Student loan Cancellation of debt Edinburgh

September 12, 2013

NEW YORK (AP) — As millions of people graduate from colleges and universities this spring, student loan debt will put the kibosh on the hopes many of them have to become entrepreneurs. And millions of others who have been out of school for years are in the same unhappy place.

Ashley Rodriguez and her husband, Alex, a manager with a wine and spirits company, would like to start a restaurant. But Rodriguez graduated from the University of Miami in 2008 with $72, 000 in loans. She still owes about $53, 000, with payments of more than $400 a month.

"We would need to have a certain net worth, a certain amount of disposable income that we just don't have at this point, " says Rodriguez, an account executive with the public relations firm Fish Consulting in Washington, D.C. She expects it will take another 11 years to pay off all her debt, putting off her husband's dream.

Concerns about the impact on the economy from the nation's collective $1.3 trillion in student loan debt have prompted the federal government, states and some schools to offer debt forgiveness or relief programs. Student loans that can run into the tens or hundreds of thousands of dollars prevent many people from buying homes or raising families, in addition to stopping them from becoming entrepreneurs. A 2015 study by the Federal Reserve Bank of Philadelphia found that higher student debt curtailed the formation of new businesses with one to four employees. And in a 2014 survey by Gallup and Purdue University, 25 percent of recent graduates with student loans over $25, 001 said their debt forced them to delay starting a company.

"These loans are not going to be paid off anytime soon. There's a chance it's going to have a long-term effect, " says Arnobio Morelix, a researcher with the Kauffman Foundation, which studies education and entrepreneurship.

Would-be entrepreneurs are seeing loan payments eat up cash that might be used for startup costs, or that would serve as cash flow for a new company, Morelix says. Debt also affects credit scores, hurting an entrepreneur's chances of getting a business loan.

In 2014, about 70 percent of graduates of public and private colleges had student loans, with an average debt of nearly $30, 000, according to The Institute for College Access & Success, an advocacy group that conducts research on college attendance and financing.

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