Changes to the federal student loan program stand to help future entrepreneurs, but can go further to support students from low-income families and marginalized communities.
In yesterday’s Fall Economic Statement, the Canadian federal government announced that interest on all student and apprenticeship loans will be permanently waived.
And earlier this week, the government increased the zero-payment income threshold on student loans from $25,000 to $40,000.
These announcements come on the heels of a new student debt program introduced in the U.S. in August. The program forgives up to $20,000 of student debt for Pell Grant recipients and up to $10,000 for non-Pell Grant recipients. Single borrowers who earn less than $125,000 ($250,000 for married couples) qualify for the debt forgiveness program.
These student loan program changes can potentially create increased levels of entrepreneurship and innovation in the U.S. and Canada.
Entrepreneurship is not only a risky venture with uncertain pay-off, it’s actively unwelcoming to those who come from marginalized communities. Those who hold student debt become more likely to choose an occupation that offers stable hours and pay, as opposed to something as risky as becoming an entrepreneur.