Velazquez Proposes Student Loan Relief for Entrepreneurs
Washington, DC – With student loan debt mounting nationally, Rep. Nydia M. Velázquez (D-NY) today announced legislation that would assist college graduates who launch their own businesses with deferment options and forgiveness on most federally subsidized student loans. Her bill, H.R. 6197, the “Supporting America’s Young Entrepreneurs Act,” aims to foster business creation by removing one hurdle preventing graduates from launching their own ventures – the rising costs of securing a college degree.
“Over the last two decades, the amount of student loan debt in this country has ballooned more than ten-fold,” Velázquez said. “Young people today, who might otherwise launch their own enterprises, are being held back by a mountain of loans accrued while financing their education.”
Today, the amount of federally financed student loan debt stands at a historic $1.3 trillion. At the same time, fewer young people are launching their own businesses and the formation of new ventures, overall, has been significantly constrained. While new firms represented as much as 16 percent of all firms in the late 1970s, by 2011, that share had declined to 8 percent. Entrepreneurship among younger people has declined significantly. Although many millennials strive for self-employment, fewer than 2 percent in 2014 were self-employed, compared to 8.3 percent of baby boomers.
“We are losing a generation of entrepreneurship due to the cost of higher education,” Velázquez noted. “Imagine the new products, markets, and job creation we are potentially losing because young people with an innovative idea can’t afford to start their own companies. If this trend continues, it will undermine our economic competitiveness for the long term.”
Velázquez’s new bill would open new options for graduates who launch their own business. Start-up founders could secure a three-year deferment on eligible federal student loans and, in some cases, interest would be frozen during this period. The legislation would further target assistance to businesses operating in communities that have struggled economically. Entrepreneurs who open their businesses in high-need, distressed areas can also be eligible for up to $20,000 in loan forgiveness. The Supporting America’s Young Entrepreneurs Act goes further by exempting the loan forgiveness from taxable income, protecting these small business owners from unfair penalties.
The legislation not only assists the startup founders, but also their employees. Employees with a college degree working for these eligible companies will also share in loan forgiveness of up to $15,000. Rewarding employees who are willing to take a chance in a startup company deserve similar financial assistance as the founders. Dedicated employees are a cornerstone to a successful, young business.
“Under this bill, if you’re willing to take the risk of launching a new company, we’re going to give you some breathing space from your student loans so you may get your new venture underway,” Velázquez added. “And, if you open a business in an economically hard hit area, creating needed jobs, we’re going to forgive some of your student loan debt.”
Velázquez serves on the House Committee on Small Business and has long been an advocate for empowering more Americans – particularly women, young people, and people of color – to go into business for themselves.