‘Student loans have been the soul-crusher of dreams’: 3 ways debt forgiveness can improve mental health, from a financial therapist

Millions of borrowers will benefit from the Biden administration's plan to forgive student loans.

Up to $10,000 in federal student loans can be forgiven for working- and middle-class Americans, and up to $20,000 in student debt can be wiped out for people who make less than $50,000 a year.

The student loan debt toll in the U.S. is close to 1.75 trillion dollars. According to the Education Data Initiative, 43 million people have federal student loan debt.

Many students who took out loans for college were told the investment would pay off in the long run.

Rasure says that many borrowers feel like they were sold a bill of goods and that they have the shame.

Canceling student loans will allow graduates to pursue their dreams and careers that they have never been able to because of their debt.

Rasure says that the harness hanging over your head clouds the things you thought you would be able to do with your degree. Student loans have been the worst thing to happen to a person's dream.

Forgiveness of student loans could improve mental health.

• It could give you a sense of freedom. With less debt hanging over your head, you’d be a lot more likely to pursue opportunities that didn’t seem possible before, says Rasure. She believes loan forgiveness may encourage people to dream again and not limit themselves. “I’ve seen firsthand how freedom comes from that, what positivity can come from that freedom,” says Rasure, “And how people change their perceptions of not only themselves, but how they operate in this world.“

  It's possible that less debt will mean more money for you. Rasure says that access to more money would allow you to purchase a home, buy a nicer car or do other things that you wouldn't have thought of.

• You won’t feel as compelled to make an income-based job decision. Often when considering jobs, people likely calculate how much money they’d need to make to pay off loans from college, Rasure says. But if that debt disappeared, more people would be able to focus on doing what makes them happy.Rasure witnessed how loan forgiveness positively impacted her sister-in-law who was able to consider unique opportunities in her field, once she was clear of her $300,000 debt. Her brother’s wife, a public defender, relied on student loans to get her law degree and after serving the public for 10 years, her loans were forgiven.For others, the freedom that comes with debt relief could mean serving in a low-income community, as a doctor, teacher or other service-oriented professions that typically come with a lower salary.

  Rasure says that they can pursue opportunities that will not pay them as much money, but will have a bigger impact on the world.

• More money can be put aside for retirement. In preparation for your later years in life, you could invest the money you would have used for your loan payments into a retirement plan, Rasure notes. This would make it easier not only on yourself, but also on your children who will likely be responsible for how you’ll be taken care of down the line. Additionally, many parents have taken out loans for their children to attend school and are struggling as they carry that debt. 

  Rasure says, "Obviously parents, in most situations, really love their kids, want what's best and will make every sacrifice possible, but parents are coming up on retirement age, or are even in retirement, and are paying off student loans for their children still."

Rasure expects student loan forgiveness to have a positive impact on mental health.

Student loan forgiveness will help society at a very cellular level because it will help employers, workers, family relationships and the economy.

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