How Does Student Loan Debt Affect Mental Health?

If student loan debt is keeping you awake at night, there are three things you need to know.

First, you aren't alone—almost two-thirds of the graduates we surveyed said they felt overwhelmed by their financial situation. 

Second, you can take steps to get your educational debt under control (and we’ll cover a number of them). It starts with understanding your options and making a concrete plan.

Third, your education was an investment—even if your finances feel stressful now. It’s hard to quantify the value of learning or the connections you build at college. Education can open doors to new careers and opportunities. Plus, studies show that on average, graduates earn more than non-graduates.

Let’s take a closer look at the mental and emotional impact of student debt, and explore ways to manage it.

The Psychology Behind Student Loan Stress

If you’re in debt, it’s easy to feel as if all the work you do is just in service of repaying what you owe. It’s an anxious feeling, knowing you owe thousands of dollars that’s growing with interest. And student loan debt is unique, because repaying student loans can take many years, but unlike an auto loan or a mortgage (which can also take a comparatively long time to pay off), you don’t have something tangible to show for it. 

Instead, when you take out student loans, you’re investing in yourself and your future earning potential. Getting an education might make it easier for you to get a job and improve your financial standing. But while you’re paying it off, you might struggle to reach the same milestones as people who don’t struggle with student debt, like buying a home or getting married. You might also be left without money to build emergency savings or invest for your later years. 

As a result, you might feel as if borrowing to further your education was a waste, and your student loans are an undue burden. Remember that you’re investing in yourself and your future, and try not to give in to these feelings, even when it’s hard. 

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Student Loan Debt Statistics 

The national student loan debt load in the U.S. stands at $1.62 trillion, per 2024 data from the Federal Reserve Bank of New York. Today’s students get a higher percentage of their funding from grants than they did 10 years ago. Research from the College Board shows grants made up 67% of undergraduate student funding in 2023-24.

Even so, about 25% of American adults under 40 have student loan debt. Data from the Pew Research Center shows that the amount people owe depends on their education level—borrowers with postgrad degrees are much more likely to owe more than $25,000 than those who took some college classes, for example. 

In a recent Freedom Debt Relief survey, we asked just over 1,500 Americans to tell us how student loans have affected their health and emotional well-being. Here’s what they said:

When you’re up against so much student loan debt, it’s easy to feel defeated. Thirty-one percent of graduates surveyed believe they won’t be able to pay back their student loans in their lifetime. It’s understandable, especially with the economic rollercoaster we’ve experienced in recent years. 

What’s the impact of so much debt on mental health? We’ll cover this in more detail below, but multiple studies have shown that debt takes a toll on mental well-being. If you’re in debt, you might struggle more with anxiety and depression. You could have trouble sleeping, or even have a hard time focusing on work, school, or the activities of daily living. It stands to reason that the more money you owe your creditors, the worse the symptoms might be—especially if you’re having trouble keeping up with payments on student loans or other debts. 

The impact of student loan debt in particular can be so severe that borrowers turn to social media to vent their frustrations. A study from the University of Georgia looked at more than 85,000 social media posts about student loans from Twitter and Reddit, and found that the majority had a negative tone, with posters reporting mental health struggles, hopelessness, anger, and sadness around dealing with student loans. 

All the “will they or won’t they” Americans have experienced regarding canceling of student loan debt (for instance, President Biden’s plan being struck down by the Supreme Court) is all the more exhausting for borrowers. If you’re experiencing confusion, uncertainty, and disappointment as a result of all the legal wrangling, you’re not alone.   

Recognizing Mental Health Warning Signs Related to Student Debt

You might always feel a twinge of worry about paying back your loans. But there’s a difference between normal feelings of obligation to make payments and symptoms that impact your everyday life. How can you tell when your student loan debt worries have crossed the line into a bigger mental health concern? Here are a few signs. 

Physical symptoms

If you have trouble sleeping or experience appetite changes (not eating enough or eating too much), it could be a sign that your debt worries are getting the better of you. It’s a good idea to see a medical doctor to rule out other potential causes for these symptoms. 

Mental symptoms

Are your worries about student debt impeding your ability to work, enjoy time with family and friends, and otherwise live your life? If you find yourself dwelling on how much you owe, or doing constant math to optimize (or just manage) your budget and loan repayment, it could be time to seek help. 

Severe impacts

Panic attacks are no fun—the symptoms can manifest like a major health problem, and may include breathing problems, a racing heart, and sweating. If thinking too deeply about your student debt leads to panic attacks, definitely look for solutions to help you cope. 

Who can help with mental health issues brought on by debt?

Check in with your medical doctor if you experience physical symptoms alongside worrying about your student loan debt. A therapist can help you sort through your feelings and find healthy ways to process and cope with any feelings of inadequacy or worry around your loans. And if you’re having trouble making payments on time, speaking to a credit counselor, financial planner, or even a professional debt settlement company could be a good idea. 

How Student Loan Debt Differs from Other Financial Stress

If you grew up in the 1990s or 2000s, chances are good that you received a lot of pressure regarding higher education. You might’ve been told by teachers and older relatives that college was the key to a good life and to earning a higher salary. There’s some truth to this notion—student loan borrowers in their 20s and 30s have higher incomes on average than those in the same age group who didn’t attend college, even when those borrowers are still repaying their loans. 

But going to college and doing what you’re “supposed to do” can lead to feelings of being cheated or being lied to when it turns out you’ve got to repay those student loans with no guarantee of an easier life and more money. If you were paying back a mortgage or a car loan instead, you’d at least have the house to live in, or the car to get you from point A to point B. 

It’s no wonder so many Americans feel so much stress in dealing with student loan debt. 

The Potential Impact of Student Loan Debt on Life Decisions and Relationships 

As we mentioned above, paying back student loans can mean delaying other life milestones. According to the Education Data Initiative, the average student loan borrower takes 20 years to repay their debt. That’s a long time to put off other goals that could make your life happier or better. 

What might this look like in practice? Your student loan debt might make it difficult to save money for big purchases, like a house. Or you might wait to get married or have children, if those are goals of yours. If your spouse or long-term partner also has student loan debt, you’ll have to spend more of your household income on paying it off. Relationship issues could be exacerbated by this additional stress—studies have found that financial problems in marriage are often more problematic, pervasive, and long-term than other conflicts. 

Speaking of household income, the drive to pay off student loan debt could spur you to seek jobs that pay better, with less regard to enjoying the work itself. This is not always bad in itself —a job doesn’t have to be a passion, it can just be a means to an end. But most people would agree that it’s easier to work hard if you like what you do to some extent. 

No matter how you slice it, student debt can have a major impact on your life, relationships, and overall well-being. So how do you deal with it? 

Make a Student Loan Debt Repayment Plan

Here’s how to start: Log into your student loan repayment account, see how much you owe, and make a plan of attack.  

Start with a list of all your loans, including the loan type, rate, and monthly payments. Then decide how you’re going to tackle them. There’s power in having everything on paper and knowing where you stand, and it sets you up to take action. As a bonus, if you’ve struggled with sleep or have experienced other debt-related stress symptoms, you might find their impacts less severe once you have a concrete idea of your total debt, and can envision life on the other side. 

Once you know how much you owe, you need to get a wider view of your financial situation. If you don’t already have a budget, create one. Use an app or recent bank statements to look through your income and expenses. This shows you where your money goes, and you can use it to figure out how much you might realistically pay to get free of student loan debt as fast as possible. 

Try to set small and achievable goals—for example, can you send an extra $50 or $100 per month to your loan’s principal balance? (This helps you pay less interest, too.) Then create reminders and build them into your calendar. Most importantly, decide how you’ll celebrate each milestone. Look for inexpensive ways to treat yourself, like a meal with friends or a movie at home at regular intervals (perhaps when you reduce your balance by another $1,000), as these make the repayment journey less painful.

Find Out Whether You Are Eligible for Student Loan Assistance or Even Forgiveness

Student loan payments are often excluded from bankruptcy proceedings. This is because you’d need to prove loan repayments would cause “undue hardship.” This can be difficult to do. 

However, there are a few forms of student loan forgiveness that could get at least partially wiped out by bankruptcy. You may qualify if you: 

• Work for the government or a nonprofit organization

• Work as a teacher, nurse, doctor, or other medical professional

• Have served, or are currently serving, in the military

• Earn a low income in proportion to your loan repayments.

Student loan forgiveness programs are a bit of a political hot potato. Keep tabs on what the current administration is promising, and remember that things could change.

Sign Up for Automatic Student Loan Debt Payments

Autopay can reduce stress, because you don’t have to remember to manually make loan payments. It’s also easier to sleep at night when you know you won’t miss payments and risk late fees. You can usually choose what day the payment leaves your account.

Even better? Autopay could save you money. Many lenders give you a 0.25% reduction in your interest rate if you sign up for autopay. With interest rates, every little bit helps. It won’t impact your monthly payment much, but it'll shrink the total loan cost. 

One downside of automatic payments is that you need to know there’s enough in the bank to cover the payment. It can be easy to overdraw, especially if you have a lot of automatic payments. Check your bank account balance and transactions regularly for errors, and to be sure you have funds to cover any automated transfers.

Seek Employer Loan Repayment Assistance

Find out whether your company offers any repayment assistance. For businesses, it can be an attractive employee perk. Even more so since, until the end of 2025, companies get tax benefits for repayment assistance.

Your employer might offer regular contributions to the loan balances of full-time employees. Some employers give lump-sum incentive payments to new hires. And in some companies, you can swap your unused paid time off for student loan payment money. 

Consult your manager or human resources department to find out whether your company has assistance programs. 

Consider Student Loan Refinancing

When you refinance your student loans, a lender takes your loan or loans and puts them into one new loan. It's a form of debt consolidation. You may be able to reduce your interest rate—which lowers the total cost of the loan—and work out a different repayment schedule. If you have multiple loans, it can be much easier to keep track of just one monthly payment.

A longer loan term might reduce your monthly payment, but it costs you more in interest over the course of the loan. If you need to free up cash to pay other bills or expenses right now, that may be the right move. Compare options from multiple lenders. Be sure you’re talking to lenders who do a soft inquiry on your credit (one that won’t hurt your score). When you choose a loan and submit an application, they do a hard inquiry, and you could temporarily lose a few points.

There could be consequences to student loan refinancing. For example, if you consolidate federal loans with a private loan, you could become ineligible for the student loan forgiveness and income-driven plans we talked about above. 

Consolidating federal student loans with a federal consolidation loan protects your benefits. 

Coping Strategies for Student Loan-Related Mental Health Stress

While you’re paying off your loans, you still have to cope with any negative feelings that arise from the process. Here are some strategies to consider. 

Write about it

Writing can be a good way to get the feelings out of your mind—when you put them on paper, you might experience a feeling of clarity. Consider journaling about your financial worries. As a bonus, this writing can help you track trends in your mental health and spot patterns, and could make conversations with a therapist or financial planner more effective and comprehensive. 

Check in with your budget

Visit your household budget regularly, and tweak as necessary. If you pick up a side hustle or get a new job altogether, it could be very exciting to plug that new, higher income into the earnings column and see how much more progress you can make on debt payoff. 

Talk to family and friends

Money and debt are sometimes considered shameful topics, but hiding your money struggles doesn’t help. If you share your feelings, wins, and losses with trusted loved ones, you might find new ways to connect—and you could even help them cope with money problems, too. 

Go online

There are tons of online communities devoted to managing debt. If you have a favorite money podcaster or author, look them up to see if you can find like-minded individuals on message boards or in social media groups. The internet has made the world a lot smaller, and you might be surprised by how many people experience the same financial issues you do. You can learn from their experiences, and they can learn from yours. 

Options to Tackle Your Other Debt

Sometimes the best way to get ahead of student loan debt is to focus on other debt first to eventually free up more cash for student loan payments. For example, if you have high-interest debt like credit card debt, you might prioritize those payments. 

Don’t think of your student loan in isolation, even if its balance is higher. Look at the interest rates, consequences of late payments, and how each loan works. Then you can decide what repayment strategy suits you—which might be focusing on the balance with the highest interest rate first (the “debt avalanche” method). That credit card debt might have an APR of over 20%, and the interest is added every day you carry a balance. 

If you’re having trouble affording your debts, you could look into debt settlement, which involves negotiating with your creditors to settle your debts for less than you owe. You can do it on your own, or get a debt settlement company to work on your behalf. Debt settlement is only an option for unsecured debt, like medical bills, credit card debt, and personal loans. 

What about your student loans? Freedom Debt Relief can help negotiate some private student loans, but not federal student loans. Debt settlement is for someone who intended to fully repay their debts, but now can’t. If you’re struggling or you’ve already fallen behind and don't know how you’ll catch up, it may be worth investigating. 

Don’t Ignore Your Student Loan Debt

There’s a strong connection between student loans and mental health struggles. Thankfully, there are ways you can deal with your debt and start building a different financial future. Start by understanding how your debts work, so you can make a plan to pay them down.