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Rhode Island Bets on Young Entrepreneurs


Rhode Island has seen better days. With a massive pension crisis, a long battle between the state government and its unions, and one of the highest unemployment rates in the country, the Ocean State is struggling to recover from the worst crisis it has seen in decades. Fortunately the state is actively looking for ways to turn things around, and this week the Boston Globe is spotlighting one intriguing idea that has much to recommend it. Well aware that many students graduate with too much debt and eager to jumpstart a start-up economy within the state, the Rhode Island Student Loan Authority is debating a plan to allow recent grads who work at or create a start-up to defer their loan payments for a few years. The details have yet to be finalized and the plan still needs to be approved, but the current outline suggest that the plan will give grads two years of $100 per month loan payments as long as they work at a start-up in the state:

“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]

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  • jeburke

    Rhode Island ought to be a boom state with its mild weather, splendid coast line and proximity to Cape Cod, smallish but urbane capital city, and one of the nation’s major universities, all contained within a state small enough to be smartly managed by even the moderately competent while also making democratic responsiveness easy. That it is not is one of the most compelling indictments of the Blue Model, far more than the failure of such benighted places as Detroit.

  • Corlyss

  • Pete

    Isn’t this merely a temporary transferal of debt from the kiddies to the state which itself is bankrupt?

    And what difference can a deferral of $100 a month for two years make to a start up effort? Answer — little to none.

    And what businesses are the kiddies suppose to start — a pizza delivery service, a travel agency, a bicycle shop, an art shop, dance studio, etc?

    And by the way, none of these in-and-of themselves are examples of entrepreneurship per Peter Drucker.

    If Rhode Island was serious about jobs, the state would cut it onerous regulations and high taxes and also pass right-to-work legislation.

    Such actions would energize the real entrepreneurs to create and/or bring jobs into Rhode Island, many of which the kiddies could land, and thus pay off their debts.

  • Jacksonian_Libertarian

    This is just another big government program designed to provide jobs for the bureaucrats running the program, it will hurt citizens and already struggling businesses from the increased government burden, more than it will help entrepreneurs and students saddled with debt.

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