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Student Loans and Your Mental Health: The Causes and Treatment of Anxiety and Depression

Student loans can cause more than just financial strain. For many borrowers they can lead to serious mental health issues like anxiety and depression.

Written By: Michael P. Lux, Esq.

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Millions of Americans will resume payment on their federal student loans in just a few short months.

For some, making student loan payments represents an inconvenience or mild financial challenge. For others, student debt represents a seemingly unimaginable hardship, negatively impacting their mental health.

Regardless of where you fall on this spectrum, it’s important to recognize that there is a real connection between financial stress/debt and mental health. Understanding this connection is essential in preventing a student loan crisis from becoming a mental health crisis.

A Note from the Sherpa: I’ve got over a decade of experience advising people on student loan issues. However, addressing the mental health consequences of debt is a different matter.

From the numerous reader emails and interactions I have each day, there is no doubt in my mind that the burden of student debt is profoundly affecting many of you. 

I’m happy to provide a sympathetic ear and words of encouragement, but I also know it isn’t enough. For this reason, I felt compelled to take this deep dive into the connection between student debt and anxiety. Given the sensitivity and complexity of the topic, numerous experts and studies have been quoted throughout this article.

Mental Health Issues and the Connection to Student Debt

Millions of Americans face mental health issues. In the U.S., one in five adults lives with a mental illness, of which 7.8% experience major depressive episodes and 19.1% have anxiety disorders.1 More specifically, financial debt and loans are significantly associated with increased psychological distress and poor mental health status.2

In terms of total household debt, student loans are the second greatest contributor, behind only mortgages.3

Borrower surveys match these findings. One recent survey found the following4:

  • 56% of borrowers report anxiety due to student debt.
  • 32% of borrowers have dealt with depression caused by student loans.
  • 20% of borrowers have had insomnia attributable to student debt.
  • 17% of borrowers had a panic attached caused by their student loans.

Simply put, mental health issues are widespread, and student loans are a major contributor.

The Ways Student Debt Can Cause Anxiety and Depression

The mental and emotional stress of student debt doesn’t hit all borrowers the same.

Different aspects of student debt can drive borrower anxiety and depression.

The following stressors are items that all student loan borrowers have likely experienced at some point.

Monthly Payments/Bills/Collection Calls

One of the most frustrating parts about life with student loans is the constant reminders of the debt.

Borrowers often have multiple lenders and loan servicers. This means multiple payments must be made each month. It also means multiple bills arrive each month. For the borrowers who fall behind, it could mean multiple calls from multiple collection agencies.

Student loan borrowers are bombarded with reminders of their debt. In addition to the bills and alerts from servicers and lenders, many borrowers also consistently see student loans in the news and on social media.

Borrowers inundated with a steady diet of student loan stress may find that it eventually overwhelms them to the point of clinical depression or anxiety.

Situational Unfairness

There is an element of unfairness that hits some borrowers particularly hard.

First, there is the obvious unfairness. Children of the wealthy often finish college without any debt. Those from middle and lower-class backgrounds are the ones saddled with student loans.

Second, there are the less obvious sources of student loan unfairness. For example, women and black adults are more likely to have student loans and more likely to struggle to repay the debt.5

The borrowers who live with student debt due to circumstances out of their control may find life with loans particularly frustrating.

Mixed Messages and Lousy Guidance

One of the worst parts about life with student loans is the challenge of locking down reliable information.

Over the years, numerous borrowers have gotten incomplete — or outright wrong — information from their federal student loan servicers. This issue has led to lawsuits and federal modifications to student loan rules.

Additionally, federal actions to address the burden of student loans have created a maze of confusing and changing rules and standards. Complexity has become a significant issue.

Uncertainty in repayment for an overwhelming amount of debt is a recipe for borrower hardships, disappointments, and frustration.

Treating Depression and Anxiety Caused by Student Loans

This site and numerous others exist to provide guidance on subjects ranging from picking a repayment plan, earning forgiveness, refinancing debt, and pursuing a bankruptcy discharge.

Ideally, these tools empower borrowers to take control of their debt and feel secure in their financial future. Unfortunately, sometimes it isn’t enough.

For some, a student loan problem can contribute to a mental health problem.

According to the Mayo Clinic6, the following are signs that everyday stress may have reached the point of a disorder requiring some form of treatment:

  • Marked changes in personality, eating, or sleeping patterns
  • An inability to cope with problems or daily activities
  • Feeling of disconnection or withdrawal from normal activities
  • “Unusual” or “magical” thinking
  • Excessive anxiety
  • Prolonged sadness, depression or apathy
  • Thoughts or statements about suicide or harming others
  • Substance misuse
  • Extreme mood swings
  • Excessive anger, hostility or violent behavior

If you think there is even a chance that treatment could help, do it.

We know that seeing a doctor right away is critical for a broken bone, and we also know that an early diagnosis is beneficial in beating cancer. Likewise, early intervention in a mental health issue can be extremely beneficial.7

The National Institute of Mental Health has an excellent collection of resources available. These tools can help people explore whether or not therapy is right for them, and they also have contact information for emergency services.


  1. Mental Health America. (2020, October 20). COVID-19 and mental health: A growing crisis. Mental Health America. https://mhanational.org/research-reports/covid-19-and-mental-health-growing-crisis
  2. Ryu, S., & Fan, L. (2022). The Relationship Between Financial Worries and Psychological Distress Among U.S. Adults. Journal of Family and Economic Issues44(1), 16-33. https://doi.org/10.1007/s10834-022-09820-9
  3. Total Household Debt Reaches $16.90 trillion in Q4 2022; Mortgage and Auto Loan Growth Slows. Federal Reserve Bank of New York. https://www.newyorkfed.org/newsevents/news/research/2023/20230216
  4. The Financial and Mental Health Cost of the United States’ Higher Education Issues. ELVTR. https://elvtr.com/blog/a-failing-system-the-financial-and-mental-cost-of-the-united-states-higher-education-issues
  5. Kent, A., & Addo, F. (2022). Gender and Racial Disparities in Student Loan Debt. Federal Reserve Bank of St. Louis. https://www.stlouisfed.org/publications/economic-equity-insights/gender-racial-disparities-student-loan-debt
  6. Mental health: What’s normal, what’s not. Mayo Clinic. https://www.mayoclinic.org/healthy-lifestyle/adult-health/in-depth/mental-health/art-20044098
  7. The Importance of Early Intervention for People Facing Mental Health Challenges. The National Council for Mental Wellbeing. https://www.mentalhealthfirstaid.org/2021/06/the-importance-of-early-intervention-for-people-facing-mental-health-challenges/
About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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