Heavy Student Loan Debt = Depression?

How many student loans do you have? What is the total of your college debt so far? If you’re not a college student (yet) do you plan on borrowing to help pay for your education? Why do you need to take note of the amount of college loans you have? [Why all the questions?]

Let’s take a look at the facts about student loan debt in the United States:

– According to the Wall Street Journal, the class of 2014 is “the most indebted ever“ … As college graduates in the Class of 2014 prepare to shift their tassels and accept their diplomas, they leave school with one discouraging distinction: They’re the most indebted class ever.

The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of web sites about planning and paying for college. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago.

In 1994, less than half of all college graduates left school with student loan debt.  Today, it is over 70 percent.

Approximately 15 percent of graduate and professional school students leave school with student loan debt balances in the six figures.

At this point, student loan debt has hit a grand total of 1.2 trillion dollars in the United States.  That number has grown by about 84 percent just since 2008.

According to the Pew Research Center, nearly four out of every ten U.S. households that are led by someone under the age of 40 is paying off student loan debt right now.

The median net worth of young households that have student loan debt is 20 percent lower than the median net worth of young households that do not have any student loan debt and that are led by someone with only a high school education.

Among college educated people, the median net worth of young households that do not have student loan debt is seven times higher than the median net worth of young households that do have student loan debt.

student loan debt sign

In 2008, approximately 29 million Americans were paying off student loan debts.  Today, that number has ballooned to 40 million.

Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined … The problem developing is that earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.

According to CNN, 260,000 Americans with a college or professional degree made at or below the federal minimum wage last year.

Even after accounting for inflation, the cost of college tuition increased by 275 percent between 1970 and 2013.

Debt for law school students has risen dramatically over the past decade or so … J.D.s certainly don’t come cheap. It’s almost unheard of to attend law school without taking out significant loans. What’s more, the average debt load is mounting: in 2001-2002, JDs borrowed on average $46,500 at public law schools and $70,000 at private law schools; by 2011, those numbers rose to $75,700 and $125,000, respectively.

Last year it was being reported that 34.9 percent of all student loan borrowers under the age of 30 are at least 90 days behind on their student loan payments.

One survey found that 27 percent of those with student loan debt moved back in with their parents after college.

Another survey found that 70 percent of all college graduates wish that they had spent more time preparing for the “real world” while they were still in school.

Student loan debt is causing many young Americans to delay getting married.  The following is from a recent NBC News article … While there is no specific data on student debt-related delays to marriage, a recent study by the Pew Research Center shows that a record number of Americans have never married. The study found the median age at first marriage is now 27 for women and 29 for men. In 1960, the median age was 20 for women and 23 for men.

Many Americans are not even using most of their student loan money to pay for college.  Instead, many are using much of that money to pay bills or stock the fridge … Take Ray Selent, a 30-year-old former retail clerk in Fort Lauderdale, Fla. He was unemployed in 2012 when he enrolled as a part-time student at Broward County’s community college. That allowed him to borrow thousands of dollars to pay rent to his mother, cover his cellphone bill and catch the occasional movie.

Only 28 percent of Americans know that the U.S. government can garnish wages and withhold tax refunds if student loan debts are not repaid.

It should come as no surprise that the delinquency rate on student loan debt in this country is far higher than the delinquency rate on mortgages, auto loans and credit card debt.

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I have to admit that the above list of facts is a significantly sobering review of the student loan debt situation. The next consideration, beyond the incredible financial burden this debt puts on students, is the psychological consequences of such a situation. This aspect has been studied and the findings are what you might expect: student loan debt is linked to poor mental health in young adults.

We already know that student loan debt can have adverse effects on borrowers, from not being able to purchase a home to dinging credit reports. But a new study claims there’s also a link between the piles of debt and poor mental and psychological functioning among young adults. A University of South Carolina study determined that students weighed down by loans were more likely to exhibit signs of depression and stress.

The study, which was published in the January edition of Social Science & Medicine, examined the link between student loan debt and psychological functioning for more than 4,600 American 25- to 31-year-olds and currently enrolled U.S. students. According to the report, both “occupational trajectories” and “health inequities” were negatively impacted among students with student loan debt they can’t repay.

The study’s author, Katrina M. Walsemann, suggests that extreme debt is causing young adults to delay decisions regarding marriage and children, as well, as causing some to deviate from their chosen career path. “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,” Walsemann says.

The study was based on two questions: What is the association between the cumulative amount of student loans borrowed over the course of schooling and psychological functioning when individuals are 25–31 years old? And what is the association between annual student loan borrowing and psychological functioning among currently enrolled college students?

Researchers found that financial strains have a measurable mental and physical effects on people from all socio-economic backgrounds. Walsemann found a direct link between stress, anxiety, hopelessness, and sometimes depression and the amount of debt accumulated by students. On average, the higher the debt amount, the more likely a student or ex-student was to suffer from mental illness.

The study notes that certain participants who were raised in poorer families or who had already experienced significant amounts of emotional instability in their lives were more capable of coping with the mental setbacks. “Those who are able to enroll in college despite their early-life disadvantages,” she speculates, “may be in better mental health or possess personality characteristics that increase their odds of attending college, such as being future-oriented or highly motivated.”

In a related article, How Are Student Loans Affecting the Well-Being of Young Adults?, Newswise notes:

When it comes to what stresses out young adults, student loan repayment is often at the top of the list. As annual student loan borrowing has become increasingly commonplace in the United States, the question of how the burden of a large loan looming at the beginning of independent adulthood affects the mental health of young people is one that has not been looked at until recently.

Researchers at the University of South Carolina and the University of California, Los Angeles posed two questions: What is the association between the amount that students accrue during undergraduate studies and their mental well-being post graduation, when they are between the ages of 25-31; and what is the association between annual student loan borrowing and the mental well being of currently enrolled students?

In the first nationally representative study to specifically look at the effects of student loans on health, lead author Katrina Walsemann set out to examine the relationship between student loans and early adult mental health. Using data from the National Longitudinal Survey of Youth 1997, a nationally representative sample of young adults in the Unites States, researchers found that those who had higher amounts of debt incurred from student loans reported higher levels of depressive symptoms, even with adjustments for parental wealth, childhood socioeconomic status, and other factors …

… There is still further research to be done, Walsemann notes, especially regarding student loan debt and the possible spillover effects into other life decisions, such as occupational choices or delaying marriage and children, and other health inequities.

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There appear to be three lessons here:

1. Try to avoid “easy” financial aid. That is, don’t choose to borrow easily and quickly available funds when other options may be available, such as merit-aid scholarships, family resources, and even part-time work. The classic claim, “I worked my way through college” is sometimes reasonable and attainable.

2. Be alert for signs of depression. While in college, if you find yourself losing interest in your work, your well being, and your social life, seek out campus resources, such as mental health counseling, which may be able to help you pinpoint the sources of your downturn. There is no shame in seeking help for an increasing case of the blues.

3. Consider cost-effective higher education. One way to bypass the consequences of heavy student loan debt is to take a path that leads through lower-cost schools. Starting at a community college and then transferring to a public university can save many thousands of dollars and perhaps even eliminate the need for loans altogether. You don’t need to pay for a $60-75,000-per-year college to be successful and happy in life!

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