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The Psychological Effects Of Student Debt – Is Forgiveness The Answer?

Written by: Dr. Don Wood, PhD, Executive Contributor

Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.


There is no doubt that we are experiencing a widespread mental health crisis. It is becoming obvious, with research to endorse it, that mental health among young adults has become unsatisfactory. To make matters worse, access to treatment is in short supply.

Young tense woman looking biting a pencil while looking at her laptop.

Before the pandemic, statistics illustrated that rates of adult mental illness were on the rise. When adding in the isolation, grief, and anxiety brought about by Covid-19, it is not a surprise that rates for both adults and youth would increase. The world continues to feel uncertain and dangerous after almost two years of trauma for our nervous system.

When you add current stress into the mix, including student loan debt, the burden magnifies. Over forty-four million Americans have accumulated almost two trillion in student loan debt. The stress is lessened if that debt creates a degree providing a better than average income. Wasn’t that the point? Besides, the financial and psychological toll of the debt creates a lot of frustration, especially if the degree results in a piece of paper gathering dust on a shelf. This will have a profound impact on the borrowers’ life and well-being. Just because someone is making their monthly payments does not lessen the stress. In most cases, these people are making sacrifices, such as delaying a home purchase or taking on an extra part-time job. There are close to nine million of the forty-four million borrowers in default. This can result in consequences such as having their wages garnished and lowering of credit. Student loan debt can contribute to prolonged anxiety, stress, and feelings of shame.

The answer is not something therapy can fulfill. That would be just working on the symptoms. Studies and statistics illustrate that 1 in 14 borrowers contemplate suicide, and that number jumps to 1 in 8 for those who are unemployed. Is the answer just to wipe out the debt? That would provide relief for many individuals however, at the same time, anger and stress on those who have paid off their debt or never borrowed in the first place. The current administration has already cancelled $9.5 billion in student loans for permanently disabled borrowers. No one should have any issues with those types of assistance. During Covid-19, there was emergency relief for all borrowers to defer their payments, another type of assistance that was met with widespread approval. Now, the Biden Administration is presenting a plan to wipe out an additional $10,000 to $20,000 in debt per borrower. However, this is controversial for many Americans. It is certainly a divisive issue among the political parties. Democratic Senator Elizabeth Warren has called for as much as $50,000 in debt forgiveness. There are a few calling for total debt forgiveness. If these people had a calculator, they would soon come to the realization that it would account for more spending than the last 20 years of unemployment insurance benefits. According to the Federal Reserve, the average college debt among student loan borrowers in America is $32,731. For a lot of students borrowing money, it was easier to borrow the money than figure out how to pay it back. I hear a lot of people argue that the students got themselves into this situation, and it is their issue to deal with. The problem I see is the system and the pressure the system puts on young people to attend college. There is more emphasis on getting a degree than on what the outcomes will be from that degree. Most young adults graduating high school have no clue what they want to do for the rest of their lives. Most of them want to go and party, leave home and gain independence. How much thought is really going into their choice to go to college? Parents, school administrators, teachers, peers, and society exert a tremendous amount of psychological pressure on our youth to make a rather life-altering decision. This psychological pressure starts early and only gets more intense as they get older. Students with a definitive goal in mind, and a profession with a clear path can reduce some of this early pressure. However, they get saddled with a lot of debt that, in the beginning, seems benign. Years later, and under a pile of debt, reality sinks in. The entire system needs to be overhauled. Everything from how much colleges charge to the degree programs being offered. In addition, the system is also often confusing to navigate, creating confusion about how their loans work and what options are best for repayment. This confusion often leads to higher balances or other costly mistakes. There are students who find themselves on repayment plans tied to their income and, even though they make on-time payments every month for years, find themselves deeper in debt than when they started. Imagine the psychological pressure as you see the debt rising or missing payments and hurting their credit scores. This issue has been examined before. A lot of research has been accumulated on the public health impacts of mounting student loans. There was a study from 2015 by the University of South Carolina that illustrated the feelings of depleted health that occurred from accumulating student loan debt. Northwestern University did another study in 2013 and discovered significant diastolic blood pressure increases in students with mounting student debt, increasing the risks associated with hypertension and stroke. Another study conducted in 2020 reported over half of the graduates making monthly payments on student loans felt the debt affected their careers. One in four with these debts were working in jobs outside of their chosen field due to the debt.

We can debate whether loan forgiveness is right or wrong. What is not up for debate is the significant health care issues created by indebtedness. Chances are the solution is going to come in a typical government form, throw money at it. As we all know, that is not an answer. The solution should be comprehensive reform to the system. If we only knew where to get some really smart people to work on a solution like that? And there it is!

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Dr. Don Wood, PhD, Executive Contributor Brainz Magazine

Don Wood, Ph.D., author, speaker, Founder & CEO of the Inspired Performance Institute, and creator of the patented TIPP method. TIPP is a cutting-edge method inspired and developed through the newest developments in neuroscience and designed to clear away the effects of disturbing or traumatic events, repurpose old patterns and set the individual’s mind up for peak performance. In essence, it “REBOOTs” the brain’s stuck thought pattern, making it possible to enhance alpha oscillations with a noninvasive and effective shift in brain wave activity. Author of two top-selling books, Emotional Concussions and You Must Be Out of your Mind.



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