As of mid-May, the U.S. national student loan debt reached $1.5 trillion, the highest it has ever been. According to a report from the American Association of University Women (AAUW), two-thirds of this debt, nearly $900 billion was accrued by women. While there are many elements at play in this statistic, studies show it largely has to do with the gender wage gap, the number of women attending universities or colleges compared to men, and the comparative levels of financial literacy.

The Gender Wage Gap

Women make up 56% of college students in the U.S., and 35% more women go on to attend graduate school and pursue higher and more expensive degrees than men. This is largely due to the fact that women may need one more degree to earn the same as men, according to some studies, including one from Georgetown University. These demographics, in part, work to clarify the unbalanced numbers regarding student loan debt.  

"Women are [statistically] more educated than men and seek out more graduate school degrees. You'd think that wages follow that, but they don't," said Alyssa Schaefer, the Chief Marketing Officer (CMO) of Laurel Road, an online lending corporation, in an interview with Investopedia. 

The report estimates that women with undergraduate degrees working full time make 26% less than their male counterparts, resulting in less disposable income with which to pay back loans. This inequality dramatically prolongs the process of repaying them. 

The Intersectional Wage Gap

Women of color have an even more difficult time of repaying loans due to both gender and color discrimination, thus bringing an intersectional aspect to the issue. Certain demographics are more heavily impacted than others. 34% of women and 57% of African-American women reported an inability to meet the essential expenses in the last year due to student loan payments according to the American Association of University Women (AAUW). This has to do with the career choices these women make and the education level required to attain jobs, as women tend to choose their careers based on passions rather than high salaries.

"Women of color typically tend to pursue careers in education, social work, and psychology, which pay less and require masters or doctoral degrees. They do this because they believe these fields are important and meaningful, despite the cost of succeeding in them," said Hansen, an expert in U.S. social policy and Economics Professor at American University. 

Cost of Debt and Financial Literacy

Additionally, women's average debt post-completion of a bachelor's degree is $2,700 greater than men's average debt, on the whole. This is because women are less informed about how to take out student loans, and end up taking out more money than necessary often at higher interest rates, believes Annamaria Lusardi, an expert in financial literacy and professor of economics at The George Washington University. Statistically, women are far less financially literate than men, although recent studies suggest that men lack in that department as well.

Lusardi's 2017 study found that female college students are less enthusiastic about financial topics, less confident, and less willing to acquire financial skills than male students. 37.7% answered financial literacy questions correctly compared to 55.2% of their male counterparts. However, 50% of women answered "Do not know" at least once, compared to the 34.3% of men who did as well, ultimately suggesting that women are more likely to admit to being uninformed. These differences can be observed in high school students as well, at which stage students start making decisions regarding their loans for education. 

"We ask young people to make important and consequential decisions about their education and how to finance it without giving them the proper knowledge that is required to make those decisions. It is imperative that we equip the young with the basic skills that are needed to thrive in today's society," said Lusardi.

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