Problem-Solving Orientations, Financial Self-Efficacy, and Student-Loan Repayment Stress

Using data acquired from a four-time longitudinal survey, we tested a model linking two measures of self-agency, i.e., problem-solving orientations and financial self-efficacy, to student-loan repayment stress. Of those participants who responded at Wave 4 (N = 855) of a longitudinal study, 396 who had acquired student loans were included in our structural equation model's Mplus analysis. After we controlled for gender, college financial education, ethnicity, and participant annual income, we found that both financial self-efficacy and negative problem-solving orientation were related to perceived difficulty. More specifically, those participants with a greater financial self-efficacy at Wave 4 perceived less difficulty in paying off their loans, while those with a more negative problem-solving orientation perceived more difficulty in paying off their loans. We also found perceived difficulty to be directly related to the actual difficulty of repaying a loan, and this perceived difficulty was, in turn, associated with loan-specific stress. We provide implications for financial education.