NEW YORK (MainStreet) — Student loan debt is one of the major sources of stress for young adults, according to a study from the University of South Carolina and the University of California, Los Angeles.
Researchers wanted to know the effects of borrowing tuition money on people who are beginning to strike out on their own. Will this affect their mental and emotional health? Student loan borrowing has become an enormous concern in the United States -- with more than $1.2 trillion current owed.
To understand the ramifications, the study took two approaches. First, the researchers wanted to know the correlation between the amount that students borrow while in college and their mental health after they graduate, around the ages of 25 to 31. The second was what association exists between annual student loan borrowing and the mental well-being of currently enrolled students.
This is significant because as of 2012 student loan debt was second only to mortgage debt among Americans. The net effect is a drag on the economy.
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According to data used 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.
“We speculate that the American middle class is suffering the most from post-graduation debt, since they do not qualify for governmental assistance, nor is their family able to take on the bulk of the costs associated with college,” said lead author Katrina Walsemann of the University of South Carolina.
Walsemann added that the researchers are also speculating that student loans are so stressful, in part, because they cannot be deferred. They also cannot be included in bankruptcy.
“They follow you for the rest of your life until you pay them off,” she said.
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O Debt, Where Is Thy Sting?
Other experts do not find the study's confirmation of psychological fallout from student debt all that surprising.
“There is every reason to think that this is true — many Americans who graduate with substantial student debts hanging over them do find it stressful," said George Leef, director of research at the Pope Center for Higher Education Policy in North Carolina.
The emotional toll student loan debt may encourage friendlier lending solutions, but Leef argues, it may call into question the worth of such borrowing in the first place.
“This study seems geared toward policies designed to lower the stress, such as income-based repayment and partial forgiveness of the debt," he said. "Instead, Americans should look at college borrowing more sensibly than many of them have in the past. Stop assuming that everyone benefits from a BA degree and that all such degrees are worth going into debt for."
He further advised that the high stress levels of those who have borrowed to excess should help others to avoid such mistakes.
Tolerable Levels to a Point
Claire Law, the founder of college process advice site EduAve.com, took a less critical tack. She believes if students have parental support and are borrowing only up to the federal aggregate limits, they should be able to handle the debt if they graduate.
“Undergraduate students can borrow only limited amounts, and generally graduate with about $27,000 of federal direct loans," she said. "This amount should be doable in a ten-year standard repayment schedule. Dependent students whose parents are unable to obtain PLUS loans often end up borrowing twice as much, in addition to other loans – and these students are more likely to struggle in repayment.”
But the less financial and emotional support a student has, the more susceptible he is to the perils of debt burdens.
“Students without parental support are more likely to drop out before earning a degree, and are more likely to suffer stress when they are not doing well in school,” she added. “These students may be working and studying at the same time, and the minute they get a bad grade may spaz out instead of staying the course. These are the students who are most likely to need more funding beyond the aggregate federal amounts and vulnerable to alternative loans.”
The true financial challenges begin to make every other challenge -- whether social or academic -- more difficult.
“College itself is a mental, social, emotional test for many students, especially if they find themselves at the wrong college, in the wrong situation or simply with a roommate they don’t get along with," Law said. "Add the worry about costs, and the mental well-being is eroded with the first test that comes back with a C,“ Law pointed out."
Proof, Meet Putting
A posting on StudentDebtCrisis.org, devoted to student debt problems, illustrates the challenge many young people face. Nick Crocker, a recent grad in Atlanta, has $124,226.15 of student loan debt, $97,000 of which is private student loans and 26,000 from Federal Stafford Loans. He attended Indiana University from 2003 to 2008, earned a Bachelor of Science degree in public affairs. After graduating he worked two jobs and had the loans in deferment and then in forbearance to help until he could afford the loans. For the past four years, he has been on a graduated repayment plan and had been paying $540 a month which only covers the interest. This past month his bill went up to $1,089 a month. That's pariticularly disheartening given that his take-home pay is around $2000/month.
"How am I supposed to save for retirement, a house, a family, anything on $911 a month?" he said. "Paying this bill would put me below the poverty line. This is where I am at now. I'm not sure where to proceed from here. I hope this bubble pops soon and this country is forced to come face to face with this issue."
The researchers of the effects of debt on stress say more studies need to be done. Walsemann noted that the possible spillover effects into other life decisions, such as occupational choices or delaying marriage and children as Crocker has seen, have to be studied more.
--Written for MainStreet.com by Michael P. Tremoglie