Billionaire Robert F. Smith recently delivered the commencement address at Morehouse College, an all-male, historically black college in Atlanta. Most commencement speakers impart wisdom about following dreams, giving back, working hard, and so on. But Smith brought a little something extra to his talk: a pledge to pay all of the 396-person graduating class’s student debt (about $40 million dollars).
No doubt, many members of the Morehouse class of 2019 desperately needed this help. But it turns out that women, and particularly black women, are more likely to need student debt relief than men, according to a comprehensive study by the American Association of University Women (AAUW). One reason is that in 2019 women will earn 57 percent of bachelor’s degrees awarded in the U.S. It’s a remarkable shift from just a few decades ago when women trailed men in educational attainment. Unfortunately, this achievement has come at a steep cost, literally, as women owe $929 million—or roughly two-thirds—of the $1.46 trillion in U.S. student debt.
These figures are drawn from the 2019 update of the AAUW’s 2017 report “Deeper in Debt – Women and Student Loans.” Several factors have contributed to greater female student debt levels. Firstly, a greater percentage of women are attending college than ever, with certain demographics, notably women of color, dramatically increasing their rate of college participation. (The percentage of non-white college students increased from 16 percent to 43 percent between 1976 and 2016). Secondly, a college education is much more expensive than it used to be, its cost in constant dollars more than doubling from three decades ago, even though there have been only marginal increases in household income, with most of those gains going to the top quintile. Furthermore, women are more likely than men to take on debt, and they face further headwinds in paying it back because of the gender pay gap.
The above factors have a number of life-long ripple effects; the AAUW notes, “Women take about two years longer than men to repay student loans and are more likely to struggle economically as they do so. As a result, women often put off saving for retirement, buying a home, or starting a business.”
The average total debt for women graduating with a bachelor’s degree is $21,619 (compared to $18,880 for men). Particularly striking is the racial disparity: white men are in debt to the tune of $19,486, and white women $21,993. The figures for black men and women are $26,434, and $30,366 respectively. (Interestingly, Asian and Hispanic student debt loads immediately following graduation are lower than those for whites). This level of debt has serious real-world consequences as, according to the AAUW, 57 percent of black women “report financial difficulties while repaying student loans,” as do 42 percent of Hispanic women, 30 percent of white women and 28 percent of Asian women (the figure for all men is 24 percent).
Student loans, whether public or private, are almost impossible to discharge through bankruptcy or other means, except repayment, and can trail people throughout their lives. Moreover, for those who do not complete their degrees there is a double whammy of serious debt, and little ability to dig out of that hole.
A particularly pernicious source of debt is for-profit institutions. Nearly two-thirds of their students are female, and for-profits enroll disproportionately high percentages of people of color, poor people, and current and former members of the military than do traditional institutions. Graduates—and non-graduates—of such programs have high levels of debt, high rates of default, and often mediocre job prospects.
To reduce female student debt, AAUW recommends expanding federal Pell grants and other forms of student aid, providing resources like child-care to non-traditional students, expanding income-driven repayment plans to help those earning relatively low salaries, and urging congress to pass the Paycheck Fairness Act to combat the gender wage gap.
Programs aimed at partial or full forgiveness of student loans—such as have been proposed by Elizabeth Warren—would be a boon to women, given their disproportionate level of debt. Of course, a more direct road to this goal would be making college cheaper to start with. Such measures could include increasing government support for state-sponsored institutions so that they can reduce tuition (in almost all cases, states are paying a lower percentage of the funds needed to run post-secondary institutions than they did decades ago).
Gender lens philanthropists can act on all of the above areas including funding grants, scholarships, and bursaries aimed at female students, particularly in fields where women are underrepresented. Another avenue is fighting to increase women’s pay and career prospects, including developing internships and mentorships aimed at female students and recent graduates. Finally, advocating for gender pay equity laws and better family leave and childcare policies will increase female earnings and allow for easier repayment of student loans.