If your fixed monthly bills include a student loan payment, you're one of the more than 43 million Americans who have federal student loans, or roughly 13% of the total population in the U.S. In fact, national student loan debt totals $1.73 trillion and the average public university student borrows $32,637 to attain a bachelor’s degree.[1]

These numbers may feel eye-opening, they shouldn’t deter emerging entrepreneurs from pursuing their dreams of business ownership. While it's generally not advisable to take on more debt than you can handle, managing financial obligations may help sharpen your business acumen, offer opportunities for more advanced budgeting, and help you identify business financing options.

Take new dental and medical practices, for example. There’s a lot of education, testing, licensing, residencies and on-the-job experience that goes into becoming a medical doctor or a dentist. And because the courses and requirements are rigorous, many students take on student loan debt.

With an average student debt load of about $251,000,[2] new grads often start their dental or medical practices weighed down with a large volume of outstanding loans. The benefits may outweigh the challenges as those new grads vie for higher incomes, greater career freedom and the chance to build practices that align with their individual visions.

The same can be said for the budding entrepreneurs who set their sights on being their own boss, pursuing a passion, building wealth or making a difference (e.g., solving problems, addressing social causes or creating positive change).

Explore Your Options

Entrepreneurs with student loan debt can still successfully pursue their great business ideas. Here are some options for entrepreneurs who are in this position and looking to start a new business:

Personal finances or current employment. About 78% of new entrepreneurial ventures are self-funded, according to SCORE. Nearly half (42%) had about $5,000 in cash reserves and 49% started with over $10,000 in funds.[3] These bootstrapping entrepreneurs didn’t let their current debt loads stand in their way; they decided to get resourceful, which means you can too.

Alternative student loan repayment options. Here are some ways to whittle down or even eliminate student loan payments during your company’s startup phase: 

  • Income-driven repayment plans effectively “cap” payments as a percentage of your current income. This can reduce your loan payments during your company’s startup phase, when it’s not producing any revenues yet.
  • You can use student loan refinancing on private loans. Your income and credit score will be considered during the refinancing process. It's important to note that both federal loans and private student loans can be refinanced into a private student loan refinance product, yet federal loan benefits may be lost in the process.
  • If you qualify, you may also consider student loan forbearance, which is a temporary pause of your loan repayments, during which time interest will continue to accrue. Forbearance programs are available for both private and federal student loans.
  • You may also want to explore debt consolidation, whereby you consolidate multiple loans into a single loan. This may simplify your repayment process and could potentially save you money via a lower interest rate. For example, the Federal Direct Consolidation Loan program requires an application and allows borrowers to select the loans they want to consolidate and select a new monthly repayment plan.
  • Business financing. Banks like PNC offer a wide range of business financing options, some of which require no collateral. For example, the bank offers lines of credit from $2,000 - $100,000 with variable interest rates on an unsecured basis. It also offers SBA loans that are typically more flexible—both in terms of structure and terms—and generally requires lower down payments than conventional loans. PNC has a history of helping business customers match their financing needs with the appropriate SBA lending program.
  • Continuing education. There are many free and low cost educational resources, webinars and workshops available online, where you can equip yourself with the skills needed to get your business on the fast track to generating revenue — allowing you to continue your education without adding to your current student debt load. Consider building your knowledge base by exploring free courses targeted at your industry, joining a low-cost entrepreneurial program, or attending networking events. 
  • Business grants. Uncle Sam offers several types of grants specifically for small businesses. Start your search for federal government grants at Grants.gov. This government site offers the most comprehensive database of funds the government is going to give away. There are thousands of grants to apply for and opportunities for a wide range of businesses.

Follow Your Entrepreneurial Path

Building a new business from scratch is never easy, but it’s particularly daunting for someone who has student loan debt. You can conquer these fears by identifying cost savings, using an auto-pay program and always making timely loan payments. Additionally, you might aim to reduce your spending on nonessentials and use discretionary income to build up your savings.

It’s also smart to have an emergency fund that will cover at least six months' worth of necessary expenses. This will help you work through any “unprofitable” periods and help address some of the “startup stress” that’s a natural part of being a new business owner.