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Managing student loan debt

Starting behind due to the gender pay gap, women have a tougher time paying off student loans


Because of the significant gender pay gap in the U.S., women have a more difficult time than men paying off student loan debt. Read experts’ opinions on how to fund your education while protecting your finances.

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Student loan debt figures are dismal.

According to the New York Fed, U.S. borrowers owed $1.54 trillion in student loan debt as of the second quarter of 2020. That’s nearly double the total credit card debt figure of $820 billion.

The American Association of University Women (AAUW) is an organization dedicated to fighting for fair pay and economic opportunity for women, and according to its website, women carry almost two-thirds of that student loan debt.

Yet, women face a gender pay gap from the time they graduate college – and that gap grows as they age – making it harder for them to pay down that debt. It also makes it almost impossible for women to save for things such as starting a business, purchasing a house or even retiring.

Keep reading to get experts’ takes on women’s student loan debt – and how to handle it.

See related: Pros and cons of paying your student loans with credit cards

Why women struggle with student loan debt

According to “Deeper in debt: Women and student loans,” a study by the AAUW, women hold nearly two-thirds of the nation’s student loan debt, which comes out to approximately $929 billion.

In addition, 41% of women undergrads take on student loans, compared with just 35% of men.

That same study shows “black women complete their undergraduate education with more debt than other women, first-generation college students face more debt by the time they graduate and women who attended for-profit colleges owe far more money than those who attended public or private non-profit schools.”

Pair that with the fact that women who graduate make 74% less than men who graduate, factor in that women take time off to care for their families and parent their children and consider the growing cost of a college education. It’s no surprise women have a harder time paying back their student loan debt than men.

The cost of a college education has risen 103% since 1987, but the median household income has only risen 14% in that same time frame. Women also take about two years longer than men to repay student loans – and they often struggle financially while paying it down. So, not only do women have more to pay back, but it also takes us longer to do so.

In addition, recent grads have to deal with the unemployment disaster that has resulted from the pandemic, which has made paying student loans even tougher.

Before you take out a loan, do your research

Katelyn Magnuson is the founder of The Freelance CFO, an organization designed to help millennials (and beyond) master their money knowledge and become financially independent.

She cautioned that before you take out a student loan, you should confirm you need the degree of your choosing to go into your career field.

She also suggested you ask yourself these questions: Is your career field hiring? What are the long-term employment prospects? How long do you expect it to take to be able to recoup your student loan costs? Does a degree help in this field more than it costs?

Be sure to take out only what you need for your degree, Magnuson stressed, and carefully analyze any extra amount you’ll need for living expenses.

“Student loan debt – especially private loans – can add up very quickly when you graduate, so taking out the bare minimum for your degree program is ideal,” Magnuson said. Also, make sure you’re not paying for higher tuition at a school that you don’t need, she added.

For instance, Magnuson considered and was accepted to both Georgetown University and Gonzaga University, but instead chose to attend a community college for two years and finish at Portland State University.

By taking this route, she was able to graduate with no student loan debt – and she didn’t regret her choice.

When you’re preparing to graduate and are looking for jobs in your field, understand the going rate (regardless of gender) and make sure you negotiate and advocate for yourself in the new role and any future roles, Magnuson noted.

“Know your worth, job hop as needed in order to climb the pay ladder and tout your talent every chance you get because you need to be your own biggest fan and best advocate,” Magnuson said.

See related: How does a student loan deferment affect your credit score?

Are you pursuing education from a place of love or a place of fear?

“A lot of times, men really tend to feel more confident asking for what they’re worth, to be paid a certain amount or for a raise,” said Jessica Caver Lindholm, writer, speaker, financial coach and founder of the website ToLivingFree.

Of course, this isn’t the only reason men may get paid more in certain jobs. But as women, we tend to skirt around the issue because we are taught that we aren’t supposed to speak up about certain topics, she added.

“The truth is, those archaic belief systems are still there, and we are still playing them out in 2020,” Lindholm said.

Furthermore, she said, as women, we tend to feel more pressure to consistently prove ourselves with more education and more certifications – it’s as if when we get more letters behind our names, we will finally feel good enough and finally feel like we know enough.

Women who consistently pursue more and more degrees, and therefore accrue more debt, need to determine if they’re pursuing the education from a place of love or a place of fear and a need to prove their self-worth, Lindholm explained.

And she pointed out that if earning the degree is coming from a place of validation, then it’s really no different from going out and buying six Chanel bags.

For those who already have significant student loan debt, she said, the steps you can take to avoid being overwhelmed are simply a matter of seeing it, being OK with it and forgiving yourself for potentially having chosen things from fear in the past – something Magnuson touched on.

“But if you did choose to take on the debt from a place of love and desire, you still just chose to pay something off over time instead of paying for it all up front – you used the options that were available to you at that time to move forward and there is nothing bad or wrong about that,” Lindholm said.

Transfer debt to a lower interest account

Andrew Roderick, CEO of Credit Repair Companies, said that although the unfortunate reality is that the gender pay gap still exists, he thinks we are moving in the right direction.

“I believe that one of the best choices that anyone can make right now, whether male or female, is to review your student loan and transfer your debt to a lower interest account,” Roderick said.

Many banks will offer the same interest rates as 10 to 15 years ago because people are aware of gender inequality gaps and some banks accept their part in it, he added.

“Shop around for the best deals – they are out there,” Roderick advised.

See related: Overcoming the pay gap as a woman of color

Now could be a good time to get a student loan

In some cases, some women take longer than men to complete their college degrees because they have to juggle more responsibilities outside of school, according to Michael Hammelburger, CEO at Expense Reduction Group. For instance, he said, they might work part-time work and go to school part-time.

But Hammelburger noted that the 10-year treasury yield – sold at auction by the government, the bond signals investors’ confidence levels – is mostly likely to stay near the 1% federal student loan interest rates; if it drops more as we head to the second half of the year, then it’s a good time to take out a student loan.

These low rates will keep interest rate charges down so paying off your debt will be faster, he explained.

Currently, Hammelburger warned, there are regulations that won’t allow you to enroll in online courses using your federal student loan, so make sure to consult your lender on this matter.

Here are the best types of student loans, according to Hammelburger:

  • Direct Subsidized loan: This loan is best if you are an undergraduate student with proof of financial need – you learn if you qualify after completing your Free Application for Federal Student Aid (FAFSA).
  • Direct Unsubsidized loan: This type of loan is best if you are an undergraduate student but cannot demonstrate your financial need.
  • Parent Plus loan: If your parents cannot meet credit requirements for a loan, consider this loan.
  • Private student loans: If you are ready to present your creditworthiness documents and you have a co-signer, then consider private student loans.

See related: Student loan debt has ripple effect throughout young adults’ financial lives

Never ignore your debt

David Baddely, director of Scottish Trust, said the gender pay gap can play a big part in paying back your student loan for the simple reason that less money means less to offer.

But this can be overwhelming for women who feel they may never be able to fully get on top of student loan debts while male equals are seeing theirs disappear, he added.

And that overwhelming feeling can easily affect your mental health, he said.

Instead, Baddely suggested, focus on paying what you can afford, which is much healthier for you mentally.

“There is no magic tool to easily get rid of your student loan debt, but ignoring it is much more likely to have a negative effect, so concentrate on what you are able to do,” Baddely said.

See related: My unpaid student loans fell off my credit report. Do I still have to pay?

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