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Congressional Proposals Pitch Student Loan Forgiveness, Fellowship Program to Ramp Up Millennial Entrepreneurialism

  • House Small Business Committee introduce bills designed to encourage millennial entrepreneurs
  • Business formation in the millennial generation lags behind that of baby boomers and Generation X
  • Measures would offer student loan cancelation for entrepreneurs and create a fellowship program with additional support for young entrepreneurs

Summary by Dirk Langeveld

A pair of bills has been introduced by members of the House Small Business Committee with the goal of improving entrepreneurship among the millennial generation. This generation is set to be the least entrepreneurial in modern history, with business startup rates lagging behind their baby boomer and Generation X counterparts.

One measure would reward entrepreneurs who establish businesses by canceling a portion of their student loans. Another would establish a fellowship program to assist young entrepreneurs with financing, mentoring, and other support. Both initiatives give special attention to entrepreneurs in distressed areas.

Supporting America’s Young Entrepreneurs Act of 2021

Nydia M. Velázquez, chair of House Small Business Committee, has introduced the Supporting America’s Young Entrepreneurs Act of 2021 with the goal of easing student loan burdens on millennial entrepreneurs. Velázquez says high student debt burdens are depressing entrepreneurship rates among younger Americans, while also reducing overall business income and likelihood of employing others when they do start a business.

Velázquez says the outstanding student loan debt in the United States is about $1.7 trillion, making it a greater burden than credit card or auto loan debt. She said student loan debt also contributes to racial disparities, as Black and Hispanic students are more likely to rely on loans when completing higher education, resulting in a heavier debt burden and the inability or unwillingness to take on further risk to start a business.

The Supporting America’s Young Entrepreneurs Act of 2021 would amend the Higher Education Act to allow the founders of small business startups to qualify for up to three years of student loan payment deferment without the accrual of additional interest.  It also directs the Secretary of Education to cancel $20,000 in principal and interest for founders of small business startups established in economically distressed areas if the founder has made 24 consecutive monthly payments on eligible Federal Direct loans.

Economically distressed areas are defined as places where data from the previous 24-month period shows a per capita income of 80 percent or less of the national average or an unemployment rate at least one percentage point higher than the national average.

The bill also proposes:

  • Canceling $3,000 in student loans for small business startup employees each year for five years, provided they make 12 consecutive payments each year
  • The establishment of a Young Entrepreneurs Business Center within the U.S. Small Business Administration to manage the program
  • Directing the Internal Revenue Service to not consider forgiven student loans as taxable income

Next Generation Entrepreneurship Corps Act

Describing the low millennial business formation rate as an “entrepreneurial crisis,” Rep. Jason Crow has proposed the Next Generation Entrepreneurship Corps Act to help address it. This legislation would establish a fellowship modeled on programs like Teach for America and the Peace Corps to enhance support for young entrepreneurs.

The bill would create a national business proposal competition to select fellows each year to start and run businesses in their communities. Next Gen fellows would receive a $120,000 two-year stipend to help cover living and startup expenses as well as health benefits.

The program would provide additional assistance through the SBA, including mentorship, networking opportunities, and assistance in pursuing federal contracts. Fellows would also have access to SBA-backed lenders to receive credit, and the program would establish a fund to encourage private investors’ involvement by providing leverage to those making an equity investments in a fellow’s business.

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