New start-up businesses by young graduates are in decline

Many young college graduates become entrepreneurs after working for someone for few years after graduation. But for many would be entrepreneurs, student loan burden becomes too heavy and as a result either put off plans to start their own business or completely forgo that idea. In 2012, more than 43 percent of 25 year old college graduates carried some form of student loan balance. The average loan balance is around $20,326 according to the Federal Reserve Bank of New York data.

On one hand, the debt load is too heavy. The U.S. college student loan balance stands at a whopping $1 trillion. According to the Small Business Administration data, formation of self-employment fell by 19 percent in 2010 compared to 2005 among individuals 25 and under. But during the same period, those who opened their own business grew more than 24 percent for individuals over 65 years of age.

On the other hand, the student loan balances make it difficult for young entrepreneurs to qualify for a loan to start their own business. This could lead to stalling new ideas, creation of new employment opportunities and development of new products. A bankruptcy can clear housing mortgage but not a student loan.