Financial well-being, anxiety and payment delinquency among student loan holders in the United States: insights from the COVID-19 pandemic

Purpose The COVID-19 pandemic presented unprecedented challenges, particularly intensifying the financial and psychological burden for individuals with student loans in the United States. Firstly, this study examined the association between student loan ownership and financial well-being during the pandemic. Secondly, among student loan holders, we tested the association of financial anxiety and payment delinquency with COVID-19 shocks and financial knowledge. Lastly, we investigated the associations between the recipients of student loans and their financial well-being, anxiety and behaviors concerning student loans. Design/methodology/approach Utilizing data from the 2021 National Financial Capability Study, we explored how unprecedented economic disruptions have affected student loan holders' financial well-being, levels of debt anxiety and payment delinquency, considering financial knowledge as a critical factor. We conducted Ordinary Least Squares (OLS) and logistic regressions to examine the associations addressed in the purpose of the study. Findings The results of regression analyses indicate that individuals with student loans generally experienced lower financial well-being than those without loans. Among student loan holders, COVID-19 shocks were positively associated with student loan anxiety and payment delinquency. Additionally, subjective financial knowledge showed a positive association, while objective financial knowledge displayed a negative association with loan delinquency. Lastly, respondents who secured loans for themselves exhibited lower levels of financial well-being than other student loan holders. Originality/value This study represents one of the initial efforts to investigate the issues of financial well-being, debt anxiety and payment delinquency among student loan holders, along with their associations with the potential COVID-19 shocks they experienced. The research shed light on the acute financial stress and mental health challenges faced by student loan holders during global crises, highlighting the significance of effective policy development for student debt management and borrower support during times of economic uncertainty.