I want to talk about something that has been affecting Black women entrepreneurs' access to capital - student loan debt.
Our mission is to help Black Women "Get The Bag," and student loan debt has a tight grip on keeping the bag sealed - blocking our collective cash flow and freedom.
The Link Between Student Loan Debt and Entrepreneurship
To start a small business, aspiring entrepreneurs need access to financial capital, which often comes from personal savings, investments, or loans. Unfortunately, for many individuals, student loan debt stands as a significant hurdle. The burden of student loan debt can restrict access to business loans and limit the ability to invest in a new business.
Disproportionate Impact on Black Entrepreneurs
The weight of student loan debt is not equally distributed across demographics. Black entrepreneurs, particularly Black women, bear a significant financial toll. They own a disproportionate share of the $1.6 trillion federal student debt total, with higher debt averages than any other group. Black women have 99% more graduate school debt than their white women peers, according to a study by the Education Trust.
A few more data points to consider below:
- Cancelling up to $50,000 in student loan debt per borrower would have immediately increased the wealth of Black Americans by 40%
- Average debt owed by a Black borrower is $53,000 vs $28,000 for a white borrower
- 40% of Black women in college have children or other caregiving responsibilities
- Pay inequities between Black women and their peers reduce the amount of funding available to pay for college and/or pay off student loan debt
- High student debt balances and payments negatively impact access to business loans and credit cards
The Case for Student Loan Forgiveness
Student loan debt is not merely a financial burden; it is a systemic obstacle that hinders entrepreneurship and economic growth and exacerbates racial wealth disparities. Black entrepreneurs, in particular, face an uphill battle when trying to access capital and pursue their dreams.
Student loan forgiveness is not only a practical solution but a moral imperative that can provide much-needed relief to those seeking financial stability and the opportunity to succeed in business. It is time to address the impact of student loan debt on entrepreneurship, recognizing that a more equitable and prosperous future awaits when we alleviate this financial burden.
The battle in the fight to reduce and/or eliminate student loan debt was lost in the Supreme Court on June 30, 2023. While student loan payments resume this month, the fight to eliminate this debt burden continues. There are ongoing efforts to win the student loan battle, including a handful of student loan cancellations and new federal programs. We've curated some helpful resources and sources of information to help you navigate next steps and monitor debt relief programs that may be a fit for your circumstances.
Resources and Reads
For more financial, business support and wellness resources to help you navigate your entrepreneurial journey, explore the Get The Bag Black Women Entrepreneur Resource Directory.