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


At the height of my student loan journey, I was paying $900 per month towards my student loans while struggling to find work. All of a sudden, everything I had worked so hard for in school started to feel like it was out of reach. I wondered if my debt would ever pay off. At that time, my student loans were taking an emotional toll on me. I felt depressed about my debt and confused about my future.

Student loan borrowers have long known the emotional consequences of debt. However, a new study by researchers at the University of South Carolina and the University of California Los Angeles confirmed this with their findings.

In the first study of its kind, researchers looked at how student loan debt affects the mental health of borrowers. The not-so-surprising results stated that student loans lead to an increase in depression as well as stress. The authors of the study think that student loan debt may be so stressful for borrowers — especially for middle-class borrowers — because they are not eligible for help from the government and their parents aren’t able to significantly help them with their loans.

When I first found out about the study, I nodded my head, understanding completely. I felt validated. It wasn’t just me.

Paying off student loan debt is a journey that goes through many stages, and depression is just one of those steps. In my experience, dealing with student loans can be like a grieving process, akin to psychiatrist Elisabeth Kübler-Ross’ 5 stages of grief (denial, anger, bargaining, depression, and acceptance).

Here’s how I relate my student loan journey to the 5 stages of grief (and you might relate, too).

1. Denial

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

Denial is such a powerful emotion because it keeps us from facing the truth of the situation. I remember that shortly before graduating with my master’s, I created a 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 in student loan debt left, but I wasn’t ready to face the truth. I could not handle that amount. Denial much?

It’s really easy to be in this stage, yet it can do so much harm.

In this stage, it’s unlikely you know exactly how much you owe, what your interest rates are, who your lender is, or even when your due dates are. Denial embraces the adage “ignorance is bliss”.

Many borrowers will attempt to defer their loans in this stage, trying their best to ignore it for as long as they can. Unfortunately, loans will still be there, and their interest rates 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 starts to rear its head. When debt collectors start calling and emailing, and letters start arriving, anger can build up.

Anger at your lender, anger at your school, anger at society, and anger at yourself for taking the stupid loans in the first place. In this stage, many people tend to cast blame or feel irrational anger and jealousy.

I remember that I used to be so envious of my debt-free peers. The worst part about this stage is that anger is so unproductive, while also consuming a lot of energy. A person can get burnt out on anger while making no progress at all toward solving their problem. The worst part? Borrowers can end up alienating people around them.

3. Bargaining

When the anger subsides, an emotionally affected borrower might start to look for ways out of their situation and bargain with a higher power to help. 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. Loans aren’t easy to deal with, and while many people may have worked hard in school and feel that they deserve better than the burden of debt, it’s key to face the reality on our own and not look for others to save us or for magical, improbable solutions.

The sooner borrowers can do that, the sooner they can begin to make productive decisions toward dealing with 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 have detrimental effects on borrowers with debt affecting mental health as well as hindering their repayment progress.

Depression can often bring along its best friend, apathy too. This duo can make even the simplest tasks seem overwhelming. It’s hard to get ahead when you just stop caring, much less find the resolve to work at paying down your debt.

Relating back to the aforementioned study, depression and stress can go hand in hand. Student loan borrowers may be worried about how they will pay it back, how their loans affect their future goals, and 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

In the final stage, after walking through an array of emotions, borrowers come to terms with their student loan debt. They accept the fact that it won’t magically go away (sad, I know). In this phase, borrowers can look for a plan of action and learn to deal with their student loans, rather than deny them.

While student loan debt may be causing borrowers distress, there are options to make it better. Make some calculations and look at what repayment plan is right for you — should you focus on high interest or smallest balances? For those really struggling to make payments and have federal student loans, look into income-based repayment to help alleviate some of the burden. Borrowers should also consider refinancing, especially if they have PLUS loans, which are known to have hefty fixed interest rates.

So, while student loans do affect us in very real ways, there is some hope out there. But it starts with you. Empower yourself with information, know your rights, and look into other repayment options. And remember, you are not alone. You are not a loan.

Regardless of where you are in this journey, you can make it to the end and say goodbye to debt. And then you can totally just shake it off.

Do any of these stages look familiar? Have you ever felt any links between your debt and mental health?

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Published in Financial Goals, Student Loan Repayment