Don't Let Student Debt Hogtie Your Business Four tips for achieving a financial balance as you launch your startup

By Kari Luckett

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


Starting a business can be challenging, especially from a financial perspective. When you add an abundance of student loan debt to the equation, the very thought of starting a business can seem like a pipe dream. However, there are steps that new or aspiring entrepreneurs can take to balance student debt and raise the necessary capital to fund their businesses. There are also new, innovative companies offering services that can assist in this process, helping to turn your dreams into reality -- regardless of the amount of student debt you may carry.

Related: How to Start a Business With Student Loans and Not Go Broke

1. Learn how to manage money.

The first step is to learn how to manage money. Jesse Mecham, founder of You Need A Budget, developed a software program designed to allow users to track their expenses and budget their money based on four basic principles: Give every dollar a job, save for a rainy day, roll with the punches and learn to live on last month's income. Mecham states, "When someone is starting to prioritize with Rule 1. Their awareness increases and they start to make better decisions when it comes to saving their money." According to Mecham, users typically see a turnaround of about $3,000 in savings within the first nine months of using his software.

2. Build up expertise, credit and cash flow.

According to Russ Campbell, president of RJC Capital, "The first capital that you secure as a business owner is the most difficult. The banks want to see a record of success, so most of the traditional lending sources won't really be an option for young entrepreneurs."

Raising seed money from your immediate network of family and friends is a great way to raise the initial capital for a startup and can help get the business started without the heavy disclosure and filing requirements of crowd-funding, says Campbell.

In addition to raising money, Campbell suggests that entrepreneurs continue to work: "Aspiring entrepreneurs should build up expertise credit and cash flow by working full-time or part-time for another company." He suggests choosing a position in an industry in which you want to start your own business, to gain powerful insight while building connections and expanding your network. "Once you have secured that initial seed money and established a proven track record, you will begin to see your lending options multiply," says Campbell.

Related: The Changing Economics of Student-Loan Debt: How to Pay It Off and Startup

3. Refinance student loans.

Refinancing student loans can help reduce monthly student loan payments. Mike Cagney, co-founder and CEO of SoFi, launched the SoFi Entrepreneur Program, designed to work in conjunction with student-loan refinancing to help ease the paying back of student debt, and spur innovation. SoFi addresses the debt burden upfront by offering a six-month deferment on student loans, while providing the support, tools and resources necessary to build a business and ensure its success. "We like to think of ourselves as a network. We help entrepreneurs vet out their business plans, provide an introduction to venture firms and offer support as they grow their business," says Cagney. "All you need is a viable business idea, the willingness to dive all in and the passion to see it through."

SoFi member and CEO of the Tot Squad, Jennifer Beall, says, "Although income-based repayment plans are a popular choice among recent graduates to lower their monthly student loan payments, the interest that accrues may cause problems down the road. A better option would be to consider student loan refinancing." Beall was accepted into the SoFi Entrepreneur Program after graduation. The program helped her save $5,000 through student loan refinancing, assisted her in setting up deferred payments while she got her business off the ground and was instrumental in helping her raise the first $500,000 for her business.

"It is a win-win because if my business fails, then I can't pay back my student loans," Beall says. "So they had a vested interest in the success of my business. When you are fundraising, it's all about the hustle and working your network."

4. Raise money through angel investors.

Founder and CEO of ESSIO, Peter Friis, suggests raising money through angel investors to fund a startup. Says Friis: "Once you have your pitch deck [a brief presentation that provides a quick overview of your business plan] and executive summary completed, begin reaching out to and pitching angel investors. Through networking and getting face-time with the right individuals in the angel community, you can fast-track the process. It always helps to meet someone within the network or be introduced through a mutual connection to give you a leg-up over the competition. One way to meet these people would be to attend monthly meet-up events for entrepreneurs within your community."

Additionally, Friis recommends using a website such as to connect to a larger audience of angel investors. "Many angel investors are members of multiple angel groups. It is a small community, and word travels fast, so you should conduct all of your pitches within a concerted period of time to build and maintain interest," he says. "The hardest part is getting the first investor, but once you secure that, others will likely follow suit."

The amount of money required to start a business, mixed with student debt, can seem overwhelming and downright scary when you look at the numbers. However, it should not deter you from starting a business. There are many individuals and companies eager to offer support at each stage of the process. So, hold on to that passion, remain frugal, prepare, network and get ready to dive all-in. Remember: If you hustle, you can make it happen!

Related: How to Keep Student Loans From Idling Your Entrepreneurial Dreams

Kari Luckett

Content Strategist and Financial Expert,

Kari Luckett is content strategist for CompareCards, one of the most trusted credit card comparison companies. She is responsible for compliance oversight and managing the company’s blog, CompareWallet. Her expertise involves financial education, credit reports/scores, money management, credit card security and debt management.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Related Topics

Growing a Business

The Truth About Achieving Exponential Growth in Business, Exposed

What's preventing your business from scaling exponentially? Learn about the factors, and see how you can achieve your desired results.

Business News

Here's How Much Amazon's Typical Customer Makes, Plus How Much They Spend on the Platform Per Year

A retail snapshot from data company Numerator paints a picture of who shops at Amazon and where they usually spend their money.

Business News

Are You at Risk for Burnout? This Psychologist-Created Quiz Lets You Know in 5 Minutes

The burnout assessment tool was tested in seven countries using more than 10,000 survey responses.

Business Plans

Outsource or DIY? 6 Signs It's Time for Virtual Assistance for Your Business

When you start feeling overwhelmed and can't focus on strategic work, it's time to outsource non-core tasks to virtual assistants.


The Rules of SEO Are Changing — Here Are 5 Powerful Strategies to Help You Rank in 2024

Do you need help to rank well on Google due to new algorithm updates? Discover five SEO strategies that work in 2024.