Debt and Mental Health: Are Student Loans Making You Depressed?

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At the height of my student loan journey, I was paying $900 per month toward my student loans while struggling to find work. I felt depressed about my debt and confused about my future.

Student loan borrowers have long known the emotional consequences of debt. According to a Student Loan Hero survey, 61% of borrowers feared that their student loan worries were spiraling out of control.

In my experience, dealing with student loans can not only cause anxiety, but they can also feel like a grieving process, akin to psychiatrist Elisabeth Kübler-Ross’ five stages of grief (denial, anger, bargaining, depression and acceptance).

Here’s how I relate my student loan journey to the five stages of grief (and you might do, too).

1. Denial

In the denial stage, you want to bury your head in the sand and pretend your student loans don’t exist.

Denial is a powerful emotion because it keeps us from facing the truth of the situation. I remember that shortly before graduating with my master’s degree, I created a Mint.com account to help me control my finances. Once I saw exactly how much debt I was in, I promptly deleted my account. At the time, I had $68,000 left in student loan debt, but I wasn’t ready to face the truth.

It’s really easy to be in this stage, but staying in denial can do so much harm. When you ignore your loans, you probably won’t know how much you owe, what your interest rates are, who your lender is, or even when your payments are due.

You might try to defer your loan payments for as long as possible. Unfortunately, your student loans will still be there, and accruing interest interest will just make them that much more bloated when it’s time to face them.

2. Anger

Anger can start to creep in once the ugly truth rears its head. When debt collectors call and letters arrive, your anger can build up.

You might feel mad at your lender, your school, society or even yourself for taking out the stupid loans in the first place. In this stage, you might cast blame or feel anger or jealousy at others.

I remember that I used to be so envious of my debt-free peers. The worst part about this stage is that anger is unproductive and consumes a lot of energy. A person can get burnt out on anger while making no progress at all toward solving the problem.

Plus, getting angry could end up alienating people when what you really need is a strong support network to help you deal with your debt.

3. Bargaining

When anger subsides, emotionally affected borrowers might start to look for ways out of their situation. They might look at their options and think:

  • Maybe I can have my loans forgiven and spare myself from paying all of this back?
  • Perhaps a wealthy friend or family member might take pity on me and pay my debt, no questions asked (we can dream, right?).
  • I wonder if there’s a payment plan with some kind of loophole in it?
  • I should start playing the lottery.

This stage can be a bit more hopeful, but it’s still not very productive at solving the problem. Unfortunately, you can’t wave a magic wand and make your debt disappear.

Looking for miracle cures could also make you susceptible to student loan scams, which make big promises but offer little results. Although there are some reputable student loan forgiveness and repayment assistance programs, none are going to wipe away your debt overnight.

The sooner you can forget about loopholes and focus on realistic solutions, the sooner you can begin to make productive decisions about your student debt.

4. Depression

When it becomes apparent that your student loans aren’t going anywhere and that they will need to be paid back, depression may set in. Borrowers who come to understand the gravity of their situation might resign themselves to feelings of hopelessness like these:

  • I’ll never get out of debt anyway, so what’s the point?
  • I’ve failed myself by getting into so much debt without a way to pay it off.
  • All the money I make just goes to debt, so why keep working so hard?

These thoughts can prevent you from paying back your debt, not to mention have detrimental effects on your mental health.

Depression often goes hand in hand with apathy, too. This duo can make even the simplest tasks seem overwhelming. It’s hard to get ahead when you just stop caring.

Student loan borrowers may be worried about how they will pay back their debt, how their loans affect their future goals, and about their current reality. It can feel totally overwhelming to manage the day-to-day expenses of life on top of hefty debt payments.

5. Acceptance

After processing an array of emotions, borrowers might come to terms with their student loan debt. They accept the fact that it won’t magically go away. In this phase of acceptance, borrowers look for a plan of action and learn to deal with their student loans rather than deny them.

While student loans can cause significant mental and emotional distress, there are ways to make your situation better. Your first step is taking account of your debt.

Make a list of your balances and interest rates, as well as your payments and due dates for each loan. Use student loan calculators to understand your repayment plans or to choose new ones.

Income-driven repayment plans, for instance, can make federal student loans more manageable if you’re working with a limited income. You might also consider the debt snowball or debt avalanche strategies so you can figure out which debts to prioritize. And if you have decent credit (or a helpful cosigner), look into student loan refinancing as a way to lower your interest rate and restructure your debt.

While student loans affect our lives in very real ways, there is always a light at the end of the tunnel. But you might have to overcome some huge hurdles before you’re able to act.

To take control of your situation, start by empowering yourself with knowledge and learning about your repayment options. And remember that your student loans don’t define you.

Regardless of where you are in your financial journey, you can find ways to make your student loans more manageable. Eventually, you can rid yourself of your student debt once and for all.

Rebecca Safier contributed to this report.

Interested in refinancing student loans?

Here are the top 6 lenders of 2021!
LenderVariable APREligible Degrees 
1.89% – 5.99%1Undergrad
& Graduate

Visit Splash

1.99% – 5.64%2Undergrad
& Graduate

Visit Earnest

1.99% – 6.84%3Undergrad
& Graduate

Visit CommonBond

1.91% – 5.25%4Undergrad
& Graduate

Visit Lendkey

2.25% – 6.53%5Undergrad
& Graduate

Visit SoFi

2.17% – 4.47%6Undergrad
& Graduate

Visit PenFed

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of Feburary 1, 2021.


2 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.


5 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: 1. Fixed rates from 2.99% APR to 6.99% APR (with AutoPay). Variable rates from 2.25% APR to 6.53% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.12% plus 2.38% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score.Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

6 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.