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Using multiple waves of the National Health Interview Survey and the National Survey of Drug Use and Health, this presentation demonstrates a growing penalty associated with poor mental health. Working-age adults who report significant psychological distress report increasing levels of disability and lower income, indicating a growing penalty associated with distress. At the same time, college completion is much less selective on poor mental health. Relative to those with less education, the lifetime prevalence of major depression is higher among college graduates, even as the 12-month prevalence is lower. Since 2005 the association between early-onset depression and college completion has increased, moving from slightly negative to increasingly positive. The environment surrounding poor mental health is changing in ways that suggest both more accommodating environments, particularly in higher education, and more social and economic penalties, especially within the labor market. Potential explanations will be discussed.