A new report from the American Association of University Women (AAUW) sheds light on the disproportionate impact of student loan debt on women in the United States. While it's true that more women enroll in colleges and universities in the U.S. than men, it turns out that the costs of doing so place a higher burden on women, impacting their finances throughout their lives — often for a much longer time than men.
The stakes are high: Wrestling with student loans can prevent women from making career decisions that would reap big rewards for them, professionally and personally. The inability to focus on longer-term goals, including retirement or building wealth through homeownership, can jeopardize women's financial prospects later in life. Education is key for increasing social and financial mobility, but the cost of doing so impedes women to a higher degree.
Here are some key takeaways from AAUW's report:
1. Women hold almost two-thirds ($833 billion) of the $1.3 trillion in outstanding student debt in the United States.
AAUW notes that although women make up 57% of bachelor's degrees in the U.S. and take out 60 percent of the student loans meted out to fund their education, student debt is rarely framed as a women's issue, or a problem that affects them disproportionately. Cumulatively, men hold less student debt ($477 billion compared to $833 billion held by women), and are also able to pay off their debt faster, giving them an edge when it comes to jumpstarting their lives.
2. Women are more likely to take on debt: 44% percent of female undergraduates take on debt in a year compared to 39% of male undergraduates.
It's hard to know exactly why women are taking out more student loans, according to Kevin Miller, a senior researcher at AAUW and the author of the report. Miller speculates that it's because women tend to need the money more.
"Although men and women and about equally likely to work while enrolled as graduates, women who work while enrolled make about $1,500 less annually than men who work while enrolled," the report says, noting that the discrepancy is "not fully explained by the number of hours worked."
Furthermore, 26% of students are parents who need to pay for childcare while they work and attend classes. Since a large majority of student parents are women, this can be one reason they take on more loans.
3. Women graduate with more debt, and it takes them longer to pay it off.
Upon completion of a bachelor’s degree, women’s average accrued student debt is about $1,500 greater than men’s. Plus, women take about two years longer than men to repay their undergraduate student loans. When parsed demographically, AAUW also finds that black women take on more student debt on average than do members of any other group, and take even longer to pay off that debt.
"The fact that women have both higher debt and lower earnings is a really potent combination," says Miller.
4. The kinds of schools that women attend can increase their burden exponentially.
For-profit schools enroll a small number of students in the United States (2,850,970 in 2014-2015 by one recent estimate), but those students are disproportionately women, people of color, low-income, and current or former members of the U.S. military. Low completion rates and high default rates among for-profit enrollees makes them especially vulnerable to financial distress in the long term. (Another reason for high levels of scrutiny of the current presidential administration and his Department of Education.)
Unfortunately, aggressive advertising toward vulnerable populations has likely spurred enrollment for these schools, according to Miller.
"You can start a week or two after visiting the campus, and they often handle a lot of the financial aid paperwork for students. You can go from thinking about enrolling to doing so almost instantaneously," he says. Considering the fact that the FAFSA is notoriously unwieldy, minimizing these pain points can be a big incentive for students who work part or full time, who have children, are low-income enrollees, or fit all of the above — most of whom are women.
5. Women with college degrees working full-time make 26 percent less than their male peers.
The gender pay gap is often discussed as a conceptual problem that needs to be solved for reasons of equity and fairness, which is great, and true. But there are also very concrete reasons why men and women should make the same amount of money for the same amount of work.
"Women working full time with college degrees make 26 percent less than their male counterparts, though the gap is somewhat smaller immediately after college," according to AAUW. "Lower pay means less income to devote to debt repayment."
Making less money puts women at a financial disadvantage in a number of ways, from having less agency in their lives and relationships, to having more difficulty paying their bills, student loans among them. And because women working full time make less money than men — but still shoulder more responsibility when it comes to parenting — the difficulty they have paying off their bills, increasing their net worth, and building wealth to the same degree as men is compounded over time.
6. Thanks to student debt, women are more likely than men to experience financial difficulties.
According to the report, "four years after graduation, women with bachelor’s degrees who had not pursued postbaccalaureate education were more likely than men to report that their education costs had influenced them to delay buying a house, and to take a less desirable job or a job outside of their field." These same women were also less likely than men to be contributing to a retirement plan or account, further increasing the likelihood that they will be financially insecure in their later years.
7. Pell Grants for low-income students are really important.
One of AAUW's key policy recommendations to reducing debt-based financial aid is safeguarding and strengthening the Federal Pell Grant program for low-income undergraduate students. The grants are predominantly issued to students whose families earn less than $20,000 per year and, unlike student loans, they do not always require repayment.
President Trump's recent budget proposal would eliminate $3.9 billion in Pell funding (somehow "leaving the Pell program on sound footing for the next decade").
However, as Mitchell explains, the Pell Grant supports low-income students who are less likely to have family help them along, and low-income students are disproportionately women.
"Even for people who aren't eligible, we strongly support making income-driven repayment plans more accessible for women of all incomes," he says.
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