Don’t let student loans define you. Here’s how to achieve that — and your goals

After a more than three-year payment pause, federal student loan bills will once again be part of Americans’ lives this fall. But borrowers should try not to fall into the “student loan identity” trap.

More than a decade ago, online advice columnist and best-selling author Cheryl Strayed addressed the phenomenon of a “student loan identity” in her “Dear Sugar” column at online literary magazine The Rumble, writing borrowers must get on with their lives regardless of the size of their outstanding student loan balances.

Indeed, a recent survey conducted by Trellis Company found that holders of student loan debt experienced key distress indicators at higher rates compared with all survey respondents.

In the study, 88% of student respondents who had experienced financial difficulty while enrolled in college said they had student loans, according to Trellis, a student loan guarantor that guides borrowers in the repayment process.

Student loan identity is the relationship you have with the debt you’ve accumulated, said financial therapist Kristy Archuleta, a professor of financial planning at the University of Georgia.

“We can attach so many emotions to our financial situations and student loan debt can be a form of debt that people may feel shame about, because they might not have known how much it was that they were taking out,” Archuleta said.

People experience anxiety with their student loans because of “money F.O.G.S.” they had during their upbringing, causing them to be judgmental about their own decisions, added certified financial planner Lazetta Rainey Braxton, co-founder and co-CEO of virtual firm 2050 Wealth Partners. She is also a member of CNBC’s Financial Advisor Council.

F.O.G.S. is an acronym that stands for “Fear, Obligation, Guilt and Shame,” explained Braxton. “Fear of money running out, obligation to keep up with responsibilities, such as credit scores, guilt for the decisions made and shame tied to the accumulated debt,” she added.

Student loan expert Ryan Law, a CFP and professor at Utah Valley University, said he has witnessed student debt anxiety, and denial, among current college students. “We deal with student loans all the time,” he said. “What I’ve generally found is that most people don’t really want to know a lot of information about their student loans.”

Additionally, 1 in 5, or about 20%, of student loan borrowers exhibit one or all five risk factors that suggest they could struggle covering their bills, according to a report from the Consumer Financial Protection Bureau. The U.S. Supreme Court struck down President Joe Biden’s federal student loan forgiveness plan in June, and borrowers as of October also will have to restart payments that were put on pause two years ago amid the Covid-19 pandemic.

That may mean extra financial and psychological stress, but Braxton said borrowers should not forget that student loan debt can be viewed as an investment in yourself, although she acknowledged that a system that requires Americans to get so heavily into debt to get a college education is “broken.”

In her column, Strayed advised dealing with current reality as best you can. “You don’t have a right to the cards you believe you should have been dealt,” she wrote. “You have an obligation to play the hell out of the ones you’re holding.”

Financial planners can help make their clients feel comfortable with talking about their anxiety over student loan debt, affirming for them that they can, in fact, meet their goals and help them let go of the stress, according to Braxton.

“Set yourself free, so you can use the energy to live the life you want instead of being stuck in a particular area,” she said.

Here are ways for you to take those first steps toward peace of mind:

1. Review your loan details. It is key to know who your loan servicer is and what your balance looks like, said Law. About 40 million student-loan borrowers will resume their payments this fall. Make sure to update contact information, connect with a loan servicer and more.
2. Shift your mindset on spending plans. Spending plans act as a sort of “reverse budgeting,” where you can save and invest for your future while affording the opportunity to enjoy life in the present.  ”Sometimes people think that it’s kind of going on a diet, but look at it as a tool that’s going to help you be successful,” said Archuleta. Spending plans are looking at your expenses versus your income, and what are the small adjustments you can make to make things work, she added.
3. Find out what your repayment options are. There are many payment options available with student loan debt that are not feasible with other types of liabilities. “Typically, the loan servicer is not going to say, ‘Let’s do … an income-based payment plan for your auto loan,’ but that’s something that you can do with a student loan,” said Archuleta. However, it’s up to you to review those payment options and apply for them to get the help you need.
4. Seek expert help. There are tools available and financial counselors are uniquely qualified to help people, said Law. Reach out to someone who can help you make a budget according to your financial situation. “Know you are not alone,” said Braxton.

As Strayed has written, “it is up to you to decide to stay parked there or to turn around and drive out.”