Jan 17, 2018

Female Entrepreneurs Struggle with Student Loan Debt

44 million Americans carry $1.3 trillion in student loan debt. And about ⅔ of those borrowers are women.

So is the impending student loan debt crisis a women’s issue? Absolutely. Women make up more than half of the students on college campuses, tend to finance more in student loans than men do, and are more likely to struggle with repaying their loans. Women also take two years longer than their male counterparts to pay off student loans.

The gender wage gap also isn’t helping women get ahead. On average, women still make 80 cents for every dollar a man makes. A study by the American Association of University Women (AAUW) found that female graduates were paid 26% less than men in the four years following graduation.

The statistics are even bleaker for minority women: Time Money found that “black and hispanic women make 64% and 56%, respectively, of white men’s earnings.”

This pay disparity coupled with an average of $20,000 in student loan debt hobbles the financial stability of American women. Many of the female entrepreneurs surveyed cite difficulties balancing basic monthly expenses with student loan payments, as well as delays in home purchases, entrepreneurial ventures, retirement savings, and even starting families.

“Women’s success in higher education is reducing the size of the gender pay gap, but student debt is making it harder for women to get the leg up they need,” says Kevin Miller, senior researcher at AAUW.

Leveraging U.S. Census Bureau data, The Institute for Women’s Policy Research (IWPR) predicts that caucasian women won’t reach pay equity until 2059 – and black and hispanic women will have to wait even longer, until 2124 and 2233, respectively.

In addition to struggling with student debt and the gender wage gap, female entrepreneurs face yet another financial challenge: lack of access to funding. Although women are starting businesses at five times the national rate, they do so with just 50-60% of the funding that male founders have. In fact, Fortune estimates that female founders secured a mere 2% of venture capital funding in 2016.

Despite the recent wave of female-focused venture capital firms, industry experts say it would take several billion dollars to reach parity. Meanwhile, female entrepreneurs are launching fundraising campaigns, turning to lending marketplaces, or borrowing capital from friends and family members.

American women currently hold more than $800 billion in outstanding student loan debt, and that number will likely rise as education costs continue to skyrocket. Organizations like AAUW and The Brookings Institution encourage legislators to expand access to federal aid programs like Pell Grants and move colleges toward tuition-free models, and female entrepreneurs continue to launch startups – albeit possibly slower than they might if they weren’t burdened with so much student loan debt.

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About the author

Melissa Zehner
Melissa Zehner is a writer and editor specializing in small business and finance. She's written for wealth management organizations, venture capital firms, credit unions, and more than 40 small businesses. Melissa currently serves as Small Business Finance Editor at Lendio. When she's not playing wordsmith, you can find her reading, cooking, or hiking with her dog Spencer.

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