When student debt is a good thing

I was once asked what I thought was the biggest barrier for young people starting their own businesses. My reply was “getting into debt at university”. Well from the sounds of things the opposite might be true.

Depending on what paper you read, the average debt of a British student is between £15,000 and £20,000. That’s a nightmare sum of money for a young person and a burning incentive to get a high-paid job.

The last thing a 21-year-old who’s £20,000 in the red wants to do is borrow yet more money to start a business – that, if we’re honest, stands a very good chance of failing. But, according to the BBC website, students are racking up debts for exactly that purpose.

At university I spent all of my spare money on booze, but 23-year-old former student Layla Boubker is far shrewder than me. Having graduated from the University of Hertfordshire, Boubker used a wedge of her student loan to start a business.

Her start-up firm, Artizina, makes handmade, Moroccan-inspired clothing - from kaftans and dresses to denim jeans. "The student loan was very important because without it I may not have been able to start this business right now," she tells the Beeb.

Student loans are great because they offer super-low interest rates (currently 1.5 per cent) and you don’t have to pay them back until you're earning over £15,000 – which could be a long while after you start a business.

It’s the perfect solution, only tempered by the fact you must sign-up to a university course first. Now, thinking back to those history seminars with Dr Harrison, it doesn’t sound like such a good idea after all.

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By Dan Matthews  on   Jun 17,2009

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Keywords

students    debt    student debt    student business    start-up business   

Comments

Steve Burford
I did much the same with my website http://www.wealthystudent.co.uk which gives free advice to students. I set it up whilst doing my degree and doing a part time job. Saved a lot of money up and now it's going from strength to strength. Just about to re-launch with a beautiful new site! Report Abuse