There's no question that taking on huge amounts of debt for college can damage your long-term finances. Case in point: Last year, Morningstar determined that for every dollar we borrow for college, we'll end up losing $0.35 in retirement savings. Given that the average Class of 2016 graduate came away over $37,000 in debt, if we follow that formula, those folks are apt to retire with roughly $13,000 less than they'd otherwise have. And while that may not seem like a huge amount, when you're on a fixed income, every little bit counts.

But it's not just your retirement that student debt might ruin; recent data shows that those loans can actually be bad for your health. In a new study by Student Loan Hero, more than 60% of borrowers say their student debt-related worries are negatively impacting their day-to-day well-being.

Man pinching his nose to indicate headache

Image source: Getty Images.

How so? Here are some troubling statistics:

  • More than 70% of borrowers claim they suffer from headaches stemming from the stress of owing so much.
  • Almost 65% of borrowers say they're losing sleep over their student debt.
  • A good 50% of borrowers have actually experienced digestive upheaval because of the anxiety their debt has brought on.

Now let's take some of these claims with that proverbial grain of salt. Yes, student debt can produce stress and anxiety, which can, in turn, cause headaches and upset stomachs. But so can many other things, like retirement-related woes, work deadlines, and so forth. Still, the above data is certainly enough to make prospective borrowers (and their parents) think long and hard before racking up a pile of debt for the privilege of a fancy education.

Do you really need to take on that much debt?

Given the cost of college these days, many families have no choice but to take out loans to finance a degree -- but that doesn't mean they don't have options for limiting their debt. For the 2016-2017 school year, here's what tuition looked like, on average, for different types of universities:

College Type

Average Cost of Tuition

Community

$3,520

In-state public

$9,650

Out-of-state public

$24,930

Private

$33,480

Data source: The College Board.

Note that none of these figures include room and board, which is a significant expense itself. But let's focus on tuition for a minute. Even if you'd rather not attend community college (say, you're worried about credits transferring over, even though many students who go this route fare just fine), choosing an in-state university over a private one will save you over $95,000 in tuition alone over four years of studies. That's huge!

Now let's revisit the idea of living on campus. Sure, there's something to be said for the dorm experience, but at an average price tag of $8,000 to nearly $12,000, depending on the type of school you attend, it pays to live at home and commute if you have the option to do so.

Remember, not only might high levels of student debt derail your retirement savings efforts, but take out too many loans, and you may have to postpone buying a home. In fact, college loans accounted for up to 35% of the decline in homeownership among younger buyers in their late 20s to early 30s between 2007 and 2015. They're also the reason why millions of Americans have a negative net worth.

Start planning ahead

While being judicious about borrowing can help you avoid student debt-related stress, an even better approach is to prepare for the expense of college by saving as early on as possible -- ideally, before your kids are even born. (Clearly, this piece of advice is directed toward parents, and not teenage college hopefuls themselves.) Whereas most folks have a good 40 years or more to save for retirement, with college, there's a much narrower window. If you start saving when you become pregnant and give your money almost 19 years to grow, you might end up avoiding student debt in the first place.

Another strategy to employ? Save in a tax-advantaged account, like a Roth IRA or 529 plan. With the former, you'll have the flexibility to withdraw funds for educational purposes, or leave your money to grow for retirement should your college costs come in lower than expected. With the latter, you'll have more restrictions, as you'll get penalized on your gains if you use your 529 for purposes other than qualified higher education expenses. The upside, however, is that you won't be limited to the $5,500 annual contribution threshold IRA savers are bound by ($6,500 for savers 50 and older).

Whether you're approaching college debt from a parental or student perspective, the thing to remember is that borrowing money can have a long-term impact -- not just on your finances, but also on your health. And while you may not manage to avoid loans completely, if you borrow in moderation, you're more likely to come out unscathed.

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