Just imagine: you are 18 years old, enrolled in college. You just graduated high school, and you are looking forward to what life will bring you. After getting accepted into your dream college, you apply for both federal and private student loans; you have no idea how interest compounds over time or concepts of inflation. When you graduate and land your first real job, you realize that your outstanding loan debt already requires most of your paycheck. You then live in a constant state of perpetual debt and financial panic instead of having breathing room to enjoy your paycheck and your life relatively debt free. 

Maybe you are already having anxiety over the loans you are accumulating. Almost 43 million people still have outstanding federal student loans. According to The Education Data Initiative, student loan debt in 2025 was $1.8 trillion. 

All this money owed can take quite a mental toll on many students. If students fall into massive debt, anxiety, depression, and a vast range of other mental health issues will continue to be on the rise for years to come. 

Students without knowledge and understanding of key financial topics are unintentionally setting themselves up for failure. To arrest this problem, students should be taught the importance of financial literacy to prepare them for future financial challenges.

The relationship between financial literacy and mental well-being, not just in adults or graduates, but also in current students, is heavily documented by experts. According to the Financial Health Network, 44% of financially healthy people say that they experience no stress while the other 56% report at least some stress. On the other hand, 95% of people who were financially vulnerable report experiencing stress. 

In a study out of the United Kingdom by the Money and Mental Health Policy Institute, this relationship is outlined as a “vicious cycle” in which financial struggles exacerbate mental health struggles. Lower quality mental health is associated with poorer financial decisions; in the same UK study, evidence shows that 46% of people dealing with debt also suffer from at least one ongoing mental health issue. 

Additionally, a study coming from the University of Georgia shows that graduates who lack financial literacy skills will likely be encumbered by a significant “cognitive burden.” Furthermore, young adults and current college students who cannot properly navigate financial debt have less mental bandwidth. This directly affects their performance in academics, career choices, emotional regulation, and more, as described in the Georgia study. When students are constantly worried about being able to afford necessities, they cannot properly focus on academics, leading to poor grades.

Without a concerted effort to teach financial literacy that will enable them to navigate the financial demands of a college education, students are set up for financial failure in their future. When students know how to manage their finances, they have much better mental health. 

How are the students of today supposed to be responsible spenders if they are never taught how to do so?

College campuses and high schools should aim to break this cycle of monetary crisis and mental health problems. Both colleges and high schools can begin offering financial knowledge seminars and finance clubs for students to become members of. Additionally, colleges could offer financial literacy support by hiring a financial advisor or someone in the finance field to help students learn how to effectively manage their money, investments, debt, expenses, and much more. 

PennWest’s finance club, in addition to guest speakers and job fair events, could offer financial literacy and investing events to better prepare students. These seminars could take place at already existing freshman orientation sessions. Specifically, students will be taught how to calculate the true future cost of their student loans, and how to avoid bad financial decisions. 

By making these practices standard among both public and private institutions across the country, current, and future generations can become more equipped to deal with their stresses, not only financial, but also psychological.