While student loans are common to both men and women in the United States, women generally have a more difficult time paying off their debt after graduation. A recent trend shows that graduates are delaying marriage, having kids, and purchasing houses in order to settle their student loans first.
At present, twenty-five percent of college graduates have more than $30,000 in student loans. However, women shoulder this financial burden more than men do. It is a fact that there are more women in college today, and they are more likely to continue with a graduate degree. That’s one of the reasons they have more debt than men do.
Forty-two percent of women have more than $30,000 in loans after they graduate, compared to just twenty-seven percent of men. As a result, women find it harder to pay down their student loans. In the United States, women, because they have more debt after their graduation, need to take more time to pay the debt off, as compared to men. It is important that people recognize the additional burden of these loans on women if they want to solve the issue of the gender wealth gap.
1. Debt Burden on Women
Americans owe $1.5 trillion in student loans alone, and women own two-thirds of the amount. Women take on more loans than men do on all education levels. The average debt women have is 14 percent higher than that of men.
To understand why women, have more debt than men do, you should know the root causes. Discussed below are the main reasons why women, and not men, find themselves having a greater financial burden.
2. Less Financial Help from Parents
Women get less help in paying for higher education from their parents. According to a study, more parents with sons save up for a college education, as compared to parents who have daughters. The former even prioritize saving for their sons’ college fund over saving for their own retirement fund.
As a result, households with daughters only have less money saved for college. The study showed that only thirty-five percent of such households have money for a female child’s education. On the other hand, fifty percent of households with sons have money set aside for education.
Parents with sons are twice as likely to shoulder all the expenses in colleges. There’s a huge disparity in the numbers, considering that fifty-six percent of college graduates in the United States are women.
3. Wage Gap
Another cause of the problem is the wage gap between men and women. On average, women in the US are paid twenty percent less, as compared to men. Women of color are paid even less. The wage gap adds to the financial burden women face after they get out of college. That means women take home less money after making their monthly loan payments.
4. Failure to Get a High Paying Job
After women graduate from college, they enter a highly competitive job market. Many people can’t find a job in their field and end up working in low-paying jobs when they get out of college. As a result, they don’t make enough money for debt payments and rent.
Once they get a better job, it’s not much help because they are already behind in their financial obligations and burdens. It puts women at a disadvantage at a young age. When they look for job opportunities, they need to factor in how much money they need to earn to pay off their debt as soon as possible.
Some women even stay in school for a few extra years. They study to obtain a master’s degree in order to remain a student, so they can delay starting to pay off their loans because they know they can’t afford to do so. However, they fail to land a high paying job even with their degrees.
5. Drop Outs and College Debt
Graduates are not the only ones who have problems with their debt. People who leave school without completing their program are twice as likely to default on their other credit loans. While their debt is smaller than that of a graduate, their chances of landing a good job are low because of the lack of a degree or certificate.
Solution to the Problem
One of the recommendations made by the American Association of University Women is to make refinancing possible for both private and federal student loans. They also call for Pell Grants to cover other costs women student can’t afford, such as childcare.
This association also wants Congress to update the Equal Pay Act and prevent employers from basing wages on the potential worker’s salary history. This practice has been banned by the City of New York.
Narrowing the gender pay gap provides a short-term solution to the problem. By banning discriminatory wage practices, women would have greater opportunities to earn more and pay off their debt faster.
Instead of waiting for Congress to assist you, you can do several things to help lessen the financial burden. You can look at loan restructuring or consolidation. You could also consult a private lender on how to save money while paying down your loan.
Women should also assess whether the degree they are working on will be worth the money they are going to borrow to earn it. You should research different post-graduation options and find out how they can affect your chances of getting a good job.
By being prepared before setting foot in college, you will be more ready to face the financial challenges waiting for you as you strive to earn your degree.