“That should give them a little breathing room while they try entrepreneurship,” said Charles Kelley, executive director of the student loan authority. “We are trying to mitigate brain drain, and looking at this as a way to help the Rhode Island economy.”
Kelley said he got the idea while volunteering at an entrepreneurship center at Brown University. While there, he encountered several students who were leaving Rhode Island for high-paying jobs elsewhere so they could more easily pay off their student loans.“If they didn’t have these student loan burdens, they might have stayed and worked with their friends in start-ups in Providence,” Kelley said.
Of course, there are serious reasons to question whether a plan like this can be effective. Most importantly, a loan deferral is not the same as a loan cancellation, and given the massive amount of debt students leave college with, a two-year delay may not be enough. Any young person with the wherewithal to start a business should (hopefully) be capable of taking stock their own long-term financial future. Starting a business is a big financial risk in the best of times, and the knowledge that you will have a massive debt burden awaiting you in a few years is likely to be enough to deter many would-be entrepreneurs from taking part in this program.Nonetheless, the basic goals of the program—namely reducing the debt burden on recent grads and promoting new business growth—are sound, and anything that gives truly motivated entrepreneurs the space they need to take a risk on a new business is worth considering. This program may not be the solution to Rhode Island’s ills, but it’s a sign that at least it’s focusing on the right problems.[Ball and chain image courtesy of Shutterstock]