Student loan debt hurts the mental health of most borrowers

Kate Quick, 43, said her student loan debt is causing stress and anxiety for her and her family.

Courtesy: Kate Quick

When Kate Quick, 43, completed her master’s degree in art at the University of Alaska Fairbanks 22 years ago, she had borrowed about $ 30,000.

Now she owes nearly $ 48,000, even after several years of payments.

“I just can not think clearly every time I have to deal with student loans,” said Quick, who now works for the faculty association at the University of Alaska.

She also barely missed an opportunity for relief. Quick has previously worked as a professor at the university, so she researched Public Service Loan Forgiveness, or PSLF, a program that would forgive her debt because she worked in education.

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The program requires 120 qualifying payments, which takes about 10 years. However, the rules for what types of payments qualify are strict. Although Quick worked as an adjunct and then hired professor for 17 years, only the payments she made while she was a full-time employee count in the program.

She is missing the 120 payments she needs to qualify and she no longer works for a qualified employer. Now she’s in a different career and sees few opportunities to return to teaching – she does not want to go back to university, and she is not certified to teach in primary, secondary or secondary school.

In addition, Quick had to change her federal family education loans to direct loans when she had to determine eligibility for the PSLF. That added $ 17,000 to her principal.

Her monthly payments will also increase to $ 568 each month from $ 88. If she follows the current payment plan set by her service worker, she will end up paying around $ 170,000 to eliminate her debt. Her husband, a jewelry artist who went back to school to become a computer scientist, also has a student loan and has a payment that is more than $ 500 each month.

“It makes me panic,” she said, adding that due to student loans, the family has postponed buying a house and saving up for college for their three teenage children.

“It created some marital problems over the years because money is a thing that people fight about in relationships,” she said. “And especially when you do not have much of it, which was us.”

A common problem

Quick is not alone. More than 60% of borrowers say that student loan debt has negatively impacted their mental health, according to the CNBC + Acorns Invest In You Student Loan Survey conducted by Momentive. The online poll was conducted 10-13. January among a national committee of 5,162 adults.

“When people are unable to pay their bills or their student loans as fast as they should, there is a level of shame and sometimes guilt,” said Aja Evans, a licensed mental health consultant working with Laurel Road, a digital banking. platform. “It can quickly turn into feeling bad about yourself and not feeling like you can present who you really are to other people because you worry about the financial stress of your life.”

The study also showed that the less a person earns, the more their mental health suffers when it comes to student debt. Less than half of people who earn more than $ 100,000 annually say that educational debt negatively affects their mental health, compared to 59% of those who earn between $ 50,000 and $ 99,000 and 70% of those who earn less than $ 50,000 each year.

Women and younger adults are more likely to report negative mental health effects of student loan debt, the study showed. Still, more than half of the baby boomers said their student debt had a negative impact on their mental state.

“People think student debt is a young person’s problem,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit organization that helps student loan borrowers with free counseling and dispute resolution. But that is not true, she said, pointing to millions of older borrowers struggling to pay down debt and save up for retirement or retiring and still repaying loans.

Why student loan debt hurts mental health

There are many reasons why having student loan debt affects borrowers’ mental health. Many Americans with debt end up postponing other financial milestones, such as having a baby, buying a home, getting married, saving up for retirement, or even vacationing.

The system is also often confusing to navigate, and besides not understanding how their loans work, many borrowers have trouble understanding their repayment and repayment options.

That confusion can lead to higher balances or other costly mistakes.

“A lot of people are on income-driven repayment plans that lower what they are required to pay each month,” said Bridget Haile, operations manager at Summer, which helps borrowers navigate repayment. “The question is, for many people, even if you make full timely payments every month for years, you will often see your loan balance go up instead of down.”

A growing balance, even when making payments, is psychologically difficult to face, she said. Additionally, if someone has defaulted or has not been able to make consistent payments, it can hurt their credit score.

What’s next

The moratorium on federal student loan interest rates and payments has helped millions of borrowers.

The Biden administration also relaxed the rules for the PSLF, making it easier for some borrowers to obtain forgiveness, and has cleared all debt from some borrowers, such as those used by for-profit institutions.

Still, many borrowers are unsure of how to resume payments and have difficulty navigating the systems that can provide them with relief. Currently, payments and accrued interest are set to start again in May.

Quick and her husband are not sure how they will make their monthly payments when they eventually reboot.

“We’re both just pulling our hair out and wondering what to do, because we can not afford a $ 1,100 a month payment for student loans,” she said. “It just makes our heads spin.”

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorn.

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