Washington, D.C.— Today, House Small Business Committee Ranking Member Nydia M. Velázquez (D-NY) introduced a bill to establish a student loan debt forgiveness and deferment program for entrepreneurs. The Supporting America’s Young Entrepreneurs Act of 2024 seeks to lower one of the most prominent barriers to starting a business, outstanding student loan debt.
“Today, debt is weighing down young people to the point where they are less likely to start businesses that provide good jobs and form the foundation of local economies,” said Ranking Member Velázquez. “I’m proud to reintroduce this legislation to help give young entrepreneurs student debt relief so they can achieve their dreams of starting and running a successful small business.”
In October 2023, student loan payments began once again with a one-year onramp for vulnerable borrowers. As of June 2023, 43.6 million individuals held a combined federal student loan debt of $1.64 trillion. A growing body of evidence shows that this debt burden is stifling rates of business startups. For example, researchers at the Federal Reserve of Philadelphia found that an eight percent increase in total student debt in each county leads to 70 fewer new small businesses.
The crisis is also fueling persistent racial disparities in entrepreneurship. On average, Black and Hispanic students are more likely than white students to rely on student loans to pay for their education. These higher debt levels often lead to less appetite for taking risks associated with starting a small business among prospective entrepreneurs, helping maintain the racial wealth gap.
The Supporting America’s Young Entrepreneurs Act of 2023 would provide three years of interest-free deferment and up to $20,000 in forgiveness for the founders of small businesses in economically distressed areas. It would also provide up to $15,000 for employees of startups anywhere over the course of five years. It would create the Young Entrepreneurs Business Center at SBA and ensure any forgiveness is not counted as taxable income.
The bill was cosponsored by committee members Rep. Judy Chu (D-CA), Rep. Dean Phillips (D-MN), and Rep. Morgan McGarvey (D-KY).
