Student loan debt is hurting the mental health of most borrowers

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

Courtesy of Kate Quick

When Kate Quick, 43, completed her MFA at the University of Alaska Fairbanks 22 years ago, she had taken out around $30,000 in loans.

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

“I just can’t think straight every time I have to deal with student loans,” said Quick, who now works for the University of Alaska faculty union.

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

Learn more about Investing in You:
Borrowers say taking on federal student loan debt isn’t worth it, survey finds
Most Americans want Biden to prioritize student loan forgiveness, poll finds
81% of adult student loan holders say they have had to delay key life milestones

The program requires 120 qualifying payments, which takes about 10 years. However, the rules governing the types of eligible payments are strict. Although Quick worked as an assistant and then as a tenure-track professor for 17 years, only the payments she made while employed full-time count toward the program.

She is missing the 120 payments she needs to qualify and she is no longer working for an eligible employer. Now she’s in a different career and sees few opportunities to return to teaching — she doesn’t want to go back to college, and she’s not certified to teach elementary, middle, or high school.

Additionally, Quick had to change its federal home education loans to direct loans when determining PSLF eligibility. This added $17,000 to his principal.

His monthly payments will also increase from $88 to $568 per month. If she follows the current payment plan set out by her service agent, 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 student loans and has a payment of over $500 a month.

“It freaks me out,” she said, adding that due to student loans, the family had put off buying a home and saving for college for their three teenage boys.

“It has created marital issues over the years because money is something people fight for in relationships,” she said. “And, especially when you don’t have many, that was us.”

A common problem

Quick is not alone. Over 60% of Borrowers Say Student Loan Debt Has Negatively Impacted Their Mental Health, CNBC + Acorns Invest In You Student Loan Survey Finds led by Momentive. The online survey was conducted Jan. 10-13 with a national sample of 5,162 adults.

“When people aren’t able to pay their bills or student loans as quickly as they should, there’s a level of shame and sometimes guilt,” said Aja Evans, a licensed mental health counselor who works with Laurel Road, a digital bank. Platform. “It can quickly turn into feeling bad about yourself and not feeling like you can present who you really are to others because you’re worried about the financial constraints in your life.”

The survey also found that the less a person earns, the more their mental health suffers when it comes to student debt. Less than half of those earning more than $100,000 a year said student debt had a negative impact on their mental health, compared to 59% of those earning between $50,000 and $99,000 and 70% of those earning less than $50,000 a year.

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

“People think student debt is a young people’s problem,” said Betsy Mayotte, president of The Institute of Student Loan Counselors, a non-profit organization that helps student borrowers with free counseling and dispute resolution. But that’s not true, she said, pointing to the millions of older borrowers who are struggling to pay down debt and save for retirement or who are retired and still repaying their loans. .

Why Student Loan Debt Harms Mental Health

There are many reasons why having student loan debt hurts the mental health of borrowers. Many Americans in debt end up postponing other financial milestones, such as having a baby, buying a house, getting married, saving for retirement, or even taking a vacation.

The system is also often difficult to navigate, and in addition to not understanding how their loans work, many borrowers struggle to understand their repayment and relief options.

This confusion can lead to higher balances or other costly errors.

“A lot of people follow income-based repayment plans that reduce what they have to pay each month,” said Bridget Haile, operations manager at Summer, which helps borrowers manage repayment. “The problem is that for many people, even if you make full payments on time every month for years, you’ll often see your loan balance go up rather than down.”

A growing balance, even when you’re making payments, is psychologically difficult to cope with, she said. Also, if someone has defaulted or been unable to make regular payments, it can hurt their credit rating.

And after

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

The Biden administration also relaxed PSLF rules, making it easier for some borrowers to obtain forgiveness, and wrote off all debt for some borrowers, such as those enjoyed by for-profit institutions.

Yet many borrowers don’t know how they will resume payments and find it difficult to navigate the systems that could bring them relief. Currently, payments and accrued interest are expected to start again in May.

Quick and her husband don’t know how they will make their monthly payments when they restart.

“We’re both tearing our hair out and wondering what to do because we can’t pay a student loan of $1,100 a month,” she said. “It just makes our heads spin.”

REGISTER: Money 101 is an 8-week financial freedom learning course, delivered weekly to your inbox. For the Spanish version, Dinero 101, click here.

TO VERIFY: The ‘old convention’ for saving in retirement won’t work anymore, expert says: Here’s how to switch strategies with Tassels + CNBC

Disclosure: NBCUniversal and Comcast Ventures are investors in tassels.

Comments are closed.