Small business growth could get a boost if President Joe Biden has his way with student loan forgiveness.
Around a third of small business owners say that student loan debt has hampered their ability to grow their companies, according to a new survey from Capital One bank and the NextGen Chamber of Commerce, a business organization that helps entrepreneurs. The survey, completed in partnership with decision intelligence company Morning Consult, polled 1,200 small business owners and 300 auto dealership owners in late March.
Biden has been a staunch advocate for student loan forgiveness, with reports saying that he’s weighing a proposal to shave $10,000 of student debt for some borrowers. The White House may also limit forgiveness to those making $150,000 or less last year, or $300,000 for those who file their taxes jointly, the Washington Post previously reported. The White House, however, has denied the report with a spokesperson saying that “no decisions have been made yet” over the plan. Approximately 44 million Americans owe roughly $1.7 trillion in student loan debt, according to the Education Data Initiative, an organization that collects data on the U.S. education system.
A student loan forgiveness plan is a step in the right direction to saving American entrepreneurship, according to NextGen’s executive director Eddie Monroy. Loan forgiveness, he says, doesn’t just ease the burden of starting or expanding a new business, “but ultimately would provide greater access to wealth building for many Americans who have been saddled with debt–especially women and minorities–helping to create a more inclusive economy.”
Student loan payments divert capital that could be used for other purposes, such as reinvesting in a growing business. The average federal student loan debt clocks in at roughly $37,000, though it’s believed that figure climbs upwards to nearly $41,000 for private debt–and with rising college tuition costs each year, touch choices often have to be made by aspiring entrepreneurs.
Take the case of Lonny Ruben, who graduated from college with three small businesses already under his belt…and student loans totaling $156,000. While working at a food distributor, inspiration struck Ruben: buy up vending machines and customize them for special diets. He launched a company called Bunny James, but to meet rent and his student loan payments, Ruben had to work two jobs. “The business needed me full time, but I couldn’t jump because of the loans,” Ruben previously told Inc.
Not everyone’s a fan of Biden’s plan. A group of Republican senators, including Sen. Mitt Romney of Utah, introduced a bill in May that would prohibit Biden from canceling student loan debt. Romney has said that “it makes no sense for the Biden Administration to cancel nearly $2 trillion in student loan debt” because it would be unfair for those who either already paid off their loans or opted for alternative education routes.
Despite the critics, there is momentum for erasing even a portion of student debt given its potential to increase business investment or ease the burden on over-leveraged households. Some have even reversed their positions on canceling student debt, such as Mark Cuban, who now supports the measure as well.