The Double Burden Of Student Loans For Women

Women are starting their adult financial lives in the hole. And student loans are partly to blame.

Student loans delay significant life events for both men and women. Paying off college means millennials are buying houses, getting married, and having kids later in life. But the impact is greater, and much longer term for women.

On average, women in the U.S. carry more student loan debt, and take longer to pay it off, than men. If we want to reduce the gender wealth gap, we have to acknowledge the extra burden of student loans for women.

The Weight of Student Loans is Heavier for Women

Americans hold almost 1.5 trillion in student debt. But women represent two-thirds of that enormous number.

Female students take on more debt than their male counterparts in every level of education. On average across degree levels, women in college have initial student loan balances that are 14% higher than men’s.

As with any social issue, identifying one lever to pull to fix the problem is almost impossible. But here are three reasons women hold more student debt:

Women get less help

It may be hard to believe, but daughters are still getting less help in paying for college than sons. One study by T. Rowe Price found that in 75% of boy-only households, parents placed saving for kids’ college at a higher priority than saving for retirement. In girl-only homes, that figure was just 60%.

As such, parents of only girls were less likely to have money saved for their child’s college. Barely 35% of households with only girls had money saved for college, compared to 50% of boy households. And boy parents were more than twice as likely to be willing to foot the whole bill.

Despite women representing 56% of all college graduates, it appears that some old school gender norms still run deep for many parents.

Women are less likely to understand their options

Financing options when applying to college are far from straightforward. But a recent study by Laurel Road found a stark difference in how well millennial men and women feel they understood their options. In fact, millennial women were more than three times as likely to feel they completely understood their financing choices during the application process.

Not understanding the implications and requirements of debt has a significant impact on how much debt you are willing to take on. And that lack of education carries on beyond graduation.

Women take on more debt and are less likely to begin paying that debt off while still in school before interest kicks in for federal loans. Also, they are almost 40% less likely to ease their debt burden by refinancing after graduation.

Whether the financial literacy gap stems back to parents or education systems that treat girls and boys differently, it is hard to say. However, we need to do a better job of explaining to all students the long-term impact of the debts they take on for college

Women graduate to lower paying jobs

The gender pay gap is, unfortunately, alive and well. Research suggests that women need one more degree to make the same amount of money as a male counterpart. For instance, a woman with a bachelors degree earns, on average, the same amount as a man with an associates degree.

This wage gap not only drives women to take on more debt as they pursue higher levels of education to increase their earnings potential, but it also makes it harder to pay back those loans. A recent study by Student Loan Hero found that women were more than twice as likely to view their student loan debt as unmanageable. Women are also 60% more likely to need to cut non-essential spending to cover student loans, according to another study by Laurel Road.

On average, it takes women two more years to pay off their student debt than men. When time is your most valuable asset in wealth building, those two years make a big difference.

So, what is the impact of higher student loan balances for women?