The estimated $1 trillion in student loan debt affects individuals from all walks of life. However, according to two studies, women and minorities are two groups experiencing some of the greatest repercussions of student debt. So, how deep is the disparate impact on these groups, why does it exist and what can be done?
The existing gender pay gap is a significant challenge for college-educated women. A recent report published by the American Association of University Women, "Graduating to a Pay Gap," examines women and men recently out of college.
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According to the report, among 2007-2008 bachelor's degree recipients who were employed full time in 2009, women earned $35,296 and men, $42,918. Even when men and women choose the same major, "women still often earn less than men do one year after college graduation," the report states. The report cites business majors as an example, where men out-earned women by $7,000.
This gender pay gap means women spend a larger proportion of their earnings on repaying loans and have less money to put toward other investments.
Women aren't the only ones who face larger barriers to repaying student debt. Statistics released by Campus Progress and the Center for American Progress in a 2012 report, "The Student Debt Crisis," demonstrate how much heavier the student debt burden is for minorities.
The report states that 27 percent of black bachelor's degree holders had more than $30,500 in loans, compared with 16 percent of white bachelor's degree holders. More black students who left school without finishing a degree cited student debt as the reason than their white peers – 69 percent versus 43 percent – and 74 percent of Latinos who opted out of attending college cited finances as the reason, the report states.
There are several factors that create these discrepancies. A higher percentage of minority students graduate with student loan debt than their white peers and – as the report points out – have higher rates of unemployment, affecting their repayment power.
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According to the report, first-generation college students are more likely to have limited access to information and knowledge about student loans. According to a report in National Journal, many immigrant parents may not trust banks and may not be comfortable with the idea of borrowing student loans from a bank.
Uninformed borrowers can easily make decisions that make it harder to take control of student loan repayment, such as borrowing through private loans, which lack the borrower protections of federal student loans.
There are ways to both close the gender pay gap and reduce the student debt burden for minorities. The AAUW's report recommends the implementation of transparent pay systems to prevent discrepancies, passage of the Paycheck Fairness Act and the protection of Pell Grants for low-income students.
There are numerous other steps the Student Loan Ranger believes federal agencies and Congress should take. All institutions of higher education should have to adopt the Financial Aid Shopping Sheet so prospective students can easily understand the true cost of college and compare institutions. In many instances, low-income students may find that schools with higher tuition actually cost less when their eligibility for financial aid is factored in than nominally cheaper schools.
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Proposed legislation like the Know Before You Owe Act would help ensure borrowers, including financially vulnerable lower-income borrowers, maximize their federal loan borrowing before turning to less protective private loans. And, as the National Consumer Law Center has repeatedly noted, there is a real need to provide relief for past victims of predatory lending and to ensure these practices will not continue.
In order to tackle student debt, policymakers, advocates and educators must recognize the underlying flaws in our supposedly equal society and take these or other steps to address them. The gender pay gap weakens women's ability to repay their education debt and perpetuates inequality.
The heavier load of student debt that minority students carry causes a gap in access to higher education in America. How can we expect our children to dream and build the American dream if all are not given the same opportunities to succeed?
Mai Brand is an operations coordinator with Equal Justice Works' Educational Debt Relief program. She first worked with educational debt relief issues as an intern at Equal Justice Works and is a recent graduate of Loyola University Maryland.