Chapter 2. Are student loans a women's issue?

 

Over several decades, the ratio of women studying in college has increased significantly. According to The Women's Bureau, U.S. Department of Labor, in 1970, only 11.2% of working women between the ages of 25-64 had college degrees, but this number grew to 45% in 2019. Women in the labor force that had less than a high school diploma decreased from 34% in 1970 to 5.4% in 2019.

While it is good that women have been getting more educational opportunities, this surge of female college graduates comes with a hefty price tag in student loans. Women college graduates are carrying over 58% of student loan debt in the nation--an estimated outstanding balance of $1.4 trillion in 2017--according to the U.S. National Debt reports. In addition to the cost of education, debt to income ratio is the more serious challenge once women enter repayment plans. It is estimated that women spend on average about 10% of their yearly net income on student loan repayment.

 

 

 

How to

A rule of thumb in financial literacy is to maintain a healthy budget. One of the principles is to limit total outstanding debt to 20% of total yearly net income. Furthermore, monthly payment on debt should be capped at 10% of monthly net income. This is known as the 20/10 rule. 

 

 

According to the U.S. Department of Education, the outstanding average student loan in the U.S. in 2021 was approximately between $20,000 and $24,999 for an undergraduate degree. A majority of women end up in occupations known as "pink collar" jobs such as social workers, elementary and middle school teachers, registered nurses, and other nursing and home health care services. It is only fair to say that a great number of women excel in their career paths, but it is in many cases at the cost of sacrificing their family and social life. The idea of "Super Women" is extremely unfair to women in projecting unreasonable expectations and causing tremendous pressure and stress, in addition to financial challenges.

 

Practice

Now you know that education carries a hefty price tag for both men and women. Think of paying it forward and discuss solutions to reign the cost of education with a friend or a family member.

 

Congratulations! You can move on to Chapter 3. Top financial missteps women take

To review the full module on Financial literacy for women, click here.