Understanding The Impact Of Financial Stress In College Students
College is often portrayed as a transformative experience filled with learning, self-discovery, and new experiences for students. However, in recent years, financial stress has often overshadowed pursuing higher education. The weight of tuition fees, living expenses, and growing student debt can turn college into a source of anxiety for some students and, in turn, jeopardize their academic success and mental health.
By understanding the challenges financially stressed students face, faculty may explore ways to alleviate their burden and pave the way for student success. Below, analyze the impact of financial stress on college students, its causes, consequences, and potential coping mechanisms.
What is financial stress?
Financial stress arises when individuals experience ongoing anxiety or concern about their financial situation. This type of stress often stems from insufficient money to meet basic needs or the pressure of mounting debt. In addition, the body’s stress response can lead to sleepless nights, difficulty concentrating, and strained relationships. For college students, the added stress of navigating financial challenges during a pivotal stage of life can have long-term repercussions.
Understanding stress in college students
While college is typically intended to serve as a path toward self-exploration, higher education, and career building, college students have notoriously faced significant stressors. Academic demands, social pressures, and pressure to plan for the future often create anxiety. In recent years, growing financial concerns among first-generation students have exacerbated these stressors, making it difficult for them to focus on their studies and maintain mental health and staggering incoming college students’ mental health. One report highlights the significant financial stress faced by college students in the U.S. The survey of 1,500 students from diverse backgrounds revealed that financial instability is a major barrier to academic success and retention. In addition, these factors may impact students’ college enrollment decisions.
The impact of financial stress on college students
Financial stress can be an overwhelming concern for many college students, affecting more than just the wallet. Its profound impact on academic performance and well-being reveals underlying issues within the current higher education system as a whole. Below are a few of the effects of financial stress in the U.S.
The cost of higher education
The cost of attending college has been on the rise in recent years, creating a significant financial burden for students and their families. The expenses associated with higher education can become overwhelming, from tuition and fees to textbooks, housing, and daily living expenses. Many students decide to rely on loans, which may add to their long-term financial concerns and create a cycle of debt that can persist for years after graduation.
Financial stress in college students
- 57% of students reported having to choose between college expenses and basic needs.
- 61% of students said financial stress negatively impacted their academic performance.
- 78% of students noted adverse effects on their mental health due to financial pressures.
The state of financial aid in higher education
Financial aid plays a critical role in college decisions, with 76% of students stating that the amount of aid influenced their choice of school. However, the current financial aid system often falls short of meeting students’ needs, leaving many to rely on loans that result in years of debt repayment. Additionally, though financial aid is intended to make higher education accessible, the process is often complex and challenging to navigate. Notably, 92% of students said they would likely seek other, less favorable options after a two-month wait.
College debt and financial aid statistics
Below are more key statistics on financial aid, college debt, and financial stress:
- Recent research from 2024 found an estimated 30% of students drop out of college, citing financial uncertainty as the leading cause.
- According to the Pew Research Center, the median borrower with outstanding student debt owed between $20,000 and $24,999 in 2023.
- Nearly 60% of students have considered dropping out due to financial stress.
- One report found that 78% of students believe financial stress has negative impacts on their mental health.
- Another 61% of students said financial stress harmed their academic performance.
Finding work after graduating
The pressure to find a job after graduation is often heightened for students burdened by financial stress. Many graduates face a job market that may not immediately offer the salary needed to repay student loans. This situation can perpetuate a cycle of financial insecurity and stress.
For financially stressed students, the stakes may be higher. The need to start repaying loans immediately after graduation can limit their career choices, leading to prioritizing income over passion. This choice might lead to underemployment or working in fields unrelated to their degree, further exacerbating dissatisfaction and stress.
The impact on students and broader implications
Financial stress has far-reaching consequences for students’ mental and physical health. Studies show that persistent financial concerns can lead to anxiety, depression, and unhealthy coping mechanisms. Students may also make risky financial decisions or drop out of college, limiting their future career prospects and earning potential.
On a broader scale, financial stress among young adults, particularly Gen Z and Millennials, is a widespread issue driven by inflation, high home prices, student loan debt, employment uncertainties, and the lingering effects of the COVID-19 pandemic. A 2023 Deloitte survey revealed that 46% of Gen Zs and 39% of Millennials feel stressed or anxious most of the time, with the cost of living being their top concern. For society, addressing student financial stress may be a matter of compassion and an investment in the future. Individuals can create a brighter, more equitable future for all by supporting students in pursuing higher education.
Below are more key statistics to keep in mind about college students and finances:
- A report from Harvard University found that more than half of young adults stated that financial worries were negatively impacting their mental health.
- Two-thirds of young adults believe buying a home will become more challenging or impossible in the future.
- One in three young adults currently lives at home, often leading to conflict and isolation.
- Unhealthy coping behaviors, such as substance use and compulsive spending, are common among financially stressed young adults.
Coping with financial stress in college
Managing financial stress requires a proactive approach that combines practical strategies with emotional support. Below are some ways to start seeking support and coping with your financial challenges:
- Look for resources: To reduce education costs, apply for scholarships, grants, and work-study opportunities. Research community colleges or online programs that offer lower tuition rates.
- Create a budget: Track income and expenses to better understand your financial situation. Prioritize essential expenses like rent, food, and tuition while cutting back on non-essentials.
- Build financial literacy: Take advantage of financial literacy programs offered by your college or online platforms. Learn about student loans, interest rates, and repayment options to make informed decisions.
- Seek support: Talk to a financial aid advisor to explore all available resources. Join student groups or forums to share experiences and tips with peers facing similar challenges.
- Practice self-care: Engage in stress-relieving activities like exercise, meditation, or hobbies. Maintain a healthy work-life balance to avoid burnout.
Seeking affordable education resources
Financial aid resources are often essential for students seeking financial stability during and after college. To reduce education costs, students can apply for scholarships and grants through tools like the Federal Student Aid (FAFSA) and state-specific financial aid programs. Work-study opportunities are available through FAFSA, which allows students to earn money while in school.
Creating a budget and tracking expenses can be crucial for incoming college students. The Consumer Financial Protection Bureau (CFPB) offers budgeting and financial planning resources tailored to students. Many colleges also provide financial literacy workshops through student services, often supported by federal programs.
Understanding student loans can also be vital to long-term student financial success. The Federal Student Aid Loan Simulator helps students explore repayment options and manage debt effectively. Taking advantage of these government-supported resources can guide students toward academic and financial success.
How therapy can help
Financial stress can take a significant toll on mental health, leading to anxiety, depression, and hopelessness. Therapy can provide a safe space and a non-judgmental environment to express fears and frustrations about financial stress. Additionally, therapists can guide students through techniques to manage stress, build resilience, and challenge negative thought patterns.
For busy and financially stressed students, online therapy through platforms like BetterHelp can be an accessible and often more affordable option. These platforms often offer flexible scheduling, eliminate transportation costs, and can be as effective as in-person sessions. Many platforms also provide sliding-scale fees or discounts for students, making mental health support more attainable.
Takeaway
What are the effects of financial stress among students?
According to a 2021 study that surveyed students through focus groups, financial stress frequently impacts students’ abilities to perform academically. It also tends to affect their social lives, with students experiencing financial stress finding it challenging to connect with their wealthier peers.
What is the financial burden for college students?
Student loan debt can be a significant financial burden for college students. While scholarship aid and financial aid can help alleviate this burden, the overall financial aid process can be challenging to navigate. The amount of financial aid awarded to students may not always be enough to cover their expenses, which can lead students to take on jobs in addition to their schoolwork. One survey reported that more than half of college students considered dropping out of their college education due to financial stress.
What is the main cause of financial stress?
Financial stress can stem from a variety of sources. For undergraduate students, student loans and pressure to work while being a full-time student can lead to financial stress. For others, insufficient income, overwhelming debt, and problematic spending habits can contribute to financial stress.
How many students struggle to pay for college?
One report stated that around 35% of current students had considered dropping out in the past six months. Of that group, a little over half (54%) struggled to pay their monthly bills. With the financial aid process impacted by a problematic FAFSA rollout in 2024, additional issues may arise.
How many college students drop out because of money?
According to Sallie Mae, a student loan provider, 31% of “at-risk” students (students who have seriously considered dropping out) have thought about leaving school due to financial challenges. Often, students’ financial aid experiences greatly impact whether a student will drop out of higher education institutions due to financial reasons. A financial aid offer letter can empower student success by removing some of the financial burden of higher education.
Can financial stress cause trauma?
Financial stress can contribute to trauma and trauma-related disorders in some cases, with chronic financial uncertainty cited as a cause of financial trauma by an article in The New York Times. This relationship may be bidirectional; not only can financial instability contribute to trauma, but research suggests that childhood trauma can contribute to financial instability in adulthood as well.
Why do low-income students struggle in college?
Low-income students may struggle due to the direct and indirect costs of attending college. Direct costs largely consist of tuition, while indirect costs include housing, childcare, food, textbooks, and the institution’s current digital tools. In general, students expect technology to be a requirement, but purchasing a new laptop and other tools can be expensive.
While student account services like financial aid can relieve some of the burden of direct costs, it’s less common for them to cover indirect costs. Low-income students may have to work to make ends meet as they attend school, which can negatively impact their academic performance. In addition, working full-time may influence financial aid, potentially making the entire student lifecycle even more challenging to navigate.
What are the 15 stressors for college students?
College students face a variety of stressors. According to the American Psychological Association, these are the top 15 for those in grad school:
- Academic pressure
- Debt and finances
- Anxiety
- Poor school/work/life balance
- Family challenges
- Research responsibilities
- Burnout
- Lack of social support
- Depression
- Physical health problems
- Relationship problems
- Other interpersonal issues
- Loss or grief
- Teaching responsibilities
- Discrimination
Increasing student recruitment and improving college student retention may be possible if the role higher education institutions play in these stressors is addressed. When surveyed, students dropped out most frequently due to financial struggles.
What leads to anxiety in college students?
Anxiety can arise in response to many different factors. Some of the most prevalent are listed above and include academic pressure, financial challenges, and a lack of social support.
What are the most common mental health challenges in college students?
The most common mental health disorders in college students typically include depression, anxiety, and substance use disorders. Students who are impacted by these and other concerns may be able to access support directly through their colleges. Other options include connecting with local mental health professionals and attending therapy online.
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