Opinion | Why women owe more student debt (2024)

FAQs

Opinion | Why women owe more student debt? ›

Because they earn less, women then take longer to pay off student debt and, like the 65-year-old woman profiled, might still be making student loan payments as they approach retirement. Because of even greater pay inequity, women of color have an even harder challenge paying their student debt.

Student debt is the second-highest source of household debt after housing. Women take about two years longer than men to repay student loans. From the moment women graduate from college, most face a gender pay gap — which compounds as they age. This makes it even harder to pay off their larger share of student debt.

The Gender Pay Gap's Impact on Borrowing and Repayment

After graduation, the gender pay gap limits the economic resources women can dedicate to student debt repayment. Earning 85 cents on a dollar compared to what their male peers earn, female borrowers will have less to put towards student loan payments.

Men have 2% more credit card debt than women. Men have 20% more personal loan debt than women. Men have 16.3% more auto loan debt than women. Men have 9.7% more mortgage debt than women.

Women hold 66% of all student loan debt. 41% of women undergraduates take out student loans, compared to 35% of male undergraduates. Women take an additional two years on average to pay off student loans.

Those who do not graduate face even more financial obstacles and have higher rates of delinquency and default. In 2021, 17 percent of Black borrowers and 18 percent of Latinx borrowers reported being behind on their student loan debt compared to 9 percent of white borrowers.

Soaring college costs and pressure to compete in the job marketplace are big factors for student loan debt. Student loans are the most common form of educational debt, followed by credit cards and other types of credit. Borrowers who don't complete their degrees are more likely to default.

Black women's average loan balance is the highest of any group, at $11,000 (Addo and Zhang 2022). A high percentage of Black men also have student debt (32.1%). Among Hispanic borrowers who attended some college or higher in their educational career, 24.1% of women and 18.9% of men are paying off student loans.

A nation saddled with debt will have less to invest in its own future. Rising debt means fewer economic opportunities for Americans. Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar.

Too much debt and a company may be in danger of not being able to meet its interest and principal payments, as well as creating a strain on its finances.

Who do we owe the most debt to? ›

In total, other territories hold about $7.4 trillion in U.S. debt. Japan owns the most at $1.1 trillion, followed by China, with $859 billion, and the United Kingdom at $668 billion. In isolation, this $7.4 trillion amount is a lot, said Scott Morris, a senior fellow at the Center for Global Development.

Former financial arbitrage trader Jerome Kerviel is the most indebted man on the planet, owing his former employer $6.3 billion. The amount Kerviel owes to French bank Societe Generale for fraudulent trades made in 2007 and 2008 would make Kerviel one of the 50 richest people in America if those debts were assets.

For example, research from PwC and TotallyMoney shows that on average, women have a credit score that's 10 points lower than men and this persists through their lifetime. This means that women are not only less able to access credit, but any credit they do access costs them more for them than for men.

Approximately three-quarters of Black- and White-headed families have debt, but the median debt-to-asset ratio is 50% higher among Black than White families (Copeland, 2020), with Black borrowers less likely to fully repay loans (Brevoort et al., 2021).

Student loans in the U.S. are generally either owned by the federal government or financial institutions. The federal government fully guarantees almost all student loans. Some student loans are held by agencies like Sallie Mae or a third-party loan servicing company.

Black borrowers are disproportionately burdened by student loan debt. As of 2019, a typical Black student loan borrower will still owe 95% of loans 20 years after starting college, compared to 6% for a white borrower.

Women graduate owing almost $22,000 in student debt, compared $18,880 owed by men. Black women graduate with an average of $37,558 in student debt. Women with bachelor's degrees who work full time make, on average, 26% less than their male peers, hampering women's ability to quickly pay off debt.

In 2021, Americans' median student loan debt was between $20,000-$25,000. However, average student loan debt varies dramatically by race. Black adults in particular tend to bear the highest burdens across indicators, from student loan borrowing rates to default rates to average debt.

Federal Student Loans by Age

Unsurprisingly, younger people hold the majority of student loan debt. Borrowers between the ages of 25 and 34 carry about $500 billion in federal student loans—the majority of people in this age group owe between $10,000 and $40,000.