College Debt Weighs Heavier on Women

Women College Debt

Women College Debt

An interesting article for NPR has recently highlighted the disparity in dealing with college debt for women compared to men. Because of the wage gap between men and women in the work force, more women are finding themselves struggling with college debt after they graduate.

Some students finish college with between $30’000-100’000 of college debt, a substantial amount of debt to be carrying as you look for employment in an economy that is still recovering. Women have made some gains in salary in recent years but are still behind what men typically earn for the same role. So while college costs the same despite your gender, women will usually be rewarded less in the workplace.

That means they will be paying a higher proportion of their salary to service the college debt and may run into financial problems that men avoid because they earn more. A study cited by NPR said that “one year after college, nearly half of women working full time, and 39 percent of men, were devoting more than 8 percent of their income toward their debt” While it’s not a large amount, you have to consider the many other living expenses that recent graduates are facing including rent, utilities, car loans, transport costs, credit cards and so on.

The gap is still larger than what most people believe. Many would assume the difference in salaries between men and women would be small in 2014, 5% of less. But the reality is that college educated women on average receive 82% of the salary of a man with the same qualifications, one year after graduation. When comparing “apples to apples”, recent graduates in the same field, the wage disparity is obvious and concerning.

It’s not all about the wage gap though. Many talented women are also attracted to fields that may pay less. Women tend to be attracted to fields like education and social services, while men tend to move into fields like engineering and IT.

Research has shown that the wage gap is closing, but it is taking decades to reach this point. There is also a problem with the wage gap increasing as people’s careers continue. So while the gap might be as small as 10% when men and women start their careers, ten or twenty years into their careers it can become significant.

Some of the college debts are so large now that this disparity plays a role for the first 10 or 15 years of their working life. There are multiple reasons for women’s income slipping as their careers progress, with the obvious one being that they may take time off to have a family.

The long term implications for women dealing with college debt are that they have to be more rigorous when dealing with their finances. Chances are they will less room to move in their budget and must watch their spending very closely, especially in the first decade after leaving college.

Women should also be more careful about taking on additional debt in the first decade. Things like car loans should be avoided if possible, and watching credit card debt is incredibly important.

If you are a woman interested in avoiding issues relating to college debt and wage disparity, you should choose a major very carefully and look at the wage conditions in the industry for your chosen profession. If you want to be very cautious, you can estimate a rough budget for your post-college working years and see exactly how tight it might be with a large college debt that needs to be serviced.

[debtcalc]

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