The Gender Debt Gap: Why Women Owe More Debt Than Men

Unbelievably, student loan debt is the second-highest consumer debt category after mortgage debt, creating a $1.3 trillion catastrophe in the United States. Debt from credit cards and auto loans combined is higher than debt from student loans.

We were interested in the distribution of student debt by age and gender. We examined anonymised information from the more than eight million users of Credit Sesame’s database. It seems that women have more debt than men do. In addition, the debt follows them for a longer period of time.

For instance, women have 46% more student loan debt when they are in their 30s than they had when they were in their 20s. Given that many folks continue to accumulate debt and complete their education well into their 20s, this makes some sense. But just 23% more is carried by men.

It becomes more fascinating. The amount of student loan debt held by women in their 50s is unchanged from the preceding decade. But guys are 8% lighter. Finally, the debt load for women in their 60s declines, but only by 2%, compared to a 16% decline for males.

Increase in student debt load from prior decade
Age Women Men
30s 46% 23%
50s 0% -8%
60s -2% -16%

Why do women have larger student loan balances than males, and more importantly, why can’t they pay them off?

Women make less money due to the gender wage gap.

Women attend college at higher rates than men, yet they are paid less. It would take an additional 44 days of labor for women to make the same amount as males did in 2015, according to a Pew Research Center analysis of median hourly wages of both part- and full-time workers in the U.S. Women only made 80% of what males did when only full-time, year-round employees were considered. According to a recently published research by the American Association of University Women (AAUW), the salary gap won’t be closed until 2059.

Only four professions—counselors, teaching assistants, combined food prep and serving employees, and sewing machine operators—show that women’s median earnings are marginally higher than men’s. The gender pay gap is typically greatest in occupations with higher than average median wages and smallest in occupations with lower than average median earnings.

The salary gap is smaller for those aged 25 to 34, which is a small but encouraging piece of news. 90 percent of what males make is paid to women.

Graduate debt is higher among women than men.

In the autumn of 2016, 11.7 million more women than men attended college, with 8.8 million men making up the difference, according to the National Center of Education Statistics. Student loan debt is higher among women. Compared to 63% of men, 68% of women graduate from college with debt, according to the AAUW. In addition, 62% of undergraduate students attending pricey private universities are women. Since more women enroll in graduate programs, they will not only have larger student debt loads but also start paying them off later.

Women graduate with degrees that have lower potential for income.

More than 57% of all bachelor’s degrees awarded to the class of 2014 were awarded to women. With 80% of the graduates in the top 10 highest-paying undergrad degrees being men, there was an overrepresentation of men in the highest-paying undergraduate majors. Nearly two-thirds of the degrees earned in the top 20 highest-paying majors went to men.

In the fields of engineering, computer science, and management information systems (MIS), for instance, men made up 80% of the graduates. Nursing was the only major among the top ten in terms of gender representation. In 2014, women obtained 84.4% of bachelor’s degrees in nursing.

Both positive and negative news are revealed in a 2015 Pew report. For the first time ever, 5.4% of Fortune 500 CEOs are women. The bad news is that it’s a pitiful sum.

Women vacation more frequently than men.

Women typically earn less over time because they are more likely to take time off work to care for children or elderly parents. Early in one’s career, the wages difference is less, but it expands dramatically as workers age, marry, and start families.

According to member statistics from Credit Sesame, women’s school debt loads peak at $41,768 in their 30s. Their 50s are when it reaches its peak at around $48,000 before significantly declining the next decade. It is understandable why working women struggle to get ahead given that they frequently balance multiple types of debt, such as credit card debt, mortgage debt, and auto loans.

Women may experience the “motherhood penalty” when they eventually return to the workforce. Employers are less inclined to hire moms, and when they do, the pay they offer is frequently less than what a man would receive in a comparable position. Employers frequently worry that a woman may need time off to care for family members, quit their job, or take an extended leave of absence in order to have and/or raise children. In contrast, many fathers experience an increase in their income after becoming parents, a phenomenon known as the “fatherhood bonus.” This may be an admission that the father must provide for the family.

The majority of breadwinners are women.

The widening pay disparity is also a result of changes in family structure. The proportion of moms who made at least a quarter of the household income increased from 28% to 63% between 1967 and 2012.

Today, 40% of mothers of children under 18 provide the majority or all of the family’s income. Making a dent in debt will become more difficult if women earn less than males and take home the lion’s share of the household income.

Women who quit the employment continue to experience the pay gap.

Women are less eligible for Social Security benefits and pensions when they retire or go to a part-time job in their later years because they make less money while they are working. In general, women receive fewer earnings-related benefits like disability and life insurance. Due to their lower income, people can still have trouble paying off debt in their later years.

The cards are stacked.

Women find it challenging to repay their student debts due to all of these circumstances. Women have a disadvantage from the beginning and may never catch up (in this lifetime).

Credit Sesame, the American Association of University Women, the National Center of Education Statistics, the Pew Research Center, and the U.S. Bureau of Labor Statistics provided the information.

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