It’s a scary fact: Of the outstanding student loan debt in the United States, women account for nearly two-thirds of that debt—almost $900 billion—as of mid-2018, according to research from The American Association of University Women. They also take on more student loan debt. In 2016, for instance, upon earning their bachelor’s degree, women had a cumulative debt of $21,619 while men had a cumulative debt of $18,880, according to AAUW.
That debt then becomes a bigger burden for female graduates later in life as they struggle to pay off their loans at the same rate as male borrowers, the organization says, noting salary disparities attributable to the gender pay gap, as a reason for why women have less disposable income to repay loans. Since the gender pay gap disproportionately affects black women and other minority groups, default rates are higher for women than men—and much higher for black and Hispanic borrowers than for white and Asian borrowers.
There’s no one-size-fits-all solution to the student loan problem in the US and for accurate repayment plans, you’ll want to contact the company that issued your loan to see what’s available. But in the meantime, there are ways that women can begin increasing their wealth and diversifying their income streams to help pay off their student loan debt faster.
We’ve outlined a few ideas here to get you started.
First, find out what repayment options are available
If you’re facing a lot of student debt, chances are you accumulated that debt over the course of your education and thus are paying a few different providers with varying interest rates and a mix of subsidized and unsubsidized student loans. If you’re graduating with a lot—say, $80K in debt—it’s worth considering how you can trim back on your living expenses to help repay faster. We’ll note that certain graduates might qualify for a federal student loan forgiveness program that was expanded during the Obama administration, but just know it’s likely to face the chopping block under the Trump administration.
If you have federal loans, the good news is that there are some repayment options to consider. Aside from the standard repayment plan, you can apply for a graduated repayment plan in which payments start off low and then increase every two years. Others, like the income-contingent repayment plan, set your monthly payments so that they’re not more than 20 percent of your discretionary income. You can read more about your options here on the Federal Student Aid website.
You savings plan can start out small
Remember the days when you kept loose change in a big, clear canister and then took it to a local coin machine only to be surprised at A) How much you’d unknowingly saved and, B) How ridiculous the “counting” fee was? Apps like Digit make it easier for you to digitally save small amounts in an online savings account you can then tap into at a later date. Look into smaller savings options available through your bank.
We’ve broken down the pros and cons of Digit here.
Examine your money habits
We all have a complicated relationship with money and it can difficult to admit that sometimes our spending habits are really the culprits behind our low checking account balance. It’s always worthwhile to examine where your might be unknowingly spending on unnecessary purchases. In order to stop living paycheck to paycheck, you need to do a little self-reflection.
We’ve outlined even more tips on how to stop spending yourself broke here.
Think about passive income
Maybe you’ve heard of passive income and how it’s one of the ways wealthy people earn money without, well, working for it. In short, it’s the kind of income that you earn in the background of your typical day-to-day job. We’ve outlined what it is here and how you can best approach it.
Read here for some passive income ideas you might not have thought of yet.
Invest what you can
Investing remains one of the best ways for you to make your money work for you. If you’re unfamiliar with the stock market, though, it’s always best to speak with a certified financial planner who is required to work in your best interest. If you want a quick breakdown on stocks, we’ve got you covered here. The best thing about investing is that the sooner you start, the more you can earn in compounded interest over time. After some time, you can utilize that fund to help pay down your debt.
If you’re scared of starting your own portfolio, read this.
Don’t forget about retirement
Yes—retirement seems like a long ways off. But trust us when we say there’s no time like today to start thinking about it and how you can set yourself up for a healthy retirement. While this won’t necessarily help pay off your student loan debt, it’ll ensure that you’re not forgetting about the bigger financial picture and that you’re budgeting accordingly. Part of this means you’ll have to decide on whether you’ll enroll in a 401(K) or set up a personal Roth IRA.
We’ve outlined what you need to know here.
Use your tax return wisely
It’s always tempting to use your tax return to splurge on yourself. But, a tax return should always be treated like any other cash windfall and the best way to utilize it is use it to pay down any other immediate debt. If you have a credit card balance, use your tax return to pay it off so that you’re free from those typical high interest rates. That’ll ensure you can budget more of your income toward your student loans.
Here are some more ideas on how to best utilize your tax return.
Read some great financial literature
Finally, there’s plenty of great books on how to better manage your finances. When you empower yourself with the financial knowledge you need, you’ll be better equipped to ask questions and find the answers you need.
Here are some great financial books to get you started.