The Student Loan Debt Crisis is a Women's Issue: Here's Why

By Meghan Casserly

Women in the U.S. earn $10,784 less than their male counterparts each year, according …22-year-old twins Mike and Caitlin are one year out of college. Both studied at a four-year University, received bachelor's degrees in engineering and are 12 months into entry-level jobs. Both siblings carry $20,000 in student loan debt, just about the national average.

All things being equal, Caitlin and Mike are on even (if unfortunate) footing for recent grads-making those first arduous steps up the career ladder, living on entry-level salaries and chipping away at hefty student loans. All things being equal.

Except that, at least according to new research from the American Association of University Women, all things are not equal. In fact, in comparing the salaries of men and women with comparable education in comparable fields just one year out of college, it's plain to see that when it comes to paying off student loan debt and getting ahead financially, Caitlin-and all women-are much worse off. Men and women pay the same amount for college, but the rewards they reap are very, very different.

"There's been a lot of attention paid to student loan indebtedness," says Catherine Hill, Ph.D., AAUW's director of research and co-author of the recent study "Graduating To A Pay Gap" which analyzed data of over 15,000 baccalaureate graduates captured by the Dept. Of Education. "But very little focus has been put to the way debt impacts men and women differently," she says. The AAUW analysis is clear: 20% of women compared with 15% of men pay more than 15% of their take-home salaries to pay off educational debt.

"Women are behind men in pay from the moment they throw their hats into the air," says Lisa Maatz, the director of public policy for AAUW. By setting the discussion of indebtedness in the context of the gender paygap that exists just 12 months after graduation the AAUW hoped to confront a clear and inarguable truth: that because women earn 82% of their male peers in their first year of employment (on average $35,296 to $42,918), the debt burden carried by women isn't just proportionally heavier than it is for men, but it can have far-reaching impacts on their financial health long-term.

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The disturbing reality for college-educated women, Maatz says, is that they are losing out financially from the day they receive their degrees to the day they collect their last social security check. "By virtue of doing everything they were told to-to go to school, to get a degree and find a job-they are potentially dooming themselves to lifelong poverty."

It's well-worn ground that entry-level salaries have a serious impact on lifelong earnings up to and including social security and pension payments (and I've examined how Millennials are already at a disadvantage at entering the workforce amidst recession), but Maatz and Hill say the added pressure of debt for women explains why women are also less likely to contribute to 401ks and retirement accounts. "With smaller paychecks and a grave debt-to-earnings ratio it's not surprising that many women can't afford to," Maatz says.

In order to avoid the well-worn flags waved against the gender paygap, AAUW's report looked at 15,000 young men and women one year out of college with equivalent backgrounds and experience. The average age was 23, all were employed full time and none had children. "It was important to take an apples-to-apples approach," Hill says, "and to control for as many variables as possible."

Across the entire group women were earning 82 cents to the dollar, but AAUW then set about controlling for the factors most commonly used to denounce the paygap. "A lot of the factors involve choice," Hill says. "That women choose different college majors, they choose to enter different fields upon graduation and they choose to work fewer hours." By removing these "choice" variables the study found that an unexplained gender pay gap persisted. Among men and women with the same major and comparable jobs working the same number of hours each week, women's pay still lags behind men's by 7% (or 93 cents to the dollar).

That 7%, says Hill, "Suggests that discrimination continues to be a part of the problem in the workforce." Increasing numbers of claims filed with the Equal Employment Opportunity Commission and the millions of dollars employers pay annually in awards, settlements, and other legal fees only underscore that hypothesis.

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"Detractors will say that 7% is a small amount," Maatz says, hinting that she knows no research will put the gender pay gap debate to rest. "But compounded over lifetime earnings it's considerable. I think it's interesting that anyone would want to minimize this problem. You can't get around the numbers. One year out of college women are earning less than men and paying more of their salary towards student loans which makes them less likely to contribute to pensions and retirement plans and headed towards a lifetime at a financial disadvantage."

I'd take it one step further for those naysayers-but more importantly the legislators-who don't seem to see equal pay for men and women as a critical issue: with a generation of women graduating college and entering the workforce on the path towards poverty (and women graduating at record rates), we could be confronted with more and more women becoming a burden on national relief programs in the long term. Politicians don't care if Catilin earns as much as her brother Mike? Hope they're prepared to pay for her food, heat and healthcare when she goes broke in her seventies.

No, it seems this is research with no silver lining. Women's career experts, frustrated with the "choice" dilemma of the pay gap, often chide women on the subject of negotiation (women negotiate poorly and so don't earn as much), but Maatz and Hill don't see that as a panacea. "Encouraging women to negotiate forcefully isn't the answer," Maatz says. "We all know what aggressive women are called, which makes that a solution that's fraught with peril."

Instead, she agrees that enforcement in equal pay is the only solution, and being a policy expert says the only hope is that it starts on the federal level. "What we need is policy with much stronger penalties against employers that are found to discriminate on pay," she says. "It's impossible to police every company but we need laws with enough teeth that they'd rather comply then worry about being caught and punished."

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Unfortunately we're no closer to such laws than we were when the Equal Pay Act passed in 1963 (and is considered among equal rights activists to be little more than a light slap on the hands for offending employers). The Paycheck Fairness Act, which would have required employers to prove that any salary differences between men and women doing the same work were not gender-related, failed in June. The final vote was 52-47, with all Republicans opposing the bill. That included female Senators Kelly Ayotte (N.H.), Susan Collins (Maine), Kay Bailey Hutchison (Texas), Lisa Murkowski (Alaska) and Olympia Snowe (Maine).

Who, presumably, have all paid off their student loans. Let's hope their daughters have the same remarkable luck.

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