The graphs in this blog come from a recent report co-authored by the Pell Institute and The University of Pennsylvania:
In addition to the direct (tuition, room and board, cost of living) and “opportunity cost” (foregone wages) of attending college, there is mounting evidence that suggests there is an emotional / psychological cost associated with taking out student loans.
Despite the intense interest in this issue among researchers, this is the first paper that attempts to understand the emotional cost of carrying student loan debt. This question is, in fact, more fundamental than the others being posed in this genre of research, since it could help to explain the mechanism through which debt may be affecting other outcomes (i.e. emotional health, graduation rates).
Based on their analysis, the authors report, “cumulative student loans were significantly and inversely associated with better psychological functioning.” In other words, individuals with more student debt reported lower levels of psychological health, when other things are held constant (including occupation, income, education and family wealth). The effect is statistically significant, but it is quite small. They also find that “the amount of yearly student loans borrowed was inversely associated with psychological functioning,” which implies that taking on debt is emotionally costly for students.
Unfortunately, this emotional / psychological “cost” seems to be affecting a greater number of incoming college students:
High numbers of students are beginning college having felt depressed and overwhelmed during the previous year, according to an annual survey released on Thursday, reinforcing some experts’ concern about the emotional health of college freshmen.
The survey of more than 150,000 students nationwide, “The American Freshman: National Norms Fall 2014,” found that 9.5 percent of respondents had frequently “felt depressed” during the past year, a significant rise over the 6.1 percent reported five years ago. Those who “felt overwhelmed” by schoolwork and other commitments rose to 34.6 percent from 27.1 percent.
Not coincidentally, the frequency and magnitude of student loan debt has increased greatly during this period of increasing student unease and depression, according to data released by the NY Fed:
More U.S. students continued to borrow larger sums for their college education last year, according to data from the Federal Reserve Bank of New York, while total student loan balances tripled over the last decade.
At 43 million, the number of student borrowers jumped 92 percent from 2004 to 2014, while their average balances climbed 74 percent, according to New York Fed researchers. The average balance was some $27,000.
Obviously correlation does not prove causation. But given the logical link between debt, depression, and dropping-out of school, these trends cannot be purely coincidental–more research on the subject is needed.
“It’s a public health issue,” said Dr. Anthony L. Rostain, a psychiatrist and co-chairman of a University of Pennsylvania task force on students’ emotional health. “We’re expecting more of students: There’s a sense of having to compete in a global economy, and they think they have to be on top of their game all the time. It’s no wonder they feel overwhelmed.”
While I cannot speak personally about the burden of student loan debt, I have experienced depression first hand, and understand how being depressed could make one more likely to drop out of school.
Depression is particularly difficult to battle in a college atmosphere. The pressure to maintain a social life, despite anxiety and financial issues, can reinforce negative feelings associated with depression. The abundance of drugs and alcohol certainly does not help the situation either.
The general pessimism which accompanies depression compromises a person’s ability to clearly assess long term goals, such as completing a degree. Depression also affects ones cognitive abilities, hampering academic outcomes.
I can only imagine the pressure on someone who is both depressed and has student loan debt to consider; some combination of the two surely accounts for more low-income drop-outs than is currently recognized.
I had to take a semester off to get myself back in the proper state of mind to complete my degree; not everyone has this luxury. However, everyone should have the support needed to realize their educational and emotional potential.
Due to my personal experiences and knowledge of economics, I vehemently support President Obama’s proposed Community College plan. Lower income students could learn if pursuing a bachelor’s degree is “for them” without taking out tens of thousands of dollars in loans, likely leading to better emotional, educational, and economic outcomes.
Furthermore, community colleges are more likely to have the the social counseling and financial advising services missing from for-profit universities, which predominantly attract low income students.
The Obama administration is attempting break the vicious cycle of student debt, emotional suffering, and dropping-out of college. Dropping out of college with student loan debt in a competitive global economy is a poverty trap for low income individuals, and has become a drag on economic growth in the macro.
By expanding mental health parity through the ACA, getting treatment for depression is no longer a luxury reserved for the wealthy. If our lawmakers pass a free community college bill, the synergy between these two public policies would go a long way towards bringing equity to America’s higher education system and reinvigorating the American Dream.