Student Loans Hurt This Group The Most

Student loan debt hit a record high of $1.5 trillion in Q1 2018 according to the US Federal Reserve’s latest data, but while it is typically associated with millennials there’s one demographic it impacts the most: women. They hold nearly two-thirds ($900 billion) of student loan debt as of mid-2018 according to a report from the American Association of University Women; men hold the balance of just +$490 billion.

Here are some more stats from the report that help explain the disparity:

  • More women attend college: women represent over half (56%) of enrolled college students as of fall 2016, but hold a greater amount (65%) of outstanding student loan debt.
  • More women take on debt: “41% of female undergraduates took on debt in 2015–16 compared to 35% of male undergraduates.” On average, women also “take on more debt than men at almost every degree level and type”. Lastly, “across degree levels women in college took on initial student loan balances that were about 14% greater than men’s.”
  • Fewer men have student loan debt at graduation: “71% of women have student loan debt at bachelor’s graduation compared to 66% of men”.
  • African American women are the most in debt at graduation: “Black women graduate with the most debt – at $30,400 – compared to $22,000 for white women and $19,500 for white men.”

The difference in student loan debt between men and women is only getting worse, as it has almost doubled in the last four years: “women now graduate with an average of $2,700 more debt than men when earning a bachelor’s degree.” Here are the consequences for women:

  • Women earn less than men after college: Full-time working females with college degrees earn 26% less than their male peers. Additionally, “compared to white men with bachelor’s degrees, black and Hispanic women with bachelor’s degrees make 37% and 34% less (respectively) and struggle to repay their loans as a result.”
  • Women take longer to repay their loans: Due in part to earning less than men, women paid off an average of 31% of their outstanding debt between 1 and 4 years after graduation compared to 38% for men. Default rates are also higher for women than men.

In sum, this all contributes to the perfect storm. A greater share of women attend college than men, but they also take out more loans and borrow more money in order to do so. Upon finishing their higher education, they earn less than men and are slower to repay their loans.

Aside from the obvious issues of gender equality, these statistics are also important to understanding the future trajectory of US economic growth. By one analysis we’ve seen (link below), US women are the primary breadwinners in 40% of US households. The disparity in student loan debt and earnings means lower growth in household disposable income and, therefore, consumption.

Sources: https://www.aauw.org/article/women-hold-two-thirds-of-college-student-debt/
https://www.aauw.org/research/deeper-in-debt/
https://www.federalreserve.gov/releases/g19/HIST/cc_hist_memo_levels.html
https://www.refinery29.com/women-breadwinners-household-income-family-impact?bucketed=true

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