The U.S. Gender Pay Gap: Women’s Student Debt Burden & Racial Inequalities

March 15th was Equal Pay Day in the US, the date that represents just how far into the new year the average American woman would have to work before she earned the same amount that the average American man was paid last year. I wrote about the impact that the gender pay gap has on a woman’s financial health throughout her life. ?From the graduate with less income to retire student debt to the retiree with lower savings at the end of her career, women’s lower salaries are a driver behind persistent gender-based economic inequality.

Since posting this piece, I’ve had several provocative and enlightening conversations that have underscored for me how complex, unfair, and deeply messed up the system is.?The gender pay gap runs like a throughline across women’s struggles to build wealth, but it is only one element in a complex system of mutually exacerbating barriers and hindrances.

The figure below illustrates just one example: the female college graduate.

Women’s disproportionate student debt burden – further compounded by racial inequities – can have a direct impact on their financial access long after graduation. US college tuition costs have exploded over the past two decades with in-state, out-of-state and private university tuition increasing by 211%, 171% and 144%, respectively. Against that, the average student debt is close to $40,000 and student debt forgiveness stands at only 1-2%. The gender pay gap then kicks off a cascade of other factors. Women’s lower salaries make it harder to retire debt and white students (57% vs 75%) lead to higher delinquency rates on student debt by Black students (32% vs 13%).?All of which leads to lower credit scores, sharply impeding women, and women of color in particular, from building wealth by establishing a business or owning a home.

These are multifaceted problems that require comprehensive solutions, not siloed ones. Luckily a growing number of innovative financial service providers are working from within the financial system to provide access to financial solutions that enable wealth creation and improved financial health. In the coming weeks, I look forward to profiling some of these innovators that are working to make finance work for women.