Because student debt affects a large swath of Americans who struggle to build wealth over the course of their careers, it is primarily discussed as a class and an economic stimulus issue. But student debt is also an issue of particular importance for women. According to earnings statistics, women get far less bang for their buck out of higher education. Recent proposals to reduce student debt could benefit women over the course of their lives—but they may not go far enough.
Women make up the majority of higher education students, yet they earn far less than men with the same degrees. For the past several years women have outnumbered men in undergraduate and master’s programs, and as of 2010 women outnumber men in PhD programs as well. With respect to the two most expensive degrees, law and medicine, in 2009-10 women comprised 45 percent of law school classes, and as of 2011 they made up 48 percent of medical school graduates. This NPR piece from 2010 discusses how even though women are earning more engineering, math, and science PhDs than they were in previous years, women still experience wage disparities in these fields after graduation. The American Association of University Women (AAUW) found in a study last year that the student loan repayment burden is higher for women than for men for a variety of reasons, including the gender pay gap, which begins right after college graduation.
And gender-wage disparities hold true across multiple sectors. Last month the National Women’s Law Center pointed out that on average “women who work full time, year round are paid only 77 cents for every dollar paid to their male counterparts—a pay gap that translates to $11,084 in lost wages annually.” The disparity is even greater for women of color. A study released last month from the National Partnership for Women and Families revealed that of the 50 largest urban cities, not a single one had eliminated the wage gap; neither had any state. There are a variety of causes for the wage gap: leaving the workforce to care for children or parents is still something more women take on, and even after controlling for life choices women on average earn 91 cents to the dollar. Discrimination is believed to account for this chunk of the wage gap.
Women also tend to gravitate toward professions that pay less in general. For example, women dominate the non-profit sector, where the earning potential is far lower than the private sector. Non-profit salaries for management level positions, which women with higher degrees may aspire to, pay far lower than in the private sector.
“The existing gender pay gap is making it hard for women, especially women of color, to pay back their student loans,” Working Families Party (WFP) organizer Nelini Stamp told RH Reality Check. WFP is working to reform student loan practices. “The proposals we see to reduce interest rates are a move in the right direction, but instead of just debt relief programs we need to focus on affordability of higher education so we are not sending new generations into debt.”
To help address this issue, some lawmakers are working to reduce federal student loan interest rates, which are set to skyrocket July 1. A proposal by Sen. Elizabeth Warren (D-MA) goes the furthest by seeking to reduce federal student loan interest rates to 0.75 percent, on par with the interest rate banks pay on some of their Federal Reserve loans. Sen. Dick Durbin (D-IL) advocates a more conservative measure of capping student loan interest rates so that they do not skyrocket during a period of high interest rates.
Elena Peifer is a third-year student at the University of Michigan School Law. She opted not to attend Columbia University School of Law because she would have wound up with $222,000 in debt upon graduation. Even after a strong financial aid package from the University of Michigan Law School, she will still be left with a $45,000 student loan bill upon graduation.
“Forty-five thousand dollars still seems like an exorbitant amount of money, because as a public interest lawyer, I will be making less than that out of law school,” Peifer told RH Reality Check. Peifer chose the more financially sound option, Michigan Law, because she is committed to practicing public interest law with non-profits that pay far less than big law firms do. In general, women who earn law degrees are more likely to pursue lower-paying public interest careers.
Women’s tendency to earn less overall means they will spend a larger percentage of their incomes paying off student debt and may accrue less wealth over time, as a piece in U.S. News and World Report pointed out earlier this month. Though student debt reform is not a solution to the wage gap, it can help improve women’s economic status by enabling them to save more. It can also serve as economic stimulus, as women would have more income to spend.
There are some debt relief programs for students who choose careers in public interest—Peifer is benefiting from at least one—but these options are not widespread.
Jessica Galeria graduates this week with an MBA from the University of California Berkeley Haas School of Business, and she will have about $50,000 in debt. She attended business school at night while working for a large non-profit, where she serves as associate director of strategic development and fundraising.
“One of the surprises for me is that there aren’t debt relief programs that were viable for me. I definitely looked into it,” she said. “So in general, I’m laudatory of the federal government efforts to reduce burden of student debt.”