Student loans are no joke. They can make it scary to take risks in life and business. The burden of student debt can make it seem impossible to switch jobs, change careers, start a new company, or build a product.
Perhaps you went into a field in your early 20s thinking you would stick with it forever but now find that it isn’t what you thought it would be. You want to go out on your own, but don’t have the capital. You may also be afraid of falling behind in payments and defaulting on your student loans. You’re worried this might train-wreck your credit score and set you up for even greater hardship and failure.
These are all valid concerns. The national cumulative student debt is climbing towards $1.4 trillion, and the average U.S. graduate now has over $35,000 in student debt – with even higher debt amounts for those with post-graduate degrees.
Before you lose hope thinking you may have to stick with a job you hate for the next few decades, let’s talk alternatives.
#1 Get paid to volunteer
First, consider if you can make time for volunteering. Platforms like SponsorChange and ZeroBound now offer debt repayment options for graduates who volunteer with local non-profit organizations. With these platforms, you can complete as few, or as many, projects as you like.
Consider taking six months or a year off of participating in other weekend activities to work on a few extra projects and give back to your local community. Volunteers can earn anywhere from $200 to $1000+ per project for around 40-50 hours of work spread over several months. Not only will this help you gain invaluable experience in diverse new skill sets, but the philanthropists on these sites will also pay down your student debts in the process.
#2 Deferment and forbearance options
When you’re ready to take the leap, make sure that your debts are up to date before you stop paying. Understand the terms of your loans and sort out a plan with your lender. Take advantage of deferment and forbearance options if available. be proactive, not reactive, when it comes to missed payments.
While interest will likely still accrue on the loans, you won’t have to worry about paying back the loans right away. This will give you more time to focus on your startup, without worrying that creditors will be ringing your phone off the hook.
#3 Work out a PAYE plan with Uncle Sam
If you have federal student loans, you could sit and wait for the next president to (possibly) forgive your debts at some point in the next four years. Or, depending on what type of federal student loan you have, you can be proactive and negotiate a pay as you earn (PAYE) plan as your income drops – once you quit your day job of course.
A PAYE sliding scale plan is great if you are not earning much. However, bear in mind that it can also get pricey if you start to make money quickly. Talk to a professional who can explain PAYE in more detail and make sure you choose a negotiated payment plan that is best for you.
#4 Pitch investors
You don’t have to come up with all the money for a start-up business on your own. Search for angel investors. Refine your elevator pitch and get out there.
Enter local and international startup competitions to practice getting your plan in front of those who’ll be able to see the need you’re filling with your product or service.
Success in business is not just about selling to your clients and customers; it involves selling your ideas to coworkers and investors as well. Start at the top and you may have enough funds to cover not only your start-up costs but employee salaries, like your own, as well.
#5 Take it to the people
Take your ideas to the people and craft a crowd-funding campaign to get the masses on board before the product or service even launches.
Ideally, work on a combination of both funding approaches. Approach both start-up capital investors and the crowds. Explaining your vision and plan to both groups will help you refine your business mission and unique selling point. This will ultimately help you learn how to best pitch what you are offering to anyone you meet.
Still considering quitting your full-time job to run your startup? That’s a brave move and one that you will need to be prepared to stand behind in the long run. However, don’t let your student loans get in the way of pursuing your dreams. There are programs and organizations that can help.
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