Thanks for the response. I definitely could take some measures, including cheaper rent, to decrease expenses. I've thought about moving back in with the parents, as well, to be rent-free.
I've been out of school since May 2010 and I have been employed for the majority of that time since then.
The problem that I noted in the post with stockpiling cash is that I can quantify exactly how much I am losing by saving up rather than spending the money on loans. Furthermore, I made the decision to contribute to retirement first because 8% (average stock market annual returns) in the long run (30+ years) is better than 7.4% (fixed loan-rate returns) in 7 years. So, I have this battle between long term net worth optimization and my yearning to start a business.
I haven't thought about contracting. How does one break into being a contractor? I've searched before and it amounted to competing with others on elance.com or doing work for free until someone can recommend your work to get paid for it.