Several recent articles, such as this one from the Center for America Progress, discuss the decline of entrepreneurship among Millennials (here, here, and here also). These articles parrot similar themes: Millennials want to start businesses, but the obstacles (or barriers of entry) are higher for them than for any previous generation, leading to lower entrepreneurship. The Aspen Group (via p21.org) goes a bit further, saying that Millennials need a “mindset” of entrepreneurship and that we need education about entrepreneurship in our high schools and colleges. With this, we agree.)
Quoting from the American Progress article:
“Young Americans want to start their own businesses, but the weak economy, high student-debt levels, and a complicated legal and regulatory framework—as well as traditional views about who can be an entrepreneur and what constitutes entrepreneurship—are holding them back. More than half of Millennials today express a desire to start a business, but fewer of them are creating new businesses than previous generations did at a similar age. As a result, our economy will grow at a slower pace and experience lower levels of both productivity and innovation in the future. Moreover, Millennials, who are already suffering some of the worst consequences of the economic downturn, will miss out on the opportunities provided by entrepreneurship, including creating wealth, improving their quality of life, and making important contributions to the economy.”
In essence, young people are saddled with high student debt, which restricts their ability to attract investment capital and/or invest their own savings into a new business. They also look at a lack-luster economy and think twice about whether or not they can successfully create a profit. So they hold off.
This summary article from the Financial Times illustrates how student debt has deleterious effects, even if a cause-and-effect relationship cannot be established. From 2004 to 2012, the average debt per student increased from $15,000 to $25,000. During a similar period – from 2002 to 2012, inflation-adjusted college costs rose by 41% in four-year public institutions, 9% in private institutions and fell by 7% in two-year public institutions. Student debt makes student less likely to choose lower-paying careers and for each $10,000 in additional student debt, there is a decrease in the student’s long-term probably of marriage by 7%. One 2010 poll found that 85% of college graduates were planning to move back home after graduation.
Students shouldn’t be coming out of school with debt, yet as a father who has a 17 year old son heading off to college soon, it’s difficult to find *anyone* within the college system who agrees with this notion. Even at the most Evangelical schools – where the Biblical teaching on debt should be the most prominent – there is an assumption that students will graduate with an average of $25,000 – $32,000 of student loan debt. It seems that Biblical teaching on debt is jettisoned even by Evangelical institutions when it negative affects their own salaries and institutions.
These colleges are just hurting themselves in the long run. If we have less entrepreneurship, we’ll have less donors to colleges in the long run. And this means that colleges will have to charge more since less donations will be available to off-set overhead costs. Students will incur greater debt, leading to less entrepreneurship. It appears to be a self-feeding cycle.
The way to break this cycle is to get rid of the notion that our students should graduate in 4 years at these four year institutions. And perhaps we should be more accepting of having our students do their general education classes at the local community college (which is far cheaper) than the more expensive four year institutions. But what we would like to see are colleges and churches working together to help college students start and incubate new businesses that could not only pay for the student’s tuition, but would also enable both institutions (church and college) to invest in the spiritual growth of future business leaders.
Incubating business with and for college students. Now that’s a solution we like!