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Why Do Women Hold the Most Student Debt?

Warmer weather is here, and with the changing of the seasons come iced coffees, cookouts, and parties on the patio.

As the highly-awaited sunshine reminds us what it feels like to be something other than cold, for many of us, the longer days are also welcoming in feelings of dread that will have us missing the sub-zero temperatures of winter.

The source of the dread, you ask? The imminent arrival of September 1st AKA the day student loan payments are set to restart.

Many of us haven’t made a student loan payment in over two years as all payments on federal student loans were paused due to the economic crisis during the Covid-19 pandemic. But with September 1st rapidly approaching, borrowers are once again feeling the financial and emotional pressure that comes with navigating student loan debt.

One demographic in particular will feel this strain more intensely than others: women.

In the US, women hold 58% of all student loan debt, carry a total loan amount that is on average 9.6% higher than their male counterparts, and will take two additional years to pay off their student loans. 

In addition to putting financial stress on women, this student loan debt disparity ultimately holds women back personally, and financially, while continuing to perpetuate a patriarchal cycle that limits women’s growth and minimizes the opportunities for future generations.

Today we are unpacking why women carry the majority of student loan debt, who is affected by student loan debt disparity, how this excess student loan debt affects women over time, and what we can do to minimize student loan debt in our own lives and the community around us.

Why do women hold the majority of student loan debt?

It could be easy to roll your eyes and dismiss the reality that women hold 58% of all student loan debt. After all, doesn’t that just mean more women are going to college than men? As a feminist financial company, wouldn’t HFK consider that to be a good thing?

And while it is true that more women are going to college than ever before and that the majority of degrees are being earned by women every year at every level (ugh…we love women), ending the conversation about student loan debt disparity there would be altogether unfair, unhelpful, and damn inaccurate.

To really understand all the reasons why women carry the majority of student loan debt we have to look at multiple contributing factors:

1. Increase in cost of college vs. the median income

First and foremost, we need to address the elephant in the room: college education costs have risen 103% since 1987 while the median household income increased by just 14% in the same timeframe.

This means it is more difficult than ever to pay for college without the assistance of student loans.

Unfortunately, it is no longer a realistic possibility to put yourself through college with your summer job or babysitting money, and even students who receive sizable scholarships or financial assistance from their parents are forced to take out student loans due to the exorbitant cost of a college education.

2. Women take out larger student loans

Upon graduating, female college students will have an average of 14% more student loan debt than men with the same degree.

Why?

Well, one study showed that 50% of parents of only sons had saved money for their children’s college education, while just 39% of parents of only daughters had saved for their future education. Therefore, there is a financial gap that many female students have no choice but to bridge with student loans.

Additionally, women are more likely to spend more time in higher education than men. It is a simple reality that the more time spent in higher education, the more student loans are necessary to cover tuition.

Female students often take more time in higher education as they pursue more advanced degrees; after all, women are earning about two-thirds of the nation’s master’s degrees and a whopping 80% of doctoral degrees.

However, women are also far more likely to have to balance their education with other responsibilities such as working and/or taking care of a child or loved one. As a result, many women often take longer to graduate than their male counterparts in the same program.

3. The Gender Freakin’ Pay Gap

Not only are female students graduating with more student loan debt, but they have fewer financial resources to pay off their student loans than men thanks to the gender pay gap.

According to the National Partnership for Women and Families, in 2022 women who work full-time, year-round are paid on average only 82 cents for every dollar paid to men in the same role and industry. This ultimately results in a gap of $10,157 every year – valuable money that could be going towards student loans.

AAUW’s 2021 report, Deeper in Debt, revealed that the average female student will graduate with $31,276 in student debt, leaving them with a monthly loan payment of $307 in the year after they graduate. When you consider that a woman graduating with a bachelor’s degree can expect to earn an average of $35,338, making that monthly payment can be extremely difficult.

Think how much easier it would be to make that monthly payment if that female graduate was getting paid the same as her male peers. Suddenly her salary would jump to over $43,000, dropping her monthly student loan payment from 10% of her gross monthly income to 8.5%.

Mind you, our previous statistics are based on the assumption that our hypothetical subject is a white woman earning 82 cents on every dollar that a man earns. The student loan debt disparity is even more significant for Black women.

Student loan debt disproportionately affects Black women

AAUW went on to report that while 56% of white students went into debt to pay for their higher education, 70% of Black students depended on student loans for their college tuition.

While white women were graduating with an average of $31,276 in student loans, Black women graduated with an average of $37,600 – making Black women the demographic with the most student loan debt across the US.

And while white women went on to endure a gender wage gap of 82 cents on every dollar, Black women did so for just 63 cents.

Despite these financial disadvantages, Deeper in Debt went on to report that while making up to 26% less than men in their fields, women are more likely to make high monthly student loan payments. Yet even with this extra financial effort, female borrowers will take an additional two years to pay off their student loans than men.

How student loan debt affects women long term

While in the grand scheme of things, two years may not seem significant, when it comes to growing wealth, two years can make a huge impact on your financial journey.

Spending an additional two years focusing on paying off student loan debt has the potential to delay women from saving for retirement, investing in the stock market, buying a home, or starting a business. Those two years of missed income and lost opportunities can have a negative impact that lasts a lifetime.

Additionally, carrying a high amount of debt not only takes a financial toll on the borrower but an emotional toll as well. Debt has been associated with the development of depression, anxiety, difficulty focusing, and a decrease in work performance which can result in additional financial struggles.

What can we do to reduce the impact of student loan debt on women?

Despite what certain out-of-touch financial personalities may have you believe (we are looking at you, Dave Ramsey), the solution is not as simple as just not taking out student loans. With the ever-increasing cost of higher education and the demand for more women to pursue advanced degrees, taking out student loans is a normal practice that has its undeniable benefits.

One of the best and easiest ways to reduce the impact of student loan debt is to refinance your loans through Juno.

Juno helps their clients get lower interest rates on their student loans by using group buying power to negotiate with lenders. Think of it as like getting a group discount on your college degree! Lowering the interest rate on your student loans will allow you to make more progress with your monthly payments so you can finally make significant progress on reducing your debt.

Juno will give you all of the information and tools you need to work with your lender to secure a new and lower interest rate, and it is totally free to join!

A note: refinancing your student loans with a private lender will prevent you from qualifying for any existing or future federal student loan forgiveness programs.

Continue to expose and address the gender wage gap.

To see long-term, systemic progress on reducing the impact that student loan debt has on women, we MUST work to reduce the gender wage gap. Having equal pay with male peers will allow female borrowers to pay off their student loans faster so that they can redirect that money towards investments in their future.

A fundamental piece of closing the gender wage gap is creating awareness. By having transparent conversations about our earnings we create a space for others to advocate for equal pay to their male counterparts.

Additionally, women in the workplace can equip themselves with salary negotiation tools and strategies so that they can secure the level of pay that they deserve.

Is it time for you to negotiate a higher salary and ensure that you are getting compensated fairly? Sign up for my free Salary Negotiation Course and learn how to approach salary conversations with confidence and how to frame your ask to make a “yes” easy!

Financial Education for female family, friends, and colleagues on how to strategically pay off their student loan debt.

Here at HFK, a phrase we hear often is “I wish I had learned this sooner.”

We believe as financial feminists, it is our responsibility to share financial education and money resources with our community so that together we can enjoy financial freedom, confidence, and security.

Share this blog post with a friend. Gift our book, Financial Feminist: Overcome the Patriarchy’s Bullsh*t to Master Your Money and Build a Life You Love to a new female grad so she can enter the workforce with a financial plan. Encourage your friends to get a lower interest rate on their student loans with Juno.

There is strength in numbers, and together we can change the future of women’s relationships with student loan debt.