How Conquering College Debt Can Make You Just as Happy as Getting a Raise

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

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Want to be happier? Paying down your student loan debts could help, according to a recent study from Purdue University.

Money is a major source of stress for Americans. In fact, money is the most common source of stress for American adults, according to the American Psychology Association’s Stress in America study released earlier this year.

Debt, in particular, can increase stress and hurt overall well-being, the Purdue University study found. In fact, college graduates without student debt are almost as likely to be happy as those with the highest incomes.

In other words, paying off student loans can make you happier — as happy as if you’d just been given a pay raise.

Student debt tied to stress and depression

“There has been a lot of research looking at whether and how income makes people happy in life,” said Louis Tay, an assistant professor of psychological sciences at Purdue University, in a statement.

“But few studies have examined whether debt can detract from happiness,” Tay explained.

The Purdue study found that debt commonly has significant, negative effects on well-being. These effects are more prominent with higher debt levels, lack of financial resources, and certain sources of debt.

The study also surveyed college graduates about their debts, income, and well-being. The results show higher incomes are tied to better well-being and life satisfaction.

Debt, on the other hand, correlates with more stress. And an overall worse sense of well-being.

“We found that carrying student loan debt is almost as important as income in predicting financial worry and life satisfaction,” Tay said.

Therefore, decreasing student loans will make you about as happy as getting a pay raise.

Another recent study from the University of South Carolina also found that student loans can be linked to higher levels of depressive symptoms.

“We are speculating that part of the reason that these types of loans are so stressful is the fact that you cannot defer them, they follow you for the rest of your life until you pay them off,” said Katrina Walsemann, the lead author of the University of South Carolina study.

Student loan stress can also worsen your work performance.

A survey from the Society for Human Resource Management found that financial stress had a negative impact on workers’ performance and productivity. Two-thirds of employers say their workers are struggling with debt, the most common source of financial stress identified in the survey.

The payoffs of paying off student debt

Many student loan borrowers struggle with repayment because many of them are facing payments they can’t afford.

A recent Student Loan Hero study found that in every state, student loan payments exceeded the threshold of affordability (equal to or less than 10 percent of disposable income).

But being proactive and effectively using financial resources to pay down student debt can help. What’s more, getting rid of student debts ahead of schedule can have big payoffs for your finances, well-being, and even health.

Increase cash flow like a pay raise

Every time you pay off a student loan, you’re also getting rid of a monthly payment. So it makes sense that paying down student debts would have a similar effect as getting a raise.

Essentially without this loan payment, you’re lowering your monthly financial obligations and increasing your cash flow.

For example, for every $1,000 you save on what you originally borrowed and repaid, you have an extra $10-12 dollars in your budget each month.

That’s equal to a gross pay raise of $13 a month. Or, $158 a year.

Check out our calculator below to see how much you could save on interest when you prepay your student loans, too.

Student Loan Prepayment Calculator

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Get a guaranteed return

Paying down student debt can also be looked at as a smart investment.

Prepaying debt has a guaranteed return of helping you avoid years’ worth of interest costs. And these savings, unlike returns on a stock portfolio, are guaranteed.

Improve emotional and physical health

Of course, the well-being benefits of paying off debt are significant, as well.

Paying off debt can provide immense emotional and mental relief. It can also improve your health and immune system, and lower your risk of ailments like headaches or high blood pressure, according to

Getting rid of debt and lessening financial stress can also help you perform better at work.

Achieving freedom from debt can allow you to focus more mental energy and willpower into your work. This, in turn, can increase your chances of earning a raise and advancing your career.

If you’re overwhelmed by student debt

Prepaying student loans is a worthy goal and one you should work towards.

But it’s also one that takes several months or years to accomplish. In the meantime, you should also focus on improving your mental health and lowering your stress.

Look ahead, one step at a time

First off, it’s important to know what’s not helpful or productive.

Feeling like a failure or beating yourself up over your debts doesn’t do anything to improve your situation. And it can increase your financial stress.

If you have student loan debts that doesn’t make you a failure, even if they’re really high. It makes you one of the 44.2 million Americans with student loans.

And maybe you’ve made some financial missteps along the way. But that’s also pretty typical and even normal. Focus on what you can do about it now instead of what you could’ve done in the past.

Don’t feel like you have to conduct a complete overhaul of your finances and debts overnight, either. Repairing your finances and building financial stability will take time.

It’s essential for you to start small, one step at a time. From making a get out of debt plan to reworking your budget, keep your efforts slow but steady. This will help you avoid burnout and create real financial change that can last.

Consider restructuring your student debts

If you are in danger of missing student loan payments or have already had issues making payments, that’s a sign that you might need to restructure these debts.

Luckily, there are a few options you can look into to help make your student debts more manageable.

Income-driven repayment plans can help if your monthly payments are too high, or your income is too low, for you to realistically pay them each month. Plans like Pay As You Earn (PAYE) can be used to reset monthly payments to match your level of income and costs of living.

And if you have decent credit, you could benefit from refinancing student debts through a private lender, like SoFi for example. You could find significant savings by securing a lower interest rate, and could also choose a repayment period that could lower your monthly payments.

Start Your SoFi Application Today

Take care of your health

Responsibly managing your debts can help lower your stress and make your debts feel manageable. That is an important step to lowering stress.

But there are other effective ways to manage stress and improve well-being.

Connecting with friends and family is one of the most effective stress-reducing behaviors, according to Psychology Today. Sufficient sleep and regular exercise can improve well-being and offset stressors like student debt.

So before you begin to feel overwhelmed by your student loan debt, take stock of all of your options and support systems. Then make a plan and just take it one day at a time.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderVariable APREligible Degrees 
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Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% 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 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% 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. 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. *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. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. 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. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit We also have several resources available to help the borrower make a decision at, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.