Americans carry an estimated $1.5 trillion in student loan debt, and nearly two-thirds of that amount, or $929 billion, is held by women.

The figures come from the American Association of University Women. The association also found that Black women finish their undergraduate education with more debt than all other graduates. Meanwhile, women who attend for-profit colleges wind up owing far more than those who attend public or private (not-for-profit) four-year schools.

There could be several explanations as to why women leave school with more debt. Chief among them are a persistent gender wage gap, the number of women seeking four-year degrees compared to men, and the comparative levels of financial literacy.

The COVID pandemic has created additional challenges for women, especially those with student loan debt. The current debt relief measures in place leave many borrowers behind, including those with the greatest burden.

The Gender Wage Gap

Women make up 56% of undergraduate students in the United States. An estimated 60% of all students seeking a master's degree are women. This is largely because women may need one more degree to close the earnings gap with men, according to a report from the Georgetown University Center on Education and the Workforce. These demographics in part clarify the unbalanced numbers regarding student loan debt.  

"Women are [statistically] more educated than men and seek out more graduate school degrees," said Alyssa Schaefer, Chief Marketing Officer of online lending platform Laurel Road. "You'd think that wages follow that, but they don't."

In 2018, women earned $0.82 for every $1 earned by men.Georgetown estimated that the gender wage gap was the widest in the highest paying fields, with men earning 17% to 43% more than women, depending on the occupation. This inequality results in women having less disposable income to pay back loans, and taking longer to do so. 

The Intersectional Wage Gap

Black women have an even more difficult time repaying loans due to both gender and racial discrimination. The American Association of University Women estimated Black women leave school with $37,558 in average debt, the highest of any group. This compared to $35,665 for Black men, $31,346 for White women and $29,862 for White men. And note: The average student loan figures don't include students who manage to graduate with no debt at all. 

Black women may graduate with higher debt because they prioritize educational attainment and job passions over high salaries.

"Women of color typically tend to pursue careers in education, social work, and psychology, which pay less and require master's or doctoral degrees," said Mary Eschelbach Hansen, professor of economics at American University. "They do this because they believe these fields are important and meaningful, despite the cost of succeeding in them."

School choice matters, too. Default rates and student loan balances are disproportionately higher at for-profit colleges than not-for-profit colleges. The AAUW found that Black students are twice as likely as White students to attend a for-profit college (28% versus 11.4%).

Cost of Debt and Financial Literacy

Annamaria Lusardi, the academic director of the Global Financial Literacy Excellence Center at The George Washington University School of Business, believes women might leave school with more debt because they were less informed about student loans and wind up borrowing more money than necessary, often at higher interest rates.

For some women, this lack of knowledge may be partly attributed to their background. Women first-generation college students borrowed around $4,000 more than women whose parents hold a degree.

A 2017 study co-authored by Lusardi found that just 30% of women globally could answer questions about finances and were considered to be financially literate. This compared to 35% for men. In advanced economies, financial literacy improves, though a gender gap remains: 59% of men could adequately answer questions on financial topics, compared to 51% of women.

"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," Lusardi said. "It is imperative that we equip the young with the basic skills that are needed to thrive in today's society."

Also important: Educated parents may have more wealth and be able to provide more financial support for their children.

Women Disproportionately Hurt by COVID Pandemic

Lockdown measures and the shift to remote learning in many states caused many parents to step down from their careers. According to the United States Census Bureau, nearly 20% of working-age adults became unemployed because of the changes in childcare. Women were almost three times more likely than men to leave their jobs for this reason (32.1% versus 12.1%). 

This loss of income will likely make it even harder for most women to pay down their student loan debt. The federal government has taken steps to alleviate the burden of student loan debt during the economic crisis, but the relief is limited.

The U.S. Department of Education implemented a payment pause and temporary 0% interest rate on all federal student loans, and stopped involuntary collections on defaulted loans. However, these benefits do not apply to private student loans, and certain FFEL Program and HEAL loans. Repayment plans and discharge options offered by the Department of Education are also not available to private student loan borrowers. 

The Bottom Line

Given current economic conditions, women will likely continue to carry more student loan debt than men. Colleges can make progress going forward by providing more support to women students, especially those from underrepresented communities. This includes guidance on paying for college and how to borrow—and repay—student loans effectively. Policymakers may consider providing assistance to private (non-federal) student loan borrowers, which include many women and women of color, during the COVID crisis. Additional education is also needed for current borrowers who are able to take advantage of pandemic relief options.