Student Loans 2013: Debt is Crushing Female College Grads

College debt is a startling issue which affects the masses of young graduates entering the work force today, but statistics show women are affected more severely in the grand financial picture.

This month, young graduates around the country toss their caps into the air and rip off their grad gowns in preparation to enter the next phase of their lives. Financial responsibility takes on new meaning as fixed expenses turn from late night library vending machine snacks, dollar drafts and 3AM pizza delivery to things like rent, insurance, and everything fiscally adult and simultaneously terrifying.

According to Forbes, the national average for student loan debt upon graduation is $20,000. In a recent report by the National Association of Colleges and Employers (NACE), salaries for the class of 2012 who found employment in their fields of study averaged a $44,455 annual salary.

This sort of debt: income ratio of financial burden sends chills down the spines of young men and women alike as they make their first grueling steps up the career ladder, attempt to survive on entry level salaries (a.k.a. ramen and well tequila) while trying to slowly shave down their student debt. Yet statistics show that women overall face a longer road of obligation and compounded fiscal burden. Last month, the National Women’s Law Center pointed out that on average “women who work full time, year round are paid only 77 cents for every dollar paid to their male counterparts — a pay gap that translates to $11,084 in lost wages annually.”

When President John F. Kennedy signed the “Equal Pay Act” in 1963, on average working women made 60% of men’s salaries.  Fifty years later, the numbers reflect change, but not equality. 

Even within the first 12 months out of college, women average only 82% of the wages of men in comparable industries and positions, according to a recent study by the American Association of University Women (AAUW).   

The sheer magnitude of student debt for both men and women is alarming across the board and is only set to rise. Yesterday, the House passed GOP-backed legislation to reform interest rates on student loans to vary year to year based on flux in the economy. As of July 1, 2013, interest rates on some student loans will double from 3.4% to 6.8% if Congress does not pass new legislation. This is disconcerting considering in a recent Wells Fargo study, outstanding loans exceeded $1 trillion for the first time in 2011, an amount now greater than credit card debt in the United States.

For women, the monetary encumbrance is not only disproportionately heavier due to the gender pay gap, but will most likely effect long term financial health over the course of their life time. The AAUW report showed that 20% of women compared with 15% of men pay more than 15% of their take-home salaries to pay off educational debt. The long term result is that women are less likely to have money to invest in 401Ks, social security and other pension plans, or at least cannot invest until much later in life.

By putting gender wage disparity in the context of student loans, the AAUW hopes to shed light on the fact that a gender pay gap still exists in the U.S. and the overall long term effects for women. 

Catherine Hill, Ph.D., is 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 Department of Education. In an interview with Forbes, she insists that her study controls as many variables as possible which are most commonly used to discredit a gender pay gap.

“A lot of the factors involve choice,” Hill says. “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 remained. 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%.

A contributing writer for Forbes, Tim Warstall, disagrees. Warstall says, “A simple gender pay gap doesn’t really exist. Once we adjust for all of the extra little factors, hours of work, years in labor force, educational qualifications and so on there’s not really any room left for us to find actual discrimination against women in wages.” He argues that new studies and statistics on gender pay gap fail to take into consideration that discrimination did exist 50 years ago, and that those women are still in the work force now.

“They are comparing all women in the working population with all men. When we know that women currently coming to the end of their working lives were discriminated against in a manner that those starting them are currently not. So we cannot take the gender pay gap of current senior executives of being indicative of what is going to happen to the current generation of 20 years old. But that’s exactly what they do: something which is, as I’ve now said a number of times, dismally silly.” 

But all variables and generations aside, what can account for the current 7% disparity? Hill says that this gap "suggests that discrimination continues to be a part of the problem in the workforce.”

Critics like Warstall might say 7% is really not much and that time will eventually fix the problem, but Hill disagrees. “I think it’s interesting that anyone would want to minimize this problem. You can’t get around the numbers,” and suggesting that action should be taken from a 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.”

Granted, the statistics are more hopeful than 50 years ago. However, change and equality are unlikely in American culture with silence and complacency. The argument should not be that 7% disparity is minimal. The questions should be: “Why does it still exist?” and “How do we create true equality?”