Reports on a meeting of experts that considered the effect that student debt might have on entrepreneurship, including determining how to figure out if such a relationship exists and proposing policies that might facilitate entrepreneurship, should student debt indeed reduce it.

The resource reports on a gathering of “experts on entrepreneurship and experts on student debt” who were invited by the Urban Institute and the Ewing Marion Kauffman Foundation “to discuss the idea that the increasing prevalence of student debt among recent college graduates might be preventing a significant number of people who are interested in starting new businesses from doing so” (p.1). The report explains that “the September 2014 conference aimed to bring together the knowledge and analytical perspectives of the two groups to consider what we know and what a rigorous research agenda might teach us about a causal relationship between these two phenomena.

Dominant themes of the conversation included questions about the most appropriate definition of entrepreneurship and the availability of data to reliably measure changes over time in the desired activity, particularly in conjunction with demographic characteristics. Participants expressed interest in (a) developing a more formal model of the ways in which borrowing for postsecondary education would be likely to affect the probability of starting a business and (b) understanding more about how people make this decision and, when they do, what factors affect the probability of success. Participants also discussed the appropriate counterfactual. Experts on student debt were particularly concerned about the idea of comparing people with student debt to people with the same educational background but no student debt. Just eliminating debt, with no effect on educational attainment or future tax obligations, would no doubt increase individuals’ options. But the best measure of the impact of debt is a comparison of the circumstances of individuals with debt to those of individuals without debt and without the education the debt purchased” (p.1).

 (Abstractor: Author and Website Staff)

Full publication title: Does Increasing Reliance on Student Debt Explain Declines in Entrepreneurial Activity? Posing the Question, Gathering Evidence, Considering the Policy Options