Student debt weighs down women more. Blame the wage gap

When Kristine Leighton graduated from a private college five years ago with a degree in hospitality, she owed $75,000 in student loans. Each month, she paid the minimum amount of $450 and lived at home with her parents on Long Island, N.Y.

At first, she was working at a hotel for $10 an hour; money was tight. Even after she got a job in Manhattan making $75,000 a year, she still couldn't afford to move out. She funneled her earnings into car payments, credit card bills and debt, and a monthly commuter train pass. The loan payments left little extra money for things like an emergency fund.

At one point she upped her monthly student loan payments to around $1,800 for almost a year, in an effort to chip away at her debt as much as she possibly could. To prepare for the future.

"I was trying," Leighton says. "I had this great job, this great career, but I still couldn't afford to move out of my parents' house."

Women have made gains in the workplace but there's still a wage gap. Although attending college costs the same for both genders, women are more burdened by student loan debt after graduating. They spend a higher proportion of their salaries on paying off debt because, well, they have lower salaries to work with than men — from the very start.

A study by the American Association of University Women found 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. That may seem small, but when you are fresh out of college, the combination of living expenses, credit card bills or debt, a 401(k) and a little left over for savings — if you can hack it — adds up.

It does so more quickly for women. College-educated women made 82 percent of men's salaries one year after graduating in 2009, according to the AAUW study.

"For many young women, the challenge of paying back student loans is their first encounter with the pay gap," the study says.

It might seem like the wage gap would be minimal at that point, since graduates of both genders are typically young, single, childless and relatively inexperienced in the workplace. Not so.

Women make less than men — even upon first entering the workforce — for a number of reasons. They're discriminated against. They don't negotiate. Or they do and are penalized. They also tend to choose fields that pay less, such as social sciences and teaching, instead of engineering and computer science. But after the AAUW controlled for factors such as college major, occupation and average hours worked, the wage gap was still there. Struggling To Get Ahead The good news is that with each successive generation, that wage gap gets a little bit smaller. Today's young women are the first in modern history to start their work lives at near-equal pay with men, according to a recent Pew study of Census data. Thirty years ago, median hourly wages for women were 77 percent of men's; now they're around 93 percent. That's progress.

Here's the bad news. The Pew study suggests that this smaller gap can't quite hold. That as today's young working women grow into their careers, this near-parity will slip.

"That gap expands," says Fatima Goss Graves, vice president for education and employment at the National Women's Law Center. "It is the smallest the first year out of college."

Not surprisingly, the reasons include marriage, babies and discrimination in the workplace because of marriage and babies.

"You have this same burden of student debt that is affecting men and women," Graves says. "But because women are making less, it means a larger percentage of their income is going [to paying off debt]."

What's the long-term impact for women — and families?

When you struggle more with student debt, you are less able to cover other expenses, explains Lauren Asher, president of The Institute for College Access and Success.

"Carrying outstanding student debt can affect whether borrowers make other financial commitments," Asher said in an email, "like buying a home, starting a family, opening a small business, saving for retirement or saving for their children's education."

After you marry, your debt becomes a joint burden, and there is less income for family expenses in the short and long term.

"When women are paid less, women and men aren't happy about the idea that women make less," Graves at the National Women's Law Center says. "Those are really dollar-and-cents family issues."

Plus, married couples tend to prioritize the career of the higher-earning spouse, so women are more likely than men to relocate for a spouse's job, according to the AAUW study — and to take time off for parenting, too.

Making Smart Choices

So basically, women make less than men, are thus more burdened by student loan debt and then typically don't catch up over their lifetime in terms of wages.

With college debt setting women back so far, so early, is it even worth going to college in the first place? Why not just get a job and a head start before marriage and kids might slow you down?

Because, when it comes to wages, forgoing college will set you back much farther than taking out a loan will. The real question to ask is: What can women do?

First of all, choose your major wisely.

"Early choices that you make will stay with you," says Catherine Hill, vice president of research and one of the authors of the AAUW study. Educate yourself on the salaries and career options of different majors, she says.

Graves points specifically to careers in science, technology, engineering and mathematics, or STEM.

"Too many women aren't on the STEM track," Graves says. As minorities in these fields, women should tap into organizations that provide "support systems that help with the isolation," she says.

Then, when you are in college, Asher at The Institute for College Access and Success says, choose your loan wisely.

"Private loans are one of the riskiest ways to pay for college," Asher says. "[Experts say that] federal loans are the safest."

Once you're in the workforce, it also doesn't hurt to bulk up on negotiating skills, learning to work around potential discrimination.

As for Leighton, who is now a financial analyst for a resort in Orlando, Fla., she admits that she hasn't ever negotiated for a raise. She is careful with her money, though, and wishes she could devote more of her earnings toward a 401(k) or saving up for her future. She'd like to own a home someday.

"I can't buy a house because I am pretty much paying [the equivalent of] a mortgage with my loans," Leighton says.

If she could go back in time, would she do it differently?

"I would have gone to a state school instead of a private school," Leighton says. "You can get the same education, and you may still have loans but it's not going to be as much."

Luckily, her current employer will pay for her to get her MBA. So she can get her master's degree — and help raise her salary in the future — without incurring any more debt.

NOTE: Kristine Leighton is an acquaintance of the reporter and became a source after responding to a Facebook query. Copyright 2019 NPR. To see more, visit https://www.npr.org.