The impact of student loans on mental health

Students who borrow money for their bachelor’s degree graduate with an average of $32,880 in student loan debt. Students who attend private schools or graduate programs can amass much more debt. Federal borrowers have had their debt payments put on hold since early 2020, but that is set to expire this summer.

The uncertainty surrounding student debt forgiveness, the impending pressure of restarting monthly payments after more than three years and the long-term stress of debt can be detrimental to borrowers’ mental health. In fact, 54 percent of Americans have experienced mental health issues due to student debt.

Student borrowers are in a difficult financial position as the clock ticks toward repayment, and high inflation makes it harder to save up money. If you have student loan debt and it is taking a toll on your mental health, you can take some steps to alleviate that mental and financial burden of debt.

How debt can impact your mental health

Any form of long-term debt has the potential to negatively impact your mental health. Amy Morin, LCSW and editor-in-chief of Verywell Mind, says that people with debt are more likely to develop anxiety and depression. Among the reasons for this is the fact that debt keeps many borrowers from achieving financial milestones and goals, like saving for retirement or buying a home.

Student loan debt in particular can be problematic for borrowers’ mental health.

Many individuals don’t end up working in the field where they received their degree. Others choose to stay at home with their kids. And many of them get married while they’re in debt and their partners assist in helping them pay off their loans. This can lead to feelings of guilt, regret and even despair.

— Amy Morin LCSW and editor-in-chief of Verywell Mind

Rising costs and increased degree demand can add to stress

The net price of a college education is increasing, which usually translates into more student loans. “Federal and state support of postsecondary education has been slowing or even decreasing, shifting the burden of paying for college from the government to the families,” says Mark Kantrowitz, student loan expert.

Additionally, more jobs require education beyond a bachelor’s degree, putting pressure on students to take on even higher levels of debt to meet hiring demands. Some students get an undergraduate degree with thousands of dollars in student loan debt only to go straight into a master’s program, regardless of their financial situation.

Kantrowitz advises students to consider whether the cost of an advanced degree is worth it compared to their anticipated income.

Generally, if your total student loan debt at graduation (including any undergraduate debt) is less than your annual income, you should be able to repay your student loans in 10 years or less.

— Mark Kantrowitz Student loan expert

You can find projected annual salaries by career through the Bureau of Labor Statistics or on sites like PayScale.

If your debt exceeds your projected annual income, it’s likely that you won’t be able to efficiently repay your loans. If possible, pay off as much of your undergraduate debt as you can before jumping into graduate school, since interest will continue to accrue during grad school even if you defer the payments themselves.

Tips for dealing with student debt to relieve stress

If you’re feeling anxious about making your student loan payments, particularly as the end of the administrative forbearance period draws near, you may be tempted to ignore your balance. However, sitting down and evaluating your options will enable you to make smart, informed decisions that positively impact your mental and financial health.

Practical ways to manage student loan debt

Monthly student loan payments can make it hard to focus on other financial priorities. But there are ways to reorganize your debt:

• Adjust your monthly budget. If there are nonessentials taking up space in your budget, like subscription services or gym memberships, consider cutting them out. An extra $20 each month can help you chip away at your loan balance faster.
• Contact your lender about hardship options. Federal student loans offer several types of deferments and forbearances that will temporarily pause payments, and private student loans often come with something similar. Check with your lender to see what options you have.
• Switch your repayment plan. If you have federal student loans, you can sign up for a repayment plan based on your income, which could lower your monthly payments significantly. If you have private student loans, you can also consider refinancing to a lower monthly payment or interest rate.
• Reach out to a professional. If you’re having trouble managing your finances and debt, reach out to a certified financial planner to help create a debt payoff plan that works for you and your financial situation.

Practical ways to manage stress

Debt can be a major stressor, especially if you are experiencing financial insecurity. To cope with stress, you may try:

• Mindfulness techniques. The daily practice of mindfulness is a research-proven way to cope with stress. Mindfulness and meditation can help lower your stress response and improve both mental and physical health.
• Journaling. Journaling, for some, can be a healthy way to process stressors and the mental and emotional difficulties that come with them.
• Exercise. Daily exercise helps to release endorphins and relieve tension, improving both mental and physical health.

These methods are great for coping with the stressors of daily life, but they aren’t the solution for every situation. If the anxiety and mental strain you experience over your student loans is chronic or is interfering with your quality of life, consider speaking to a professional counselor or therapist to help you find coping strategies that work for you.

Where to find mental health help

When it comes to finding help for your mental health, there are plenty of resources that you can use. Here are a few reputable mental health organizations and how they can help:

• Mental health resources: The National Institute of Mental Health.
• For immediate mental health services: MentalHealth.gov.
• Tips on finding a mental health provider: Mayo Clinic.
• Tips on managing anxiety and stress: Anxiety and Depression Association of America.

If you’re experiencing a mental health emergency, call emergency services or reach out to the National Suicide Prevention Lifeline via the live online chat feature or by phone at 800-273-8255.

The bottom line

Coping with the impact of long-term stress caused by your student loan debt isn’t something you should do alone. Whether you seek help through your lender, a certified financial planner or professional counselor, remember that student loan debt is nothing to be ashamed of, and every step you take toward paying it down is a step in the right direction.