Before Covid, women struggled with student debt. Your problems could get worse
Courtesy of the American Association of University Women
It’s a statistic that results in a double income: women owe two-thirds of the outstanding student loan of $ 1.7 trillion.
On average, women borrow more than $ 31,000 to fund their education. Black women take out more than $ 41,000. Men now borrow around $ 29,000.
However, these differences are only the beginning of the problem.
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Women take longer to pay off their student debts because they still only make 82 cents for every dollar a man makes. More time on student loans means more interest and less resources for other milestones like buying a home or starting a family.
The coronavirus pandemic is likely to make math worse for women, according to a report from the American Association of University Women.
CNBC recently interviewed AAUW CEO Kim Churches about the results of their organization. The exchange below has been compressed and edited for the sake of clarity.
CNBC: Why do women borrow more student loans than men?
Kim Churches: Women make less than men and may not have as much money to pay for their education. Some receive less help from their families, while others have care costs to cover. We know that women are more likely than men to attend nonprofit colleges and universities where debt is higher. So that’s a factor too.
CNBC: How do we know women have more difficulty paying their student debts than men?
KC: The difficulty of paying back student loans is reflected in default rates, which are higher for women than men and much higher for black and Hispanic borrowers than for white and Asian borrowers. We also found that 34% of all women and 57% of black women who paid back their student loans said they could not cover their essential expenses.
CNBC: Why are black women taking on more student debt and what problems do they face with repayments?
KC: The racial wealth gap is a big factor here. The median wealth of white households is 20 times higher than that of black households, so black families can contribute far less to college education. Then there is the gender pay gap. Black women only make 63 cents for every dollar a white man makes, which means less money to spend on education and more challenge to meet student loan obligations.
CNBC: How is the pandemic likely to affect female student borrowers?
KC: We expect a sharp increase in the number of women unable to meet their student loan obligations. Most of the layoffs we’ve seen have been in women-dominated areas, and many more women have left the workforce and are still taking responsibility for childcare and home education. If we don’t address the student debt crisis, we will see an even bigger setback to women’s progress in the years to come.
CNBC: Does the AAUW think debt relief is a good idea?
Yes, we need student loan forgiveness and we actively support a number of federal and state debt relief proposals. But debt relief alone is not the answer. A generation ago, an academic year cost 22% of median household income. That number has risen to 43% today. The cost of higher education is really out of control.