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Entrepreneurs are public servants, too

Monday, December 05, 2011   (0 Comments)
Posted by: Kristina Moy
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By Laura Vanderkam, USA Today Column

Intriguingly, the Obama administration is marketing Income-Based Repayment specifically to potential entrepreneurs as a way to boost job creation (though anyone can apply). The Small Business Administration's website touts the "Student Start-Up Plan," enticing people to "Defer Loans. Not Entrepreneurship." This is quite smart; even if a small business produces revenue, its owner can easily have income under $20,000 as she re-invests incoming cash. IBR means she doesn't have to worry about student loans on top of bank loans or start-up costs. "It's a perfect setup," says Scott Gerber, head of the Young Entrepreneur Council and co-founder of Gen Y Capital Partners.How it would work.

But if we truly believe, as the SBA claims, that "young entrepreneurs are key to our economic success," then we can do better than 10% and 20 years. We already do better for some people. The federal government also runs a program called Public Service Loan Forgiveness for people who work for government agencies and certain non-profits. Aside from capping payments, the government forgives outstanding balances after 10 years — a major boon if you have $50,000 in loans and earn $30,000 a year. The recipients are deserving, but why is someone who works for a non-profit after graduation more deserving of loan forgiveness than someone who creates the wealth that allows people to donate to non-profits in the first place? Starting a business "is doing a service to the economy, going out and creating jobs," Gerber says.

Read the full article on USA Today.com

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