Financial Literacy

Why student debt hits women harder than men

By: Lisa Coxon on October 11, 2019
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There’s no question that student debt is holding a lot of us back financially. 

It’s estimated that those in the United States owe a collective US$1.46 trillion in student debt. In Canada, that number hovers somewhere around $18.2 billion. 

But the crushing weight of all this debt is actually hitting women the hardest.

Of the US$1.46 trillion that American graduates owe, analysis from the American Association of University Women (AAUW) shows that almost two-thirds belongs to women, meaning they owe a whopping US$929 billion in student debt compared to the US$531 billion that men owe.

Here in Canada, 61% of Ontarians carrying student debt last year were women, according to 2016-17 numbers from Canada Student Loans. And, according to the latest annual research from Toronto licensed insolvency trustee firm Hoyes Michalos & Associates, women owe an average of 8.2% more in student debt than men — and are filing for insolvency on that student debt at a much higher rate than their male counterparts.

“So,” says Deborah Vagins, senior vice president of public policy and research at the AAUW, “while this is a national story and an economic story, it’s also a gendered story.”

How the gender pay gap factors into it

Recent data from Statistics Canada shows that, while the gap between male and female earnings in the country has decreased over the last 20 years, women still earn an average of $0.87 for every dollar a man earns, which works out to $4.13 less per hour. 

What does this have to do with student debt?

Well, if women are already at a disadvantage when it comes to earnings, they will have less personal wealth to contribute to their education, making them not only more likely than men to take on student debt in the first place, but also more likely to take on larger amounts.

So while this is a national story and an economic story, it’s also a gendered story

In fact, according to research from the AAUW, women in the U.S. graduate with an average of $2,700 more student debt than men do, and it takes them two years longer than men to pay their debt back.

Black women are hit hardest by student debt. The AAUW found that they take on more student loans than any other group, graduating with $30,400 in student loans, compared to $22,00 for white women and $19,500 for white men.

“This is not surprising,” says Vagins, “African American women have one of the worst pay gaps.”

And, even though women might be earning more money once they earn their diploma or degree, that pay gap doesn’t disappear, which means they still have less disposable income to put toward student debt repayment.

Trouble finding full-time work after graduation

A second challenge women face is finding full-time employment after graduation.

According to the 2009-10 National Graduates Survey, 79.4% of male students were working in full-time positions three years after they graduated, compared with 71.9% of female students.

And we also know that women are also overrepresented in the part-time workforce. StatsCan actually flagged this overrepresentation as a contributor to the gender pay gap, accounting for 8.9% of the gap in 1998 and 9.2% of the gap in 2018.

Since women make less, there needs to be more income-driven repayment options

Women are also more likely to struggle paying back their debt because they require time off from their work for things like maternity leave, or the need to be stay-at-home mothers because of the unaffordability and unavailability of childcare.

“Unfortunately, we still have systems that are built around the assumption that women are primary caretakers,” says Vagins, adding that the AAUW’s research has revealed that 34% of female graduates claim financial difficulties as compared to 24% of all men.

And, even when women are financially secure, they’re nearly three times more likely than men to forfeit that security in order to take care of others, according to a CIBC study from February of this year. That study revealed that 30% of women have reduced or completely ceased contributing to their savings as a direct result of having to care for aging parents or children.

According to Hoyes Michalos, a woman filing insolvency is less likely to be employed at the time of filing. And in 2018, 83% of female student debtors were employed, compared with 90% of males.

Not as much financial help from family

According to a 2017 report from the AAUW on women and student loans, women also don’t receive as much financial help for their education from family as men do.

The report says that a person’s “expected family contribution (EFC)” is based on the amount of money the U.S. Department of Education thinks someone and/or their family has available to pay for the student’s tuition in a given year. It can’t perfectly capture exactly what financial resources are available to each person or family, but the EFC does have an impact on how much money the government is willing to lend to a student.

Once again, black women are hit the hardest in this area, receiving the least family contribution for all groups, says Vagins. According to the AAUW’s research, the average EFC for white male students is more than three times greater than that of black female students.

How do we improve the situation?

There are several factors that have to be taken into account in order to alleviate the burden of student debt on women, and the first is making school more affordable.

The cost of a college education in the U.S., which includes tuition, room and board, as well as other expenses, has increased more than 100% since 1987, Vagins says. But the mean household income has gone up only 14%.

In Canada, Maclean’s magazine has pegged the average cost of a postsecondary education (including tuition, rent, extracurriculars, groceries, commute, among other factors) at $19,498.75. And a 2018 Graduating Student Survey from the Canadian University Survey Consortium revealed that 32% of students said they graduated with $20,000 or more in debt.

“We should be expanding grants that we give to low-income students to reduce the amount of student loans they’re taking on altogether,” says Vagins. “And there need to be more efforts to support tuition and debt-free options, supporting our public education.”

And, she adds, “Since women make less, there needs to be more income-driven repayment options.” That would mean linking someone’s repayment amount to how much they’re earning, as well as the sector of work graduates end up in. This kind of repayment option already exists in Australia, where graduates don’t have to start repaying their student loans until they start earning above AUS$45,881.

It would also help, Vagins says, to introduce more robust family leave policies, as well as creating access to more affordable childcare, both in the form of subsidies and physical sites like on campuses.

“We have to be cognizant that for non-traditional students or for parenting students, their debt may accrue from other obligations. And that has to be part of the discussion — otherwise you’re ignoring part of the problem.”

“There has to be more flexibility to understand the whole experience of a student trying to go to college.”