The Big Story: Supreme Court strikes down Biden student loan relief plan
The Supreme Court this week struck down President Biden’s student loan relief plan that would have canceled up to $20,000 in student debt for qualified borrowers. The decision, while not unexpected, is a blow to the millions of Americans riddled with student debt, and individuals whose debt acts as a barrier to pursuing entrepreneurship.
This Supreme Court’s 6-3 decision ruled that the administration’s attempts to cancel student debt using executive power were unlawful. Supporters of student debt cancellation have called for the administration to consider other pathways for cancellation, but a new concrete pathway for forgiveness has yet to emerge outside of an amended repayment plan designed to ease the burden of student loan payments. This week’s decision makes it clear that Congress must act to create a permanent solution. Such a solution is unlikely to be found in a deeply divided Congress, however, with the Republican-led House voting to halt the relief program, and Democrats calling for broad cancellation of student debt.
Engine has long-emphasized the barrier student loan debt creates for many wishing to pursue entrepreneurship—especially for underrepresented individuals. Women, for example, shoulder roughly two-thirds of student loan debt, with Black women carrying higher balances than other groups on average. Easing the burden faced by student borrowers, particularly those from underrepresented backgrounds who already face significant barriers in the startup ecosystem, is critical for the U.S. to remain a leader in innovation. Finding new solutions is necessary so that a wave of would-be founders and entrepreneurs are given the chance to innovate and bolster the U.S. startup ecosystem.
Policy Roundup:
Antitrust agencies propose increasing merger filing burdens. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) issued proposed changes to premerger filing requirements that could lengthen the acquisition process. The proposed changes greatly expand the documents and information required from merging parties and would increase the time it takes to prepare the filing by more than four times the current estimate. The changes would apply to all reportable mergers, adding significant burdens to non-problematic transactions. The changes threaten to negatively impact startup exits via acquisition, which are important for the health of the overall startup ecosystem.
State data privacy laws to take effect. Privacy laws in Colorado and Connecticut will enter into force tomorrow, July 1st, bringing the number of unique data privacy laws in effect to four. Meanwhile, a California court issued a tentative ruling delaying the state’s additional privacy regulations from taking effect until March 2024. As more state laws come online, more startups are likely to begin feeling the impacts of the state privacy patchwork. State legislators have been busy this year adding to that privacy patchwork, but also passing several other laws impacting startups, including around intermediary liability, tax, and worker mobility. We explore those trends and what they mean for startups in a new blog post this week.
Canada releases pro-immigrant tech talent strategy. Canadian policymakers this week announced a raft of immigration policies designed to attract tech talent to the country and siphon high skilled immigrants from the U.S. Among the changes are a new work-permit stream that would allow U.S. H-1B visa holders to move to and work in Canada. H-1B visas allow U.S. companies to employ foreign workers in certain occupations. But, the H-1B application process is fraught and expensive, and out of reach for many U.S. startups. Canada is also expanding their Start-up Visa program and other nations, like the UK, are similarly looking to steer tech talent away from the U.S. The U.S. has a shortage of STEM talent and the efforts of other nations will only serve to further shrink the talent pool, demonstrating the need for meaningful immigration reform in the U.S.
Billions announced as part of broadband push. This week, the Biden administration announced the allocations of a $42 billion federal funding initiative aimed at expanding high-speed Internet access across the nation, significantly scaling up infrastructure that forms the backbone of digital innovation. The funding, passed as part of the bipartisan 2021 infrastructure law, is the largest investment toward closing the digital divide. High-speed Internet access enables entrepreneurs to launch companies from anywhere in the country, and expanding the reach of reliable and affordable broadband is crucial to foster innovation and entrepreneurship.
Supreme Court rules against affirmative action. On Thursday, the Supreme Court found race-conscious admissions policies to be unconstitutional, upending decades-long efforts to build diverse student bodies which in turn support the STEM talent pipeline and broader innovation ecosystem. Engine has long-explained the importance of diversity in the startup ecosystem—diverse teams lead to more and better innovation, as well as increased revenues—and has repeatedly highlighted the significant barriers underrepresented founders and talent face. The court’s decision will have impacts beyond college admissions, risking the growth of an equitable and thriving startup ecosystem, and worsening barriers faced by underrepresented entrepreneurs and would-be entrepreneurs across the country.
Startup Roundup:
Engine celebrates LGBTQ+ innovators. This week marks the end of Pride—an opportunity to celebrate the diversity, wins, and successes of the LGBTQ+ community, and the important role they serve, especially within the broader U.S. innovation ecosystem. LGBTQ+ entrepreneurs are creating jobs and finding innovative solutions to problems every single day. And according to the National Gay & Lesbian Chamber of Commerce, LGBTQ+ entrepreneurs make up 1.4 million business owners, which is only projected to grow. However, LGBTQ+ entrepreneurs face unique barriers and difficulties while building their startups. This month, we held a roundtable discussion with LGBTQ+ founders and leaders to learn more about the role policy can play in expanding opportunities for underrepresented founders.
The innovation ecosystem can be difficult to navigate for any entrepreneur, especially if there are few mentors or communities representative of their identity. Athelo Health Founder and CEO Jessica Thurmond explained the need for tailored support for “founders who live in regions that we know are really struggling right now.” We also heard from Renée Rosillo, Co-Founder and CEO of Prism, who told us that “policy should be geared toward having more diverse emerging managers, and making an easier way for folks to become investors.” Such changes are “key to the flywheel of innovation” because diverse investors fund diverse founders. And Mariah Barber, the Founder of D.C.-based startup Invisible Strengths, said that incentivizing support organizations to partner with newer entrepreneurs via providing internships or apprenticeship programs could be key in “diversifying technology and startups as a whole.”
We’re grateful to these founders, LGBTQ+ leaders, and others for sharing their perspectives and experiences with us and providing solutions that policymakers can implement that would support these important communities. As Pride comes to a close, we urge lawmakers to keep diversity in innovation front of mind not just this month, but every month of the year.
