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Baby boomers aren’t so entrepreneurial after all

By WTOP Staff

Pardon me if I’m confused: I thought aging baby boomers like myself represented the next wave of entrepreneurship.

The Kauffman Foundation, for example, reported that 23.4 percent of all entrepreneurs in the U.S. were in the 55-64 age range in 2012, compared with 14.3 percent in 1996. That prompted headlines like this one, “ Why Baby Boomers Can Be Great Entrepreneurs,” in U.S. News & World Report.

Well it turns out that the main reason why baby boomers account for a growing share of entrepreneurs is because there are so many of us boomers out there, not because we’re particularly prone to starting out own businesses.

Self-employment rates do rise with age, but the share of Americans in the 55-64 age who are self-employed has declined from above 18 percent in 1994 to 14.3 percent in 2012, according to a new study published by the Small Business Administration’s Office of Advocacy.

There are three reasons for this decline in self-employment, according to the study:

  • More self-employed people in this age group are leaving self-employment to get jobs with other businesses;
  • The rate of self-employment has declined for 55-year-olds i.e. the youngest of these old folks), particularly in retail; and
  • The share of 55-year-olds in the 55-64 age cohort has increased.

The study also found that women and African-Americans are less likely than others to be self-employed at age 55, and that self-employment at that age increases with educational level and income.

It’s possible Obamacare could boost the rates of self-employment, if it makes health insurance more accessible and affordable for the 55-64 age group.

“Such changes in health insurance would counter the ‘job lock’ phenomenon particularly detrimental during a recession, e.g. individuals not wanting to leave jobs that provide health insurance,” the duty states.

Even if the Affordable Care Act succeeds on this front, however, current tax law concerning health insurance discourages self-employment, the study noted. Self-employed individuals can deduct their health insurance premiums from their income taxes, but they can’t deduct this cost when they calculate their payroll taxes (self-employment taxes).

Changing this tax inequity has been a top priority for the National Association for the Self-Employed for years.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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