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ABSTRACT Although recent reports have suggested a relationship exists between university students' debt levels and their levels of psychological well-being, no formal study has been done to test this hypothesis. Therefore, using a model of financial distress developed by Krause, Jay and Laing (1991), this study was undertaken to determine the precise nature of the relationship between students' levels of daily financial stress (i.e., the ability to meet their daily financial needs), chronic financial strain (i.e., the negative effects of long-term debt), the perceived levels of understanding and control they feel they have regarding their financial situation, and their perceived levels of psychological well-being (i.e., anxiety and depression). Path-analyses showed that levels of daily financial stress were associated with individuals' perceptions of manageability and internal control regarding their financial situation. These factors, in turn, directly influenced the students' levels of psychological well-being. In contrast, chronic financial strain was shown to influence students' psychological well-being by negatively affecting the degree of comprehensibility regarding their situation as well as their senses of control and self-esteem. These findings were taken to indicate the necessity of differentiating between sources of financial distress (e.g., immediate or ongoing) when attempting to understand, and mitigate, the effects of university students' financial situation.
Lange et al. (Thu,) studied this question.