Women of Color Faced Greater Hardships Through COVID-19, Struggle to Keep Up with Their Student Loan Payments

By Sunny Glottmann, Researcher, Center for Responsible Lending

A recent report by the Center for Responsible Lending (CRL) has reaffirmed that the lasting financial impacts of the COVID-19 pandemic have compounded the financially unstable position of many women of color, deepening gender disparities and leaving them in an even more insecure financial position than pre-pandemic.

“Resilient but Deeper in Student Debt: Women of Color Faced Greater Hardships Through COVID-19,” touches on the financial hardships faced by women who have taken out student loans and who experienced a disruption in their employment during the pandemic.

Here are four themes and four recommendations revealed in the report: ?

Women of color and women who couldn’t work remotely during the pandemic have less job security today than pre-pandemic.

This is due to increased childcare responsibilities, historic pay inequities and the high-contact, low-wage nature of many women’s occupations. The report notes that between February 2020 and April 2020, almost 22 million jobs were lost. Further, Black women’s unemployment rate is 63% higher than the national unemployment rate, and Latinas’ unemployment rate is 57% higher than the national unemployment rate.

Economic gains in 2021 bypassed many women of color, leading to difficulty paying necessary expenses.

Women of color disproportionately reported experiencing lost income and housing insecurity, and greater challenges in saving for the future. The women we spoke to shared heartbreaking stories about not being able to maintain their rent or mortgage payments. One woman who said she prioritized paying her rent – presumably so she wouldn’t have to secure a new home during the pandemic – had her vehicle repossessed.

Women also reported struggling to feed their families. Our report highlights that in August 2021, 15.3% of Black, non-Hispanic women and 12.1% of Latinas were struggling with putting food on the table; compared to 6.2% of white men. Black and Latina women also were twice as likely as white men to report being behind on rent or mortgage payments.

Student loan debt burdens remain at staggering levels, despite the payment pause.

Many of the women feared they would be unable to resume their federal student loan payments in September.

Of the 29 focus group participants who estimated their student loan debt, 86% reported owing over $10,000 and nearly half, 48%, reported owing over $50,000. Our focus group findings align with the U.S. population. Black women typically have higher student loan balances than white women. Among student loan borrowers, Black women, on average, borrowed $37,558 whereas white women, on average, borrowed $29,862.[1] Having higher student loan balances makes repayment more difficult.

Women of color are reluctant to take out future student loans for themselves or their children.

Many expressed frustration that their loans didn’t help them get a higher wage job or advance them in their life in any way. Some couldn’t find jobs aligned to their field while others couldn’t find jobs with high enough incomes to make the debt worth incurring. They felt disenchanted and exhausted by the education system, and several shared that they would go to great lengths to prevent their children from taking student loans.

Many of the women didn’t realize the hurdles associated with loan forgiveness programs like Income Driven Repayment (IDR), which promises cancellation of student debt after 20 or 25 years of payment. However, among the millions of borrowers who have applied, only 157 total have received the forgiveness promised so far.

Without intervention, the burden of unmanageable student loan debt will continue to negatively impact women, families and the economy. CRL recommendations include:

• Cancel $50,000 of student debt per borrower: to stimulate the economy, provide new jobs and increase GDP, as well as close the racial wealth gap.
• Implement a retroactive IDR waiver: to simplify a complex process and relieve more qualified borrowers of student loan debt, as it was originally intended to do.
• Improve collection and monitoring of IDR and public service loan forgiveness data: make data publicly available to add checks and balances to an inherently flawed system and help reveal systemic issues more quickly.
• Support women of color: through investments in Historically Black Colleges and Universities (HBCUs), increasing federal Pell grant funding and student eligibility for such funding, among other measures.

Women are the backbone of America, and the pandemic and economic crisis has impacted women in ways that will take years, if not a lifetime, to recover. Fixing failures in the system now can improve the livelihood of women and impact generations to come.

[1] Fast Facts: Women & Student Debt – AAUW : Empowering Women Since 1881