Education Loan Stress
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Education Loan Stress
Introduction
The increase in the cost of Higher education in America is an issue that has resulted in the upsurge of student’s debts. College students with huge loans are likely to be stressed out as they face the scary fact of loan repayment. During graduation sessions, millions of students, together with their friends and family, celebrate despite the fact that they have an overwhelming hook of loan repayment. As much as the loans enable students to advance their studies, they are stressed out as the repayment process adversely affects their future earnings. Nevertheless, studies show that financial issues are the major cause of stress in America (Tran, Lam, and Legg, 2018). Student loans, just like any other financial issue, can cause isolation, depression, loss of motivation, fatigue, headaches, sleeplessness, and tension. Huge loans can predispose students to depression as the ones who graduate with more depts mostly suffer from depression. According to Cilluffo (2017), college graduates with impending student loans are likely to struggle financially than those with no loans. Attaining financial stability while repaying the student’s loan has proven to be a great hustle to the postgraduates as it strains them financially. Financial challenges related to loan repayment continually stresses students to a point where it interferes with their performance. Ultimately, educational attainment is a great achievement; however, students should minimize the number of loans they receive as it directly affects their future stability. While applying for the loans, students are advised not to take loans that supersede their expected salary in the first year of employment. Understanding more about stress related to student loans is essential as it helps us realize the extent to which the loans result in stress-related issues.
Causes of Stress Related to Students Loans
The student loan is a complex topic that highly results in stress and anxiety. The loans stress students, as most of them leave colleges with huge debts that they cannot repay comfortably. The students who have not yet graduated also encounter stress as a result of fear of the unknown. The non-graduates see how their seniors who have graduated are struggling to repay their loans and that though stresses them out (Dori, 2019). Fear of the unknown can be a dangerous stress causal factor that can lead to depression. Moreover, most of the students fear the unknown as they lack adequate knowledge concerning the loans. Student loans are complicated, and many students lack knowledge on the terms of the loan, the repayment process, the interest it earns, delinquency, and the repayment period (Dori, 2019). Lack of information predisposes the students to stress as they are always thinking of the worst even as they spend the loan. Furthermore, the students feel overwhelmed when they think of the underlying stress of repayment. The thought of having huge debts also brings about anxiety, as they fear facing their debts. Financial issues are complex, and they are the major causal factors of stress. Students worry too much about why the cost of education is huge to a point where they have to take enormous education loans. Reducing the general cost of education can reduce student stress, and they will not have to worry about loans. Loans are very delicate, and students have to make the various decision that affects their general life and their future.
Subsequently, the loans cause stress, as students are concerned about the financial mistakes they have made and the ones they are yet to make. Loans are a very crucial topic, as it requires high levels of discipline. Paying for a loan, which one cannot account for, is devastating and can lead to stress. Apart from paying school fees and accommodation, students use the loan in some ways that they cannot account for clearly. Financial mistakes are, at times, inevitable, and the students are stressed as they are already stuck to the issue of taking too many loans (Dori, 2019). Similarly, students end up worried as they are stuck to monthly loan repayment, the rising interests, and the fact that they will have to refinance the loan. The fear in students is dangerous as it causes paralysis as their actions are frozen. Unfortunately, some students use the loan to finance their lifestyles and engage in dangerous activities such as drug abuse (Dori, 2019). After receiving the loan, some students feel like they have made it in life, and they end up partying like it is the end of life. Further, the students who use the cash to buy drugs end up stressed, as they will have to pay the money they used wrongfully. Repaying for a loan, which one cannot account for, is stressful, and the feeling can devastate students to a point where they sink into depression. Before awarding student loans, the facilitators should consider offering financial education to avoid financial mistakes.
On the other hand, student loans and personal finance issues are deeply personal, and some students feel embarrassed because of their debts. A loan can be a secrete shame that a student deals with to a point where it results in stress (Baker and Montalto, 2019). Most students strive for perfection, and they do not want their peers to notice their weaknesses. Some students are stressed because their loan applications can be rejected, while some are worried because their peers will ridicule them for the failed attempt. The fear of ridicule is real, and it has the potential to lower the students’ self-esteem. Similarly, students feel that the lenders will laugh at their application as they have little income, low credit score, and huge loans (Dori, 2019). Some worry to an extent where they fee that the lender will judge their financial habits and mistakes. Students care about other people’s perceptions about them, and that is why they end up being stressed as they fear that people will know that they are suffering from loan burden. Furthermore, students are stressed, but they fail to trust their lenders who place their profits and business ahead of the borrower’s interest. Trusting lenders is difficult, as you cannot know of their next move. The websites that advise students on loans can also not be trusted as they promote loans and benefit from the loan repayment. Some students feel that as much as the lenders are helping them attain education, they are benefiting more from the interests attached to the loans.
Impact of Loan Stress on Academic Performance
The rising cost of higher education has predisposed American students to stress that negatively influenced their academic performance. Some students have reacted to the high cost of education by working for extra hours to meet their needs. Instead of taking huge loans, the students have decided to work harder to substitute their loans. Unfortunately, the extra work hours have a negative impact on the students’ academic performance (Bennett, McCarty, and Carter, 2015). The extra hours strain them to a point where they become too tired to concentrate in class. The students also lack time to work on their assignments, and they end up performing poorly. Consequently, the loan stress in students drives them into finding other ways of earning extra cash. A study conducted indicated that students feel that financial stress negatively affects their performance (Bennett, McCarty, and Carter, 2015). Other studies also show that financially stressed students seek employment and work for longer hours to a point where they have less time to study (Bennett, McCarty and Carter, 2015). The stressed students who see employment are also likely to experience more hardships that may make them drop out of school. Moreover, the stresses students are likely to low motivation that may interfere with their interest in academics. Concentration difficulties are also likely to occur as some students fear the unknown to a point where their academic performance drops. The loan stress can also lead to memory loss that, in turn, interferes with the student’s performance. Students with poor memories are less likely to perform well as they may struggle to remember the learned concepts.
Nevertheless, loan stress can decrease students’ sleep, hence interfering with their ability to concentrate, solve problems, and listen in class. The poor learning behaviors associated with sleeplessness, in turn, interferes with the academic performance of students hence poor grades (Baker and Montalto, 2019). Sleep is vital in every person’s life, and the people who have an adequate sleep are the ones that are likely to perform well in their given tasks. Elsewhere, loan stress can increase students’ anger issues that may interfere with their ability to master learned skills. Stressed students are mostly frustrated, irritable, and they may suffer from social withdrawal. Angry students may be hostile to their fellow students and their instructors; hence they may have relational problems. Moreover, the angry students may end up focusing on their emotions instead of focusing on their studies. Anger issues may make the students experience difficultly in accomplishing their academic tasks hence a reduced performance (Baker and Montalto, 2019). Similarly, the stressed students’ negative grades may affect them negatively and decrease their ability to complete their studies. Therefore, students should develop ways of dealing with loan stress as it can adversely affect their academic performance.
Dealing with Student’s Loan Stress
Attaining financial literacy is a great move that can help in reducing loan stress among students. Financial training helps students understand their finances better and provide them with the information they can use when taking action concerning their loans (Fan and Chatterjee, 2019). Proper understanding of how student’s loan function helps them in making more informed and smarter decisions. The training also helps students by increasing their awareness of debts and how to manage the stress that can come up as a result of debt. Financially literate students are in a better place as they can control their finances well due to their financial control knowledge. Ultimately, most students become stressed as they are not adequately educated on financial management. The majority of students end up being worried about their loans as no one educated them on managing their finances. Even though parents are not financial experts, they can train their children in colleges on financial management. Studies show that students who received financial training from their parents are less likely to be stressed as compared to the ones who were not trained (Fan and Chatterjee, 2019). Additionally, student borrowers find themselves stressed as no one gives them the information needed to make good financial decisions. Loan providers only care about dispatching the loans without thinking about the psychological stress that the students may go through. Loan providers and policymakers should consider educating students as some of them are still young, and they can make major financial mistakes. Therefore, the loan provider should consider training students as educated borrowers are at a better place to make wiser financial decisions.
On the other hand, financial education is more effective when done early enough before awarding students the applied loans. Studies conducted by Britt, Ammerman, Barrett, Jones (2017) indicated that students with loan stress who did not seek early intervention are likely to drop out of school. Financial stress plays a huge role in increasing the likelihood of students from discontinuing school. Peer counselors can offer the help students need in reducing stress; however, timing is an important factor. Most of the students who resort to financial counseling do that when it is too late, and hence they end up not benefiting from the therapy (Britt, Ammerman, Barrett, and Jones, 2017). Students should consider seeking early intervention for financial counseling to be effective. Elsewhere, financial stress is linked to health concerns such as depression and anxiety. Mental health issues in students associated with loan stress should not be ignored, as they are the most proximal health concerns. Models of stress coping underscore that stress cannot guarantee aversive health outcomes because adaptive coping disrupts the link between stress and health (Tran, Lam, and Legg, 2018). Social support is a good coping resource, and it can help students in overcoming their loan stress. Moreover, social support acts as a good buffer against chronic difficulties and stressful events. Students should consider having good social support systems as it may help them in overcoming loan stress.
Tracking loan spending can help in reducing loan stress. Students who fail to track their spending end up misusing their loans most of the time. A great way of tracking spending is by getting a receipt after every spending, writing down the amount spend, and the exact purpose of the spending (Dori, 2019). After writing down the spending, students can transcribe the information on a spreadsheet or their money management program of choice. Elsewhere students can write down their needs and indicate the mandatory ones and the others that are discretionary. Students can ignore their luxurious needs as they can always wait for the right time. Similarly, monthly calculations of the total spending are another great way to track one’s spending. Being aware of the amount spent in a month is essential as it helps the student know the rate of spending and future planning. The monthly financial report can also assure the students that all is well, reducing their stress. Subsequently, students should be keen to know more about their loans for them to avoid stress. More information on a loan gives students the power over their spending as they know that they will eventually repay it. The information that the students may need to know includes; the name of the lender, the interest rate, the due repayment date, type of interest, monthly repayment amount, amount owed, and the repayment plan (Baker and Montalto, 2019). Students should consider having that full information as it helps them in managing and planning their loans better. Therefore, students should understand their loans better as it helps them in reducing stress.
Furthermore, automating the loan repayment process is a great move in reducing stress. Automatic repayment allows the lender to receive the loan repayment directly from the borrower’s account. The automatic process is beneficial as it saves the student from problems related to late repayment (Creed, Sawitri, Hood, and Hu, 2020). The pinch of getting a lesser amount on one’s account is real, but it indeed reduces the burden of student loans. The automatic reduction is also key as it eliminates the constant thought of loan repayment. Having to pay the cash physically may be more stressful, and that is why students should consider automatic repayments. Nonetheless, students should avoid the habit of ignoring mails from the lender. Ignoring mails only increases stress as it cannot make the loan go away. The earlier the student starts the loan repayment, the better as late payment can interfere with one’s credit score. Furthermore, setting up money Mondays can reduce loan stress as the action improves one’s financial discipline (Dori, 2019). A small action taken on the day set aside, such as finding an extra income and cutting spending, can greatly improve a student’s finances. The financial resolution of setting aside a specific day is key, as the extra cash can help in loan repayment. Therefore, students should develop more financial discipline for them to repay their loans without stress.
Lastly, making extra repayments can help in reducing stress as it improves the student’s financial situation. The extra cash makes a huge difference, no matter how small it may be. The Snowball method of repayment is vital as it helps the loan balance decrease rapidly. The faster a student repays his or her loan, the closer they move towards financial stability. Watching the loan reduction process provides great relief, which improves students’ psychological health (Creed, Sawitri, Hood, and Hu, 2020). Students should save themselves from loan stress by repaying it as fast as possible. On the other hand, freezing one’s spending can reduce stress, as the borrower is able to take control over the amount they are spending. A way to freeze spending is by avoiding any extra spending and impulse buying. One can choose to have a no-spend holiday as it has the potential to increase their finances. The extra cash that one saves from freezing can be beneficial as it can reduce the loan balance. To successfully freeze spending, students can take their credit card, place it in a zip lock bag, submerge it in a container, and freeze it (Creed, Sawitri, Hood, and Hu, 2020). Freezing prevents one from using the card, as the process of thawing it is too long. Most people would prefer to give up on whatever they wanted to buy, as unfreezing is time-consuming. Therefore, students should develop active ways of controlling their finances for them to be at a better place to repay their loans.
In conclusion, student loans are vital, but they can cause stress and anxiety among students. Higher education costs are high to a point where some students have to depend on loans for them to survive and complete their studies. Fear of the unknown contributes to the stress, and the students think of the repayment process as scary and overwhelming. Nevertheless, the stress related to student loans is dangerous as it interferes with academic performance. Stress results in anger and sleeplessness, which interferes with the student’s concentration. Elsewhere, normalizing the current expensive cost of higher education is dangerous because the students are suffering psychologically. The cost of education does not have to be too high as students who cannot afford the cost end up having huge debts. The government should consider the matter and subsidize higher education costs for students to achieve great mental health. Moreover, students should also develop effective ways of dealing with stress to attain great mental health. The loan providers should also take the initiative of training students on financial management before awarding them loans.
References
Baker, A. R., & Montalto, C. P. (2019). Student loan debt and financial stress: Implications for academic performance. Journal of College Student Development, 60(1), 115-120.
Bennett, D., McCarty, C., & Carter, S. (2015). The impact of financial stress on academic performance in college economics courses. Academy of Educational Leadership Journal, 19(3), 25.
Britt, S. L., Ammerman, D. A., Barrett, S. F., & Jones, S. (2017). Student loans, financial stress, and college student retention. Journal of Student Financial Aid, 47(1), 3.
Cilluffo, A., (5). Facts about Student Loans, Pew Research Center (blog). August 24, 2017.
Creed, P. A., Sawitri, D. R., Hood, M., & Hu, S. (2020). Career goal setting and goal pursuit in young adults: The role of financial distress. Journal of Career Development, 0894845319897136.
Dori, Z. (2019) How To Reduce Student Loan Stress. Savingforcollege.com
Fan, L., & Chatterjee, S. (2019). Financial socialization, financial education, and student loan debt. Journal of Family and Economic Issues, 40(1), 74-85.
Tran, A. G., Lam, C. K., & Legg, E. (2018). Financial stress, social supports, gender, and anxiety during college: A stress-buffering perspective. The Counseling Psychologist, 46(7), 846-869.