Student loans hurt women more than men
It’s no secret that our country is in the midst of a student debt crisis. Currently, 44 million borrowers owe a cumulative $1.4 trillion in student loans, and the average college graduate aged 20 to 30 must pay $351 a month in debt repayment.
But while countless graduates are struggling to keep up with their student loans, it seems women are having the toughest time of all. In fact, a new report from the American Association of University Women (AAUW) reveals that not only do women accumulate more student debt than men, but because of the gender pay gap, they take longer to repay this debt. As a result, women hold nearly 67% of outstanding student debt in the country, and given that women made up 56% of college students last year, that number is only expected to climb in the future. coming years.
Women bear a higher debt burden
While pay inequality is a strong contributor to the student debt crisis affecting women, let’s not ignore the fact that female students are more likely to take out loans in the first place. According to the AAUW, in any given academic year, about 44% of female students take out loans, compared to only 39% of male students. Additionally, women enrolled in undergraduate programs earn an average of $3,100 more than their male counterparts. And this is by no means a new trend; women have consistently borrowed more than men for over a decade.
But even if women borrowed exactly the same amount as men, they would still be at a huge disadvantage when it comes to repaying that debt, and all because of the wage gap. Currently, male workers earn a good 20% more than their female counterparts across a wide range of industries, but believe it or not, this income gap starts as early as college. Although male and female students are equally likely to work during their undergraduate studies, women earn about $1,500 less per year than men during this period. And given that college students with work-study arrangements generally have similar qualifications and work roughly equal hours per semester, it’s a telling statistic.
Unfortunately, this pay gap only tends to widen once you finish college. Women with a bachelor’s degree typically earn 18% less than their male colleagues as early as a year out of college. After four years after university, this gap increases to 20%. As a result, women take approximately 1.9 years longer than men to pay off their student debt, during which time they are often forced to delay other savings efforts, such as retirement. It is therefore not surprising that women are more likely than men to find themselves short of money in their old age, although they are more likely than men to benefit from employer-sponsored pension plans.
Sadly, if recent history tells us anything, it’s that we still have a long way to go before women can count on being paid as much as men in every field. Therefore, let this be a lesson: if you are a woman and planning to go to college, be judicious about how much you borrow, and if you are already on the verge of a pile of debt , focus on eliminating as quickly as possible. Otherwise, your long-term financial goals could suffer.
Reduce your tuition fees
While it may seem unfair that female students, more than male students, have to go the extra mile to minimize their education costs, if you want to avoid a decade or more of unshakable debt, you’ll have to be reasonable on the front end. student loans. Of course, the easiest way to avoid heavy debt is to attend the cheapest college possible. If community college is not an option, stay at a public university in the state. Doing so will save you $15,000 on tuition compared to an out-of-state public school, or nearly $24,000 per year compared to a private university. Commuting from home rather than living in a dorm will also save you $10,000 or more on your annual costs, allowing you to keep your borrowing to a minimum.
If you’re already in the position of having taken out student loans, your next best bet is to focus on keeping your living expenses as low as possible and using whatever extra cash you can glean from your paychecks to reduce your balance faster. . The sooner you pay off your debt, the less you’ll end up spending on interest.
Finally, be vigilant about saving for retirement, even if it means funding an IRA or 401(k) while simultaneously trying to eliminate your student debt. Not only do women tend to outlive men, but they also tend to save less over the course of their careers due to their lower incomes. And while retirement may seem a long way off when you’re struggling with student debt, the sooner you adjust to the reality that women might struggle more than men overall, the better off you’ll be able to compensate. only during your university years, but during your career and beyond.