The student loan debt crisis continues to plague millions of Americans, with the average borrower holding a balance of $38,792. By and large, this means that many college graduates enter the workforce with a negative net worth while facing immense hurdles when it comes to buying a home, building wealth or achieving other financial goals.

But some Americans have taken a bigger hit when it comes to student loan debt. In fact, a recent analysis from the American Association of University Women (AAUW) shows that women hold approximately two-thirds of all student loan debt in the United States. Not only that, but Black women in particular graduate with more undergraduate debt than other women.

If we hope to solve the student loan debt crisis, we have to look at the root causes of this issue, as well as why women struggle more to repay their loans after they graduate.

Graphic explaining that women carry more student loan debt than men

Source: American Association of University Women, Deeper in Debt: Women & Student Loans

The gender wage gap

According to student loan expert Robert Farrington of The College Investor, another problem women face when it comes to their student loans is the fact that they tend to earn less.

“Lower wages forces women to make different choices about how they spend their money, and it’s not going to their student loan debt as quickly,” he says. After all, having less money coming in could mean saving less for retirement, struggling to save up the down payment for a home and not having any extra cash to throw toward student loan debt.

The AAUW data backs this up; it shows that women take approximately two years longer than men to repay their student loan debt. They are also more likely to struggle financially as they pay down their student loans.

How bad is the gender wage gap? Recent figures from the Center for American Progress show that women earn between 54 cents and 90 cents per dollar when compared to white men. Here’s what that looks like broken down by ethnicity:

  • White women: 79 cents per dollar.
  • Black women: 62 cents per dollar.
  • Hispanic or Latino women: 54 cents per dollar.
  • Asian women: 90 cents per dollar.
  • Alaskan Indiana or Alaska Native women: 57 cents per dollar.

How women can reduce their student loan debt

While the deck appears to be stacked against women when it comes to student loan debt, there are steps women can take to improve their own situation. It all starts with doing plenty of research and making sure that any higher education decisions are informed by the facts. For example, women and men borrow less when they choose public, in-state institutions over for-profit institutions, or when they choose community college for their first two years of school.

Other tips to reduce student debt include:

  • Choose the right repayment plan. Borrowers with federal student loans can repay their student loans over the standard 10-year repayment plan, but they can also opt for an extended or graduated repayment plan that lasts for up to 30 years. With private student loans, repayment terms can be anywhere from five to 20 years. These options won’t reduce your debt or the amount of interest you pay over time, but they can help make student loan payments more affordable.
  • Explore income-driven repayment plans or Public Service Loan Forgiveness (PSLF). Federal student loan borrowers can also look into income-driven repayment plans or Public Service Loan Forgiveness, which let you cap student loan payments at a percentage of your discretionary income. Income-driven repayment plans forgive any remaining loan balance after 20 or 25 years, while PSLF forgives remaining balances after 10 years.
  • Ask your employer to chip in. Updates to the CARES Act in March 2020 and the Consolidated Appropriations Act in December 2020 mean that employers can contribute up to $5,250 per year to employee student loans, with the amount tax-free for both parties.
  • Refinance private loans. Consider refinancing private student loans with a new lender if you’re now eligible for a lower interest rate. Doing so won’t reduce your principal balances, but it can help you save on interest, pay down balances faster or both.

How the U.S. can reduce student loan debt for women

While anyone with student loans has some options when it comes to reducing their debt, saving on interest or securing a lower monthly payment, many major institutions think that the United States government could be doing more to help. Specifically, the AAUW makes the following suggestions:

  • Congress should protect and expand Pell Grants for low-income students.
  • Congress should increase funding for public colleges and universities with the goal of moving toward tuition-free higher education.
  • The U.S. Department of Education should make it easier for all borrowers to enroll in income-driven repayment plans.
  • Institutions should create new programs to address some of the financial challenges of attending college, including the cost of child care.
  • Employers should provide employee matches for student loan repayment.

In the meantime, students with federal loans can still benefit from COVID-19 emergency relief measures that were put in place in 2020 and extended several times. Interest rates on federal student loans are set at 0 percent until Sept. 30, 2021, and no payments are due during this time.

The bottom line

The American student loan debt problem only seems to get worse, and that’s true regardless of your gender or ethnicity. However, the issue has definitely become a crisis for women, and particularly for women of color.

Unfortunately, it may be a while before we see any meaningful legislation that affects student loans or the collective debts of American borrowers. In the meantime, women struggling with their debt may take a closer look at repayment plans, including income-driven repayment plans, to ensure that they’re repaying student loans with a plan that makes sense.

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