If you're currently enrolled in university and want to start a business, the idea of using your student loan refund check to fund your new product or website probably crossed your mind. There's no shame in bootstrapping, but is this taking it too far? Let's break it down.
There's no doubt that student loan debt is a massive issue in America. Currently there is roughly $1.5 trillion of outstanding student loan debt spread out across about 45 million borrowers. Plus, having more student loan debt can make it a lot more difficult to secure debt financing in the future.
But that doesn't mean it's a lost hope.
If you've been dreaming about starting a business and you took out a little extra student loans than you needed, there is nothing stopping you from using that money to start a business.
It's a better investment than using it to buy a fancy new TV or a new wardrobe, so believe it or not, you're being a lot more responsible than you think. If you are using the money for something that will provide a quick, positive return (like inventory or a marketing campaign) than using your extra student loan balance might actually not be a bad idea. You can even take out a bit more than you need to use as a safety net. Just make sure you know what you are getting yourself into.
You should still look at other options like crowdfunding, angel investors, small business loans, and friends/family loans first. Starting a business will always be tricky and although student loan money might make it easier at first, it could turn out to be much harder down the road.
Hopefully this information has eased your concerns about starting a business with student loan debt. The point is: Don’t let it hold you back. Aspiring entrepreneurs are the future of business, and people want to help make that happen.
Founder/CEO at Pence Branding, LLC
Ohio University Alumni
Bachelors of Business Administration