Gender Disparities in Student Loan Debt

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Richard Pallardy

By Richard Pallardy

September 13, 2019

Student loan debt is currently one of the defining issues for the younger generations. Millennials were the first to be hit hard by this phenomenon and post-millennials face even greater financial obstacles once they exit college and enter the workforce.

As economists and other analysts attempt to ascertain the reasons for this crisis, it has emerged that, as one might expect, it affects certain demographic groups differently. Racial inequalities in student loan burdens are increasingly scrutinized. And striking gender inequalities are now under the microscope as well.

Sussing out the reasons that women suffer disproportionately in this regard is challenging. In a politically charged climate that has highlighted gender disparities in all realms of society, objective analysis sometimes takes a backseat to rhetoric. To the credit of those who study this trend, most studies have found that the enormous student loan debt carried by American women is attributable to a complex constellation of factors, most of which do not reflect direct bias.

Even so, examination of the issue has revealed that women hold a startling two-thirds of the student loan debt in the country, begging the question: if not direct bias, what is the reason?

As it turns out, more women attend college, more women take out loans to pay for college (and larger loans, on average), and more women pursue advanced degrees. More women also drop out of college, leaving them with debt burdens that are more difficult to meet without the salaries that might be expected from jobs available to those with a college degree.

Further, women appear to have more difficulty in paying off their loans due to gender wage disparities and differing financial obligations in other areas of life. Both the residual effects of historical biases and the consequences of differing life choices come into play.

As the picture of this situation comes into focus with the publication of more intensive research and analysis, solutions will become more tenable.

Women Take Out More Loans

According to the American Association of University Women (AAUW), some $929 billion of the $1.6 trillion currently owed in student loans belongs to women.

The AAUW found that for the 2015-16 school year, 41% of women borrowed to finance their bachelor’s degrees while on 35% of their male peers did the same. The overall amounts taken out by women were around 14% higher.

Black women hold nearly $10,000 more in debt at graduation than white women.

A 2018 study suggests that some of this may be attributable to gender differences in borrowing habits. Women are more likely to use loans to bridge gaps in income, while men are more likely to borrow to finance luxury purchases.

Data on the subject has not been consistent, however, and more study is clearly required.

A 2017 study from Iowa State University found no significant difference in amounts borrowed between men and women, though men were more likely to work and less likely to borrow and women were more likely to receive grants.

A 2017 study by T. Rowe Price found that parents are more likely to save for college for male children than female children. Half of households with only boys saved for their children’s college education, compared with just over a third of households with only girls.

A 2012 study in Gender & Society suggested that higher drop-out rates among women were tied to their debt loads, along with their increased rates of attendance at lesser-known private universities.

More Women Attend College

Though the statistics on the student loan debt held by American women are alarming, at least a portion of it reflects a positive trend: more women are enrolling in college.

Those that do are more likely to be black and older than are men.

In the early years of American higher education, men far outnumbered women (p. 76). In the mid-19th century, less than a third of college enrollees were female. But, by the 1960s the trend had started to reverse. By the mid-to-late 1970s, the number of women seeking college degrees hovered just below 50%. And by the 1980s, full parity had been achieved. Now, nearly 60% of matriculants are female.

And that refers only to bachelor’s degree seekers. More than half of associate’s, master’s, and doctoral degrees awarded each year now also go to women.

That being the case, it follows that women would hold more debt than men. Still, that’s not even the half of it.

Enrollment Statistics Also Differ

Notably, women are much more likely to enroll at for-profit institutions. Up to 62% of enrollees at for-profit colleges are female.

While these institutions may seem appealing due to their more flexible schedules, they generally provide lower quality education and greater debt. High drop-out rates and later default are common. And, even those who complete their degrees have diminished job prospects.

Women also appear to gravitate toward different majors than men. This, of course, is not to say that some women do not choose majors that lead to higher pay. Some absolutely do.

But the psychological and economic literature both point to a definite trend in which men are drawn to more systematic professions such as engineering and women are more drawn to empathetic, human-oriented professions such as social work and education. Women hold nearly three quarters of the positions in the latter fields. And, whether fairly or not, it is the systematic professions that are ultimately more remunerative.

A 2018 Laurel Road survey found that 94% of male millennial graduates prioritized earnings over interests, whereas only 79% of females did the same.

Even within majors that result in high-paying work, women appear to gravitate toward concentrations that result in lower pay. A 2018 Georgetown University study found that, for example, 32% of environmental engineering majors were women. This is the lowest paying engineering degree. Some 17% of petroleum engineering majors, the highest paying engineering degree, were women.

Even that situation is improving, though. The Georgetown study found that 40% of physical sciences majors and nearly 50% of business majors are now women.

And, intriguingly, a 2015 study found that associate’s degree attainment provided labor market returns to women exclusively.

Parental Contributions Play a Role

The 2019 AAUW report stated that the expected family contribution was on average lower for women on the Free Application for Federal Student Aid (FAFSA).

Investment firm T. Rowe Price found in 2017 that families approached saving and college planning differently for girls than they did for boys. Households with only male children were not as likely to send their offspring to cheaper colleges to avoid debt. And they were 12% more likely to say they were saving for college. They were even more likely to consider saving a priority.

Women are also more likely to receive no assistance from their parents than men.

The American Council on Education found in 1999 that women were more likely to receive no support. The same study found that fewer women were considered dependents while in college than men. Independent men without children had lower incomes though, likely due to the fact that independent women without children were more likely to be married and receive financial support from their spouses.

The trend, however, was reversed when children came into the picture. Women are more likely to raise children while single.

Female college students may also be more likely to come from a low-income background per a 2014 Pew report. This is particularly true of those who are first-generation college students according to the American Association of State Colleges and Universities (AASCU). That being the case, it seems logical that women might need to take out more loans.


Women Find It More Difficult to Pay Off Their Loans

Due in part to their average familial contributions and their differing career choices, which may result in lower salaries, women tend to find paying off their loans more difficult than men do.

A 2018 study found that women were substantially more stressed about the prospect of repayment. It also found that far fewer women than men refinanced their student loans, a move that can offer significant savings. 62% of men refinanced while only 39% of women did the same.

Keep in mind refinancing federal student loans means a loss in many benefits – income-driven repayment plans, any federal forgiveness programs, generous deferment options, and more.

According to the AAUW, men pay off an average of 38% of their debt in the four years after graduation, compared to only 31% for women. Repayment rates are even lower among women who belong to racial minorities, with the exception of Asians.

An AAUW report found in 2017 that among graduates from 10 years prior, men on average had paid off 11% more of their debt. Similarly, Dēmos found in 2019 that white men had paid off 44% of their loans 12 years after matriculating, while white women had paid somewhat less and black women owed 13% more.

Women appear to take at least two years longer to pay off their debt than men — and in some cases, even longer.

The much-debated wage gap appears to play a significant role in this disparity. As previously mentioned, this gap is likely in part attributable to the career choices made by women. Women tend to pursue careers that, for better or worse, are less remunerative. CEOs, surgeons, and lawyers remain predominantly male.

Even most female business majors end up in supportive administrative roles. Wage gaps are actually more substantial in such high paying fields. And other women disproportionately pursue nursing, teaching, and social service professions, which resulting in lower pay.

The U.S. Department of Labor in 2009 also attributed some of this disparity to the increased likelihood of part-time work among women and their greater role in child-rearing, elder care and other responsibilities that remove them from the workforce. Further, labor force participation among women is relatively low. A 2017 Brookings Institution report found that it was below 60%. A 2015 Bureau of Labor Statistics report found that men worked longer hours than women.

It is estimated that women work 2-5 hours less a week than men do, perhaps in some small part accounting for the wage differential.

There may also be gender differences in negotiating for higher salaries, according to a 2014 Harvard Kennedy School study.

Regardless of the reasons for the pay gap, women make around 20% less than men on average according to most estimates and men may take home an average of more than a million dollars over the course of their careers.

Per the AAUW, about 7% of this disparity remains unexplained by other factors, leading some to suggest that gender discrimination remains a significant factor in the workplace.

The aforementioned 2018 report from Georgetown claimed that women needed to earn an additional degree in order to overcome the wage barrier.

Fiscal education may also play a role. Laurel Road found that nearly 90% of millennial men had taken a personal finance course while only around 50% of millennial women had done the same. This suggests that women may not prioritize financial education and thus suffer the consequences.

Some studies have also found that women are more likely to default as a result of these financial risk factors.

What Can We Do About It?

A handful of reasonable proposals might help mitigate the disproportionate student loan debt carried by American women.

Government-supported childcare has been proposed as one way of increasing labor force participation by women. Many women take long breaks from, or permanently exit the workforce due to childcare responsibilities. The United States has incredibly short mandatory leave periods for women who bear children in contrast to other developed countries. And, unlike many countries, there is no legal mandate for paid leave.

Government-supported childcare may also encourage women to remain in the workforce.

Programs that illustrate to women the benefit of pursuing higher-paying occupations, particularly STEM and business education initiatives, may encourage girls to consider these careers.

And, perhaps most importantly, wage transparency allows all workers to assess the worth of their labor and compare it to that of their cohort. Disclosure of wages across the board will likely facilitate the equalization of wages for the same work.

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