Anna Stork left Columbia University in 2011 with a master's degree in architecture, a business partner for her new startup, and $100,000 in student-loan debt.

In the past five years, she's paid off approximately $60,000 of it. She cut her housing costs by going back home to live with her parents in Sherborn, Massachusetts, for six months, and then accepted a fellowship with the Kauffman Foundation, which included housing in Kansas City, Missouri, and a small stipend.

After the fellowship ended, she returned to her parents' home in Sherborn for another year before finally moving to Chicago with her startup, Inc. 30 Under 30 honoree LuminAid. She made a mental commitment to consistently pay back slightly more than the minimum monthly requirement, and sold some stock that she got when she was "much younger." And for the first two and a half years, she did it without taking any money from her company.

It may sound like a classic entrepreneurial story: taking on a massive student-loan debt load and erasing it through hard work and perseverance while finding success in the high-risk startup world. But it's not typical of this year's 30 Under 30 honorees.

Sixteen of the winners--more than half--reported no student-loan issues whatsoever. Of the nine winners who did report challenges building their startups because of student-loan debt, only three left school owing more than $35,000, the average amount for class of 2015 graduates (the highest in U.S. history), according to a report by financial aid resource Edvisors.com. (Note: The remaining five companies did not respond by time of publication.)

Are young people with crippling student debt less likely to be entrepreneurial successes early in life? Entrepreneurial interest is high: A 2014 Bentley University survey reports that nearly two-thirds of Millennials hope to start their own business at some point. But a 2015 report from the Kauffman Foundation says  startup activity is actually significantly lower among people aged 20 to 34 than it was 18 years ago.

That correlates with an increase in student-loan debt, which has become the second-highest consumer debt in the country (behind mortgage debt, currently at $13.8 trillion). In 2000, average student-loan debt per graduate was only $17,000--less than half of today's figure--according to the U.S. Public Interest Research Group. You can literally watch total American student-loan debt rise on this visualization of Federal Reserve data:

This year's 30 Under 30 group may serve as further evidence of that idea. All founders who reported student-loan problems spoke of a moment when they were faced with the choice of committing resources to either their loan payments or their startup. Without fail, the startup won.

Sometimes, this meant skipping loan payments, something financial experts say is the single worst thing you can do, especially with federal student loans (the most common type). Margaret Paddock, a U.S. Bank market leader, says those federal loans should be an absolute top priority. Bethy Hardeman, Credit Karma's chief consumer advocate, says the same thing, almost verbatim--specifically because they stick around for a long time. Government records have long memories.

One 30 Under 30 co-founder who missed a few such loan payments, Jessica Scorpio of Getaround, called it a wake-up call. "You have to know that stuff is hitting your credit, because it has such major implications," she reflects. It affected her company, too: Scorpio's then-low credit score made it difficult to lease cars, which Getaround needed for early car-sharing tests.

There are, of course, creative solutions. Geoff Doran, co-founder of 30 Under 30 honoree Tradiv, dealt with his $40,000 in student-loan debt in part by living off credit cards for three months in early 2015. He stopped when his company found funding through an accelerator, CanopyBoulder, over the summer. It's a dangerous move, prone to debt spirals (taking out new loans just to pay off old ones). In other words, a prototypical short-term fix.

Fellow honoree Tatiana Birgisson, founder of Mati Energy, left Duke University at the end of 2012 with $20,000 in student-loan debt. After her six-month post-graduation grace period ended, she applied for and received two years of forbearance on a private loan, just to delay the need to make payments for as long as possible. "You just can't start a startup and have those kinds of scary, overwhelming things going on," she says. "So I just put it out of my mind and decided to deal with it later."

Birgisson wouldn't change a thing. Her two years of forbearance helped her get to the point where she can pay herself a regular salary and take advantage of an income-based repayment plan. Jamie Byron, co-founder of 30 Under 30 honoree Grove, says the personal fulfillment from starting his own company after graduating from MIT in 2013 has been worth any amount of student-loan debt. 

Then again, neither Birgisson nor Byron left school with a particularly large debt load: $20,000 and $10,000, respectively.

For those with more student-loan debt, the only reliable way to make ends meet is often to slash living expenses. Stork, of LuminAid, lived with her parents for 18 months. She meticulously tracked her income, stock value, and student-loan debt figures in an Excel spreadsheet, updating it every month. Still, she wonders if she could have taken advantage of short-term fixes like forbearance or loan consolidation.

Aeron Sullivan, Doran's Tradiv co-founder, lives in a building that's half-apartment, half-office space for the company's 20 employees. It helps ease the pain of his $50,000 student-loan debt and $80,000 personal-loan debt from launching the company. The personal loan was easier to get than one might expect: Sullivan applied for it before finishing his MBA program at Norwich University, meaning his student loans were still accumulating. Now that he has student-loan repayments on his record, he says, a personal loan would be much harder to attain.

Another option--one many young entrepreneurs don't want to hear--is to wait until you've been out of college long enough to build some financial security and a strong credit score. Tim Harris, co-founder of 30 Under 30 honoree Swift Navigation, graduated from the University of California, Berkeley, in 2008 and spent the next couple of years working as an industrial planner for OR Soft, a German software and consulting company. He started law school at Boston University in 2010, and left in 2013 with just under $100,000 in student-loan debt.

The time spent in the work force before launching Swift helped Harris refinance his loans to a lower interest rate through SoFi, one of a few new marketplace lenders focusing on student-loan debt. For recent graduates with little or no credit history, it's a nearly impossible strategy.

Harris has also used traditional methods, of course: saving money at his old job while cutting rent and living costs to prepare for the unstable early-startup days. He's been able to pay off roughly half of his student-loan debt so far; like Stork and Sullivan, he's not out of the woods yet.

Maybe those experiences can give these founders an advantage: more financial awareness than founders who haven't been burdened by hefty student loans, for example. The lessons learned from managing debt have to be valuable.

But the fact remains that only three 30 Under 30 winners reported significant student debt. More than half had no debt at all. Of all the numbers in this story, those may be the most telling. Student-loan debt is a ticking time bomb for our economy: It's higher than ever before, and it may be preventing some of the best and brightest young graduates from making their mark in the world of entrepreneurship.

Published on: Jun 7, 2016