Why Are Women Bearing the Brunt of Student Loan Debt in America?

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Women hold nearly two-thirds of the outstanding student debt in the U.S., according to the American Association of University Women. And, they have a harder time paying off their debt compared to men. Prior to the student loan forbearance period, 70% of men made at least their required minimum monthly loan payments, while only half (54%) of women said the same, a recent survey by D.A. Davidson found. In addition, 37% of women reported having either struggled or been unable to make their required minimum monthly loan payment prior to the forbearance, compared to 1 in 4 men (26%) in the same situation.

Here’s a look at some of the reasons behind the unequal student loan burden placed on women.

Women Owe More and Earn Less — and the Pandemic Has Made Things Worse

Women were struggling with student loan debt prior to the pandemic, and the COVID-19 pandemic has added to the struggle.

“Before the pandemic, women had on average 7% more student loan debt than men. The pandemic exacerbated existing issues such as wage disparities that made student loan repayment difficult for women,” said Andrew Crowell, vice chairman of wealth management at D.A. Davidson. “Women with bachelor’s degrees earn 74% compared to men with the same education.”

“With remote learning for children and social distancing critical for elderly relatives, many women took on increased caregiving responsibilities during the pandemic,” he continued. “As a result, in part, nearly 1.66 million women left the workforce from February 2020 to August 2021, according to the Federal Bureau of Labor Statistics. Leaving the workforce can hurt an individual’s lifetime earnings potential, and loss of wages can further compound the potential challenge of repaying student loan debt.”

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More Women Took Advantage of Student Loan Forebearance

More than half of women (55%) stopped making loan payments during the forbearance period versus 36% of men, the D.A. Davidson survey found.

“While repayment requirements have been paused during the pandemic, we are currently not expecting any extensions to the student loan forbearance period beyond the recently announced May deadline,” Crowell said. “Giving up two years of payments is simply extending the lifespan of people’s debt, and therefore the length of time they will have to eventually make these payments.”

This means that women are more likely to be paying their student loans off for a longer period of time than their male counterparts.

Women Are Less Likely To Have a Plan for Paying Off Student Loan Debt

Ninety percent of men are taking financial planning measures to help pay off their student loan debt — such as establishing a budget or applying for loan forgiveness — versus 80% of women. And men seem to be better at following through on these plans as well — 38% of men surveyed keep to a weekly or monthly budget versus 24% of women. And nearly one-third (32%) of male respondents make extra loan payments when possible, while less than one-quarter (23%) of female respondents said they do the same.

Taking proactive steps to pay off student loan debt is essential for women who want to even the financial playing field. As one such step, Crowell suggests that if possible, women should begin to start making student loan payments again before the new May deadline.

“Borrowers should try their best to begin making required minimum payments again in February, the previously agreed-upon deadline,” he said. “To avoid late payments, use the extra time to contact your lender to ensure your information is up-to-date and begin making payments as soon as possible.”

Women should also create an overall financial plan that can keep them on track with goals.

“Think about student loan debt in the context of your holistic financial plan,” Crowell said. “Speak with a financial advisor about how to balance student loan debt alongside other debt, such as car loans or credit card payments. Evaluate whether there is an opportunity to refinance or consolidate debt at a lower rate.”

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Crowell also recommends putting any windfalls or extra cash flow toward student loan debt.

“Be strategic with newfound cash flow to make additional student loan payments,” he said. “For example, did you earn a year-end bonus or receive a raise over the past year? Plan on putting some of that money toward your loan repayments.”

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