47% of Graduates Say Student Loan Debt Affects Mental Health

If student loan debt is keeping you awake at night, there are three things you need to know. Firstly, you aren't alone—almost two-thirds of the graduates we surveyed said they felt overwhelmed by their financial situation. Secondly, there are steps you can take to get your educational debt under control. We’ll cover a number of them here. It starts with understanding your options and making a plan.

Thirdly, your education was an investment—even if your finances feel stressful now. It’s hard to quantify the value of learning or the connections you build at college. Education can open doors to new careers and opportunities. Plus, various studies show that graduates earn more than non-graduates on average.

Student loan debt statistics

The national student loan debt in the U.S. stands at $1.62 trillion, per 2024 data from the Federal Reserve Bank of New York. Today’s students get a higher percentage of their funding from grants than they did ten years ago. Research from the College Board shows grants made up 67% of undergraduate student funding in 2023-24.

Even so, about 1 in 4 American adults under 40 have student loan debt. Data from the Pew Research Center shows that the amount people owe depends on their education level. Borrowers with postgrad degrees are much more likely to owe more than $25,000 than those who took some college classes, for example. 

In a recent Freedom Debt Relief survey, we asked over 1,500 Americans to tell us how student loans have affected their health and emotional well-being. Here’s what they said:

When you’re up against so much student loan debt, it’s easy to feel defeated. Thirty-one percent of graduates surveyed believe they won’t be able to pay back their student loans in their lifetime. It’s understandable, especially with the economic rollercoaster we’ve experienced in recent years. But you don’t have to manage that overwhelming debt alone. Here are some tips to help you manage your student loan debt.

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Make a student loan debt repayment plan

If student loan debt impacts your mental health, having a plan can help you feel more in control. 

Start by making a list of all your loans, including the loan type, rate, and monthly payments. Then you can decide how you’re going to tackle them.

There’s power in having everything on paper and knowing where you stand. 

If you don’t already have a budget, create one. Use an app or recent bank statements to look through your income and expenses. It'll show you where your money goes, and you can use it to figure out how much you might be able to realistically repay. 

Try to set small and achievable goals. Then, create reminders and build them into your calendar. Most importantly, decide how you’ll celebrate each milestone. Look for inexpensive ways to treat yourself, like a meal with friends or a movie at home, as these make the repayment journey less painful.

Find out whether you are eligible for student loan assistance or even forgiveness

Student loan payments are often excluded from bankruptcy proceedings. This is because you’d need to prove loan repayments would cause what’s called “undue hardship.” This can be difficult to do. 

However, there are a few forms of student loan forgiveness that could wipe out at least some of your balance. You may qualify if you: 

• Work for the government or a nonprofit organization

• Work as a teacher, nurse, doctor, or other medical professional

• Have served, or are currently serving, in the military

• Earn a low income in proportion to your loan repayments

Student loan forgiveness programs are a bit of a political hot potato. Keep tabs on what the current administration is promising, and realize that things could change.

Sign up for automatic student loan debt payments

Autopay can reduce stress because you don’t have to remember to manually make loan payments. It’s also easier to sleep at night when you know you won’t miss payments and risk late fees. You can usually choose what day the payment leaves your account.

Even better? Autopay could save you money. Many lenders will give you a 0.25% reduction in your interest rate when you sign up for autopay. With interest rates, every little bit helps. It won’t impact your monthly payment much, but it'll shrink the total loan cost. 

One downside of automatic payments is that you need to be sure there’ll be enough in the bank to cover the payment. It can be easy to overdraw, especially if you have a lot of automatic payments. Check your bank account balance and transactions regularly for errors and so you know you have funds to cover any automated transfers.

Seek employer loan repayment assistance

Find out whether your company offers any form of repayment assistance. For businesses, it can be an attractive employee perk. Even more so since, until the end of 2025, companies get tax benefits on those repayment benefits.

Your employer might offer to make regular contributions to the loan balances of full-time employees. Some give lump-sum incentive payments to new starters. In some companies, you can also swap your unused paid time off for student loan payment money. 

It’s worth consulting your manager or human resources department to find out whether your company has any assistance programs in place. 

Consider student loan refinancing

When you refinance your student loans, a lender takes your loan or loans and combines them into one loan. It's a form of debt consolidation. You may be able to reduce your interest rate—lowering the total cost of the loan—and work out a different repayment schedule. If you have multiple loans, it can be much easier to keep track of just one monthly payment.

A longer loan term might reduce your monthly payment, but it'll cost you more in interest over the course of the loan. If you need to free up cash to pay other bills or expenses right now, that may be the right move. Compare options from multiple lenders. Be sure you’re talking to lenders who do a soft inquiry on your credit (one that won’t hurt your score). When you choose a loan and submit an application, they’ll do a hard inquiry and you could temporarily lose a few points.

There could be consequences to student loan refinancing. For example, if you consolidate federal loans with a private loan, you could become ineligible for the student loan forgiveness and income-driven plans we talked about above. 

Consolidating federal student loans with a federal consolidation loan protects your benefits. 

Tackle your other debt

Not all debts are created equal. If you’re figuring out how to get out from underneath them, it’s good to understand how each one works. For example, if you have high-interest debt like credit card debt, you might prioritize those payments.

Don’t think of your student loan in isolation, even if the balance is higher. Look at the interest rates, consequences of late payments, and how each loan works. Then, you can decide on a repayment strategy that suits you—which might be focusing on the balance with the highest interest rate first. 

Consider student loan debt settlement

Debt settlement involves negotiating with your creditors to settle your debts for less than you owe. You can do it on your own or get a debt settlement company to work on your behalf. Freedom Debt Relief could help negotiate some private student loans, but not federal student loans. Debt settlement is for someone who intended to fully repay their debts, but now can’t. If you’re struggling or you’ve already fallen behind and don't know how you’ll catch up, it may be worth investigating. 

Don’t ignore your student loan debt

Our study shows a strong connection between student loans and mental health. Thankfully, there are ways you can deal with your debt and start building a different financial future. Start by understanding how your debts work so you can make a plan to pay them down.