This 34-year-old paid off $81,000 in student debt, but not before it took a toll on her mental health

Melanie Lockert, now 34, graduated from California State University of Long Beach in 2006 with an undergraduate degree in theatre. She had borrowed $23,000 while in school and took an administrative job at an arts nonprofit soon after.

“I was making the minimum payment on my debt each month, and I felt good,” Lockert said.

Three years after starting her job at the nonprofit, Lockert decided she wanted to go back to school and pursue further education in theatre. Soon enough, she was accepted into a one-year intensive performance studies program at NYU’s Tisch School of Arts.

“It was my dream school,” Lockert said.

She was offered over $80,000 in loans to cover tuition and rent, but she chose to only take on $58,000 for tuition. “The higher number scared me. I had savings and worked multiple jobs on the side in order to pay rent,” she said.

While at NYU, she continued to make payments on her undergraduate loans but graduated in 2011 with $68,000 of debt and no job on the other side.

“I was panicking,” Lockert said. “I had done everything millennials were told to do. I had gotten a master’s degree and gone to a prestigious school.”

The psychological effect of debt

The debt soon began to weigh on her mental health. “I’ve had mental-health issues in the past, but this made me feel so low and guilty. I was depressed and cried every single day,” she said.

Realizing she couldn’t pay rent in New York without a stable job, she moved to Portland, Ore. where her partner at the time lived. In Portland, she worked temporary jobs for $10 to $12 an hour and ended up on food stamps.

“I didn’t make a bad decision per se. I went to a good school. But at that point, I felt so aimless,” she said.

The financial burden of student debt is discussed often. Graduates who do take out loans leave school today with approximately $30,000 of debt. And multiple 2020 Democratic presidential candidates, including Bernie Sanders and Elizabeth Warren, have made canceling this debt a central component of their campaigns.

But student debt’s effect on mental health is often left out of the conversation. And this effect is very real, research suggests. Individuals who experience financial challenges in college are more likely to show signs of depression later on in life, according to a recently released study from the University of Arizona. The study researchers polled 208 University of Arizona students three times, once in 2010 during their fourth year of college, once in 2016 five years after college graduation, and once in between those years. The median age of the participants five years after leaving college was 27.

Individuals in the study who reported what the researchers defined as “good financial behaviors,” including “tracking monthly expenses, spending within a budget, responsible borrowing, saving, and investing,” were less likely to experience depression after college.

To assess depressive symptoms, researchers asked participants to rate how often they felt “unhappy, sad, or depressed,” how often they felt tired, and whether they lost appetite or overate when they felt upset.

“Managing your money well in your fourth year of college leads to lower symptoms of depression later on,” Xiaomin Li of Beijing Normal University, the lead researcher on the study, said.

But those who “manage their money well” can often do so because they have less debt, Katherine Keyes, an associate professor of epidemiology at Columbia’s Mailman School of Public Health, told MarketWatch.

“Financial instability is a strong predictor of mental-health problems,” Keyes said. “These students who are managing their money well in their final year of college and go on to have fewer depressive symptoms may also be students who have less debt or students for whom managing that debt is less of a burden.”

Other studies, including one from the University of South Carolina in 2015, have also found that high levels of student debt or financial instability can take a toll on mental health. And approximately a quarter of millennials say their student loans keep them up at night, according to a Charles Schwab

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survey.

Mental-health troubles can make life more expensive

To manage the depression and anxiety surrounding her student debt, Lockert began going to therapy in Portland.

“It helped, but it didn’t make my problems go away,” she said. Since she lived in Portland, she could see counseling students at Portland State University to save money. “They weren’t licensed, but they were one semester away from being licensed.”

Lockert spent about $5 per session, but that’s not the reality for most people. Therapy sessions generally can cost anywhere from $65 to $250, or more. For those with insurance, part of the cost will be typically be covered — but rarely all of it. “The effect can be compounding for those who already have a lot of debt to pay off,” Lockert said.

‘I made my last payment in December 2015’

While struggling to pay off her debt and working temp jobs seven days a week, Lockert started a blog titled Dear Debt in 2013 to document her journey. “I didn’t find anyone talking about mental health or emotions related to debt, and I felt alone,” she said.

At the same time she started the blog, Lockert was offered a job at a non-profit with $30,000 annual salary. She took the job, but quit one year later.

“I started freelance writing full-time,” she said. “I had been looking for a stable job for so long, so to quit right after I finally got one seemed crazy. But I wanted to focus on writing and the blog.”

Her first year freelancing full-time, she brought in $60,000 and was beginning to pay off her debt.

“I made my last payment in December 2015 and was crying tears of joy,” Lockert said. “A lot of people tell me that paying off their debt was anticlimactic, but I was celebrating.”

Life changing

“I finally had time to see friends again. I wasn’t working seven days a week anymore. I went to Italy with my mom, and I moved to LA,” she said. “It was so exciting.”

Not all of Lockert’s mental-health struggles went away once she had paid off her debt. “I had struggled with anxiety and depression before I had the debt,” she said. “But my life was so different, and it was significantly improved — paying the debt was a complete relief.”

It’s been six years since she started her blog, and Lockert still doesn’t believe the link between debt and mental health is discussed enough.

“Though mental health itself is getting more attention, the intersection of debt and mental health is still not discussed widely,” she said. “I get many people Googling

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 ‘I want to kill myself because of debt’ and finding my blog.”

“This is a problem the personal-finance community cannot ignore,” Lockert says.

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