The total amount of student debt surpassed the total amount of credit card debt in 2010, and the amount of all auto loans last year. That comes out to an average of more than $25,000 per graduate. On the human rather than statistical level, that means a host of horrific stories of recent grads saddled with humungous monthly payments at the very start of their careers.

So what's a budding entrepreneur to do? Follow in the famous footsteps of Steve Jobs and Bill Gates and drop out of college before the loan burden gets too heavy? Try for a highly competitive alternative path, like Peter Thiel's 20 Under 20, or an uncredentialed path into much-in-demand tech jobs?

These options may work for a few incredibly talented and driven individuals, but they're highly risky and limited. Is there another solution to bridge the gap between high school and starting a business for more entrepreneurially minded young people? Virgin founder Richard Branson, himself a famous nongraduate, offered a suggestion while speaking recently at Salesforce's Dreamforce event in San Francisco.

Some of the mogul's most fascinating quotes from his conversation with Salesforce boss Marc Benioff were rounded up on Saleforce's blog, including this thought-provoking suggestion:

In the U.K, I have been lobbying the government to do entrepreneurial loans instead of student loans...For some people it’s much better to just get out in the real world and say, “Screw it. Let's do it,” and give it a go. You learn so much from being in the jungle and building a business from scratch.

The best way of learning about anything is by doing.

Here's the complete hour-long video of the interview if you're interested in the deep dive into Branson's remarks:

Of course, there are big differences in how student loans are handled in the U.K. and in the United States. British grads (at least since 1998) start to pay back their loans only after they've reached a certain income threshold (currently £15,000, or about $24,000). At that point, payment is determined as a percentage of income and is taken directly from their paycheck, much like Social Security in the States. The scheme is run by the government

This means implementing entrepreneurial loans in the U.K. would probably work much differently than any such scheme in the United States. But in both countries the case could be made that smaller amounts of debt given as entrepreneurial loans could help recipients earn more money more quickly than traditional student loans.

Do you think entrepreneurial loans could be part of the solution to the U.S. student-loan problem?  


Published on: Sep 25, 2012