Gender Mystery Revealed: Why Women Have More Student Loan Debt

NationalPersonal Finance
Posted By Terri Williams on June 14, 2017 at 7:05 am
Gender Mystery Revealed: Why Women Have More Student Loan Debt

Student loan debt continues to grow by leaps and bounds, and a new report reveals that women bear the brunt of this debt. According to the American Association of University Women, women are responsible for $833 billion — close to two-thirds — of the country’s $1.3 trillion student loan debt. Another gender mystery: Women also pay back their debt at a slower pace than men.

The report examines the various dynamics that affect how borrowing and repayment differ across gender lines.

Student loans: The gender mystery

Among students enrolled in undergraduate programs, 44% of women vs. 39% of men take out student loans, according to AAUW data. If a higher percentage of women borrow money, it logically follows that they would hold a higher percentage of debt.

Men are more likely than women to drop out of school, which could be another reason for this gender mystery. While it’s true that too few students graduate and too few graduate on time, the report reveals that men are more likely to leave before they incur the level of debt that women typically do.

Choice of school can determine total cost of attendance, as well as the ability to obtain a job. AAUW notes that the majority of students at for-profit schools (64%) are women, 50% have dependent children, and 51% are working mothers. And this is a triple-negative.

For-profit schools are typically more expensive than other institutions. These schools spend a significant amount of money marketing the flexibility of their programs and emphasizing the low barriers to entry and the generous financial aid packages available to students. In fact, critics question whether some students choose the best college or the one with the best PR.

Also, at for-profit schools, half of students are parents. College students with children are an underserved population, often struggling with such issues as child-care costs or the inability to find relatives and friends to babysit.  And, since 51% of women students at for-profit schools are working mothers, juggling three roles can make it difficult to focus on academics.

Even among students who attend four-year public and private institutions, graduating can be a problem. AAUW reports that only 60% of full-time students complete degrees within six years.

At the graduate level, only 55% of students pursuing a STEM-related master’s degree complete it in four years, and only 57% of doctoral students complete their degree within a 10-year time frame.

While paying back student loans is a challenge to those who have achieved their academic goals, students who take out student loans and don’t finish school have an even more difficult time paying back the borrowed money. One gender mystery solved.

Repayment plans

According to AAUW, women are more likely to take longer to pay off their student loans, choosing income-driven plans that could lead to a 30-year loan repayment period – with interest continuing to accrue.

Repayment rates among women tend to vary by race, but during a three-year period, the study found that black women paid back 12% of their student loans; Hispanic women, 18%; white women, 33%; and Asian women, 60%.

However, men tend to pay back money at a faster rate than most women. Is that a gender mystery or is there a simple reason behind it?

Remember the gender pay gap

One reason women choose repayment plans and take longer to pay back their loans is due to their level of income. According to the report, in 2016, women with a bachelor’s degree earned 26% less than men with a bachelor’s degree. Some of the disparity may be the result of women choosing lower-paying majors than men. However, this would not explain the gender pay gap among dentists, physicians, and lawyers.

Dr. Kevin Miller, senior researcher at AAUW and the study’s author, tells GoodCall®, “Women’s lower incomes mean that their student loan payments — which they are paying against slightly larger loan debts, on average — are coming out of smaller paychecks.”

While the average gender pay gap percentage among grads with a bachelor’s degree is 26%, Miller explains, “Even among recent college graduates, the gap is substantial – AAUW research has found a gender pay gap of 18% one year after college graduation, and 20% four years after college graduation.” As a result, Miller says that women don’t have as much money as men, which affects their ability to pay back what they’ve borrowed while also paying their living expenses. Again, gender mystery solved – though the gap itself remains an enigma.

“In our report, we point out that partly as a result of the gender pay gap and the disproportionate burden of student loans, one third of women (compared to a quarter of men) repaying student loans report experiencing financial difficulties – an inability to meet all their essential expenses sometime in the past year,” Miller explains. “The rates of financial difficulties are particularly high for black and Hispanic college graduates, especially women.”

Also, remember that men are more likely to drop out of college, but don’t seem to be as handicapped by this action as their female peers. The report states that women who drop out of college earn substantially less than women who complete college, while men who drop out of college do not experience a substantial difference in income when compared with men who completed college.

That’s because women who drop out are more likely to end up in low-paying jobs, such as clerical or service jobs. On the other hand, men who drop out of college are more likely to end up in construction, manufacturing, transportation or other fields with higher wages.

Alleviating the problem

Miller says that AAUW has three primary recommendations for addressing the problem at two points – the larger loans taken on by women and the difficulty repaying experienced by women when they leave college.

  • Make higher education more affordable by supporting state and federal investment in public colleges and universities, as well as by supporting expanded and increased Pell grants for low-income students.
  • Make repayment easier for women. Update the Equal Pay Act as well as legislation that prohibits employers from using an applicant’s salary history to determine pay.
  • Streamline income-driven repayment plans for student loan borrowers and make it easier to enroll in these plans.

Choosing jobs based on salary alone?

Obviously when women are interviewing for jobs, salary is important. Monster.com Career Expert Vicki Salemi, tells GoodCall®, “If you have significant student loans to pay off and you’re driven solely by financial reasons, then salary is definitely the number one priority.” But on the other hand, if you want to start another business on the side, then Salemi says work-life balance should be the top factor.

However, instead of solely prioritizing factors – salary, job outlook, job security, work-life balance – she recommends deciding what is most important to you, and then rank those factors. “Maybe you’re going to school for your MBA, so tuition reimbursement is really important,” Salemi says. “In that case, ‘MBA’ is at the top of your list, so tuition reimbursement is probably number one, then, maybe flexibility at work is number two, so you can work from home and study for exams, etcetera.”

Terri Williams
Terri Williams graduated with a B.A. in English from the University of Alabama at Birmingham. Her education, career, and business articles have been featured on Yahoo! Education, U.S. News & World Report, The Houston Chronicle, and in the print edition of USA Today Special Edition. Terri is also a contributing author to "A Practical Guide to Digital Journalism Ethics," a book published by the Center for Digital Ethics and Policy at Loyola University Chicago.

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