One of President Biden’s biggest campaign promises was to forgive federal student loan debt — a pretty big promise to the 43 million Americans who currently owe the U.S. government over $1.6 trillion for their higher education, according to the Education Data Initiative. So when the Biden administration announced a three-part plan in August 2022 to forgive up to $20,000 of federal student loan debt for federal borrowers who make less than $125,000 a year (for single filers), it felt like he was making good on his promise of student debt relief.
But there are still many questions about how this debt forgiveness will affect the U.S. economy, especially small businesses and entrepreneurs, and whether Biden’s plan goes far enough to help those who need debt relief the most.
How Could Student Loan Debt Relief Affect Businesses in the U.S.?
Although no one is certain how the White House student loan debt relief program will ultimately affect the U.S. economy, previous research on student loan debt can give us an idea of how some relief could have an impact, especially on small businesses.
Namely, student loan borrowers who are interested in entrepreneurship have been especially affected by student loan debt. According to research by the Federal Reserve Bank of Philadelphia, a rise in student loan debt in any county by as little as 8% means that the county will see 70 fewer new businesses — a 14% overall decrease per county nationwide. A similar…
