A college degree is valued so highly — overvalued, if you ask George Leef — that many students are willing to take on huge student-loan debts with the expectation that a degree will give them the means to pay off debt with relative ease. Among the potential problems this creates: Student debt creates roadblocks for budding entrepreneurs who should be creating jobs and generating economic growth. The latest Bloomberg Businessweek documents the problem.

Dr. Steve Sherick wants to build out the emergency-care business he started two years ago, but the $300,000 in student loans he and his wife carry makes it difficult. The 36-year-old physician’s team of seven doctors works under contract at a local hospital in Trinidad, Colo., about 200 miles south of Denver. Sherick would like to hire a full-time office administrator and offer more competitive salaries to entice doctors to work in the rural community. “It deters an entrepreneurial spirit when you already start four steps behind the starting line,” he says. “The student debt increases the risk for an entrepreneur like me and makes it harder to expand a new business, get loans, and hire new people.”

The $1 trillion in educational loans is dampening the entrepreneurial drive of U.S. college graduates. In a recent survey of 9,500 debtors by Young Invincibles, a youth advocacy group, almost 23 percent said they had put off starting a business because of monthly student debt payments. Data compiled by the Small Business Administration show that while self-employment among those 65 and older increased 24 percent in 2010 compared with 2005, it fell 19 percent among individuals 25 and under in the same period. “With more student debt and stricter bank lending, it really hinders the ability of students to take risks, start a company,” says Dane Stangler, director of research and policy at the Kauffman Foundation, an organization dedicated to supporting entrepreneurship.