If you have student loan debt and are interested in starting a business, you may face some unique challenges. You could have problems getting funding for your business, or as you work on your startup, you may have trouble paying your student loan payments.
However, it’s not impossible to become an entrepreneur with student loans. In fact, you don’t even have to pay off your student loans before you start your business.
Can you start a business with student loan debt?
The short answer is yes. You can definitely start a business with student loan debt. Starting a business will come with a unique set of challenges, though. You will need a plan to continue making your loan payments if your business is not making money immediately.
One option for repayment is an income-driven repayment plan. If you have a federal student loan, you can choose an income-driven repayment plan when starting your business. With this method, your payments are a percent of your income, so your payments will be low or nonexistent if your company isn’t making any money.
Another option is refinancing. If you have private student loans, the only way you can change repayment terms is by refinancing. You can reduce your interest rate and lengthen your repayment terms if you refinance with your private lender. You will need to qualify for refinancing based on your income and credit score, so if you do not have a high income, you may need a cosigner.
There are other methods of handling your student loans, including student loan forgiveness and forbearance. If you work for a qualifying nonprofit organization, you may be able to earn Public Service Loan Forgiveness. You can also pick a student loan forbearance option where you can temporarily pause payments on your loans. However, even though payments are paused, interest will still keep accruing, so you will eventually have a bigger balance to pay.
Just because you have student loans does not mean you can’t start a business. There are options for financing and adjusting your loans, so you can start the business you dreamed of.