How to Save Money On Student Loans and Start A Business?

Are you drowning in student debt yet so confident your business idea will succeed? If so, then you may have quite an outstanding vision. 

However, even though we share your enthusiasm, it’s good to know that it’s common for startups to fail. Most businesses even fail to get enough funds, and those with massive funding can also fail. 

So it can become quite a hurdle to cross starting your business with student loan debts. But, even though you may face unique challenges, you can still succeed. This guide will show you everything you need to know to increase your chances of succeeding. 

Analyze Your Repayment Options

Several issues develop when you decide to start a business while having loan debts. First, you must come up with a plan to pay off your student loans if your business doesn’t make money right away. 

You’ll have to decide the amount you’ll apportion to your business regarding the amount of money. Some of the options include: 

Income-Driven Repayment 

If you have federal student loans, one of the best options is an income-driven repayment plan. When you choose this plan, your payments are capped at the percentage of your income. 

In other words, if your business doesn’t make much income immediately, your payments could be low or zero. Yes, you can get to zero dollars every month, depending on the income-driven repayment plan you choose. 

Besides, when you make on-time payments every month for some period, your remaining balance will be forgiven. 

Of course, if your business performs well, your payment increases. But by then, you should be able to afford the monthly payments. 

Student Loan Refinancing 

If you have private student loans, you can refinance your student loans with a private lender, and you may get a lower interest rate. Also, you can extend your repayment term to reduce your monthly payments. 

However, you can qualify for refinancing, and your income and credit score will determine if you’re eligible. If you have a low income, a cosigner can help with a good credit score. That can help your business, especially if it’s now gaining momentum.

By the way, keep in mind when you extend your repayment term, your interest will increase over time. 

Student Loan Forgiveness For Entrepreneurs 

The federal government doesn’t offer loan forgiveness, particularly for entrepreneurs. But you can qualify for programs that can assist you in paying off your student loans. For example, if you work for public service, you can get Public Service Loan Forgiveness (PSLF). 

If you choose to run your business as a non-profit, your remaining balance will be forgiven if you meet all the requirements. However, you’ll have to make 120 qualifying monthly payments for the requirements before getting your loans forgiven. 

Student Loan Forbearance

Sometimes, public and private student lenders can allow you to pause your loan payments temporarily. But remember that your interest still accrues during the entire time the payments were halted. So you pay more loan balance in the end.

Borrowing To Start Your Business 

It can sometimes be challenging to borrow money for your start, but it’s not impossible. Unfortunately, some lenders may not accept your loan offer for your business when you have student loans. But there’s still a fighting chance. 

Explore Personal Or Business Loan Options 

A cosigner can help you improve your chances of getting a personal loan. If you have a solid business model, it can also boost your approval level for a loan. 

You can also refinance your loans or switch to an income-driven repayment plan. If any of them reduces your monthly payment, you can qualify for a loan. 

Borrow From Your Friends And Family 

Friends and family can be a great option sometimes. If they’re interested in your business, you can ask them to invest. However, if they agree to help you, ensure that you understand the loan terms. You have to cover all grounds to avoid any disagreements. 

Conclusion 

You can use your savings to fund your business if you have student loans. If you don’t, maybe you can get a side job to support your business. Another excellent idea is to consider an angel investor. If your business model is great, many angel investors will be willing to help you. 

However, before you make any decision, we recommend that you speak to an expert. That can help you make better decisions.