The Impact of Student Debt on the Millennial Mindset

The national student loan debt in America is at a record high of $1.45 trillion.

It’s an almost mind boggling number. And it becomes even more staggering when looked at another way: there are 45 million student loan borrowers in this country, each of whom owes an average of $27,975 in educational debt.

This colossal burden is weighing heavily on millennials in particular, many of whom report that the debt is having a significant emotional toll, according to a recent study.

A joint study from LendEDU and Laurel Road found that 74.3% of those surveyed feel stress related to the student loan debt on a daily basis. In addition, 55.6% admitted that they felt self-conscious or embarrassed by their student loan balance.

It should go without saying that living with stress on a daily basis is bad for one’s health over the long term. If this describes how you feel, take heart, there are ways to manage both the debt and the negative feelings. Here’s what the experts had to say.

Be Informed About Your Repayment Options

One of the initial and most important steps to take to address the stress associated with student debt is to be informed about your repayment options.

“If you’re struggling to make your monthly payments, there are ways to decrease the amount of money you put toward your student loans each month,” said Brandon Yahn, founder of Founder StudentLoansGuy.

Yahn’s top two suggestions include refinancing your loans at a lower interest rate, while keeping a similar repayment term length or for those with federal student loans, shift them to an income driven repayment plan (if your income allows for this).

It’s important to note however, that income driven repayment plans only apply to federal loans and could ultimately increase your overall debt, says Yahn, by stretching out the repayments over a longer period of time or increasing the amount of interest you pay, so be cautious and do your homework before choosing this option.

Develop a Concrete Repayment Plan

Numerous experts agree that the simple act of developing a repayment plan can significantly alleviate the emotions tied to student loan debt.

“To address the stress, the debt-reduction plan itself helps greatly because people see the debt going down month after month, which is very encouraging,” said Christine Luken, a money coach who is a member of the Financial Therapy Association and author of Money is Emotional: Prevent Your Heart from Hijacking Your Wallet.

That plan should include making paying student loan debt a priority. Many millennials have resigned themselves to the fact that they will always have student loans. This doesn’t have to be the case.

“I first have my clients tackle high interest credit cards, then use that freed up money to hammer away on the student loans, no matter what the interest rates are,” said Luken.

Financial Analyst, Dock David Treece, of FitSmallBusiness agrees, noting that he has seen financial clients benefit tremendously by formulating a detailed plan.

“Build out a detailed monthly budget and review it in-depth. Knowledge breeds confidence, so understanding more about your finances is the first step to resolving stress over outstanding debt,” said Treece.

Change Your Thoughts

Another technique Luken uses with clients is asking them to examine their their thoughts and language tied to money and write down all the negative ideas they have.

The goal of this exercise is to increase awareness surrounding your thoughts and change them to positives.

“So instead of saying things like ‘I’ll never pay off these student loans’ or ‘The balances never seem to go down,’ change these comments to positive statements that begin with ‘I’m the kind of person who…’ or ‘It’s normal for me to…,’ explained Luken. “For example ‘I’m the kind of person who always pays extra on my student loans and they’ll be gone in no time’ or ‘It’s normal for me to be debt free.”

The bottom line, our thoughts often become our reality, so keep those thoughts positive.

Don’t Ignore Your Debt – Own it and Address It

Debt resolution attorney Leslie Tayne says that one of the biggest issues people face when it comes to student loan burdens is the lack of control.

“People feel that their situation is out of control and that can beat you down mentally,” said Tayne.

You can conquer those feelings by taking control on various levels. For one thing, debt may be embarrassing. But don’t ignore it. Mitigate those feeling of embarrasment with the knowledge that you’re not alone, says Tayne.

“Look at how many people have debt, especially student loan debt,” Tayne continued. “Own it and look for solutions. Without solutions and a strategy, you’ll wallow in debt stress…Debt denial is never the answer and only makes the problem worse.”

Tayne suggests seeking out the help of a true professional who not only understands how to resolve debt but has your best interests in mind. And remember, it took time to get into debt and it will take time to get out.

Celebrate the Wins Along the Way

It can be defeating to work month after month making seemingly tiny dents in an enormous debt.

“Instead of focusing on the total amount that needs to be repaid, break it down into smaller more attainable near-term goals,” suggests Emily Shutt a certified life coach focused on financial empowerment for women. “So rather than saying ‘I can’t believe I have $100,000 in student loans to pay off. It’ll never happen’ Focus on something attainable like ‘I know I can put at least $5,000 extra towards my student loans this year.”

Or your goal might simply be to put an extra $100 each month toward student loans, said Shutt.

The important takeaway is that when you achieve manageable goals, celebrate the win.

“There are lots of free or low-cost ways to treat yourself so that you’re reminded you can have a life and take care of yourself while paying off debt,” said Shutt. “Self-talk is more important than people realize when paying off debt. If you see yourself as capable and dedicated, you’ll show up differently than if you see yourself as a victim or a loser.”

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14 days.

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