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Student Loans and Entrepreneurship: An Overview

The relationship between student loan debt and entrepreneurship sits at the intersection of many questions related to labor markets, higher education, business dynamism, innovation, and capital markets. This brief considers these intersections.

Nearly 1 in 6 adults in the U.S. has outstanding student loan debt. Among those between the ages of 18 and 29, 1 in 3 reported having student loan debt. Meanwhile, the share of new entrepreneurs aged 20-34 declined from 34% to 27% between 1996 and 2019.

Key trends in student loan debt in the U.S. include:

  • Federal student debt tripled from just over $516 billion in 2007 to $1.5 trillion in 2020. Both the number of borrowers and the debt amount have increased in recent decades.
  • 2 out of 3 college seniors (65%) who graduated from public or private nonprofit colleges in 2018 had student loan debt. The average student debt among graduating college seniors who took out student loans was $29,200.
  • The share of students who took out loans was smaller among those pursuing graduate or professional degrees than among those obtaining undergraduate degrees. Total debt, however, was higher for the students pursuing higher levels of education.
  • In 2016, 54% of individuals graduating with master’s degrees had federal student loans, with an average amount of $63,700. Among those graduating with PhDs, 45% had federal student loans, with an average student debt amount of $107,600.