This truth, profiled in a recent Inc. article, is something that Undebted founder Andrew Chapman knows full well. Until the pandemic last year led to Congressional action to put student loan payments on hold, he’d spent years juggling the balance between paying down his student debt and investing in his entrepreneurial pursuits.
And this brings up a key point not mentioned in the article — this situation is greatly affecting Gen X entrepreneurs, like Chapman, as well.
In fact, according to research by Experian, Gen Xers are actually carrying the largest average student debt of any generation (nearly $40,000). Boomers are second, and Millennials are third. Unfortunately, it’s not possible to fully correlate the stifling of entrepreneurship by student debt broken down by generation. For example, some older people don’t attempt to start businesses for other reasons, such as family or career satisfaction. And the idea of roommates all piling into an affordable apartment is more palatable for a 20-something than a 50-something.
But what about Gen Z, also known as the Digital Generation? Well, the future looks concerning here as well, and perhaps more so. Forbes has been following this generation’s interest in entrepreneurship for a few years, and in 2020 reported that it finally hit a majority. Specifically, 54 percent of Gen Z respondents said they wanted to start their own companies, higher than any previous generation. Will they be hindered by student debt? It’s too early to say, but an obvious concern is the larger tuition costs they face leading to larger debt.
They may want to start a business, but will their student loan payments allow them to? Conversely, however, the article shows promise in the form of questioning college — more than prior generations, Gen Zers seriously consider delaying or forgoing college. So, it may very well be that Gen Z will turn things around with regard to overall student debt load and entrepreneurship.
No matter what generation someone is in, however, the prospects of entrepreneurship would be more viable if student debt weren’t so onerous. And this is why our mission to make scholarships available after college offers hope. Imagine if aspiring entrepreneurs could apply for scholarships. Even if it only reduced one’s student debt by 20 percent, that could be the difference between getting the business off the ground and giving up on it.
Photo by Margeaux Walter