How bad is the wage gap for women in the workplace?
For college graduates, it's so bad that it begins even before women begin their careers.
According to a study by AAUW, Graduating to a Pay Gap: The Earnings of Women and Men One Year After College Graduation:
Women and men pay the same amount for their college degrees, but they often do not reap the same rewards. Among 2007-08 college graduates, women and men typically borrowed similar amounts to finance their educations, about $20,000. Because women are paid less than men are paid after college, student loan repayments make up a larger part of women's earnings. In 2009, among full-time workers repaying their loans one year after college graduation, just over half of women (53 percent) compared with 39 percent of men were paying more than what we estimate a typical woman or man could reasonably afford to pay toward student loan debt. These numbers have risen in recent years.
Outstanding student loans today total more than $1 trillion, surpassing credit card debt. Student loan debt has increased nearly 300 percent over the last eight years, according to a report by the New York Federal Reserve.
Is Congress doing anything about this problem? As a matter of fact they are. They're making it worse.
This July, unless Congress acts, the interest rate on federally subsidized Stafford loans is set to increase from 3.4 to 6.8 percent. In another example of the Congress' attitude of "don't tax the rich, but tax the most vulnerable," student loans are seen as a nice little moneymaker.
The federal government will make $34 billion this year on student loans. If Congress allows the interest rate on these loans to double, the federal government will bring in even more revenue -- money that comes straight from the pockets of students who had to borrow money to go to college.
Of course, not everyone has to pay such a burdensome rate of interest on loans. Big banks can borrow money from the Federal Reserve at a rate of less than 1 percent. There's something very wrong with this picture.
This week, I attended a breakfast meeting with Senator Elizabeth Warren (D. Mass.) where she spoke about the first piece of standalone legislation she is introducing in the United States Senate.
In a speech on the Senate floor, Sen. Warren said:
The Bank on Students Loan Fairness Act would allow students who are eligible for federally subsidized Stafford loans to borrow at the same rate that big banks get through the Federal Reserve discount window. For one year, the Federal Reserve would make funds available to the Department of Education to make loans to students at the same low rate offered to the big banks. This will give students relief from high interest rates while giving Congress time to find a long-term solution.
At our breakfast, I remembered that it was the mobilization of enormous grassroots support for the Consumer Financial Protection Bureau (then-Professor Warren's brainchild) that kept pressure on Congress to pass the legislation that established that agency. Her fight to keep student loan interest rates low is her next big campaign, and women should pull out all the stops to support her.
AAUW's findings tell us that women are disproportionately likely to take out loans; among 2007-2008 graduates, 68 percent of women borrowed money for college compared to 63 percent of men.
According to the AAUW report:
For many young women, the challenge of paying back student loans is their first encounter with the pay gap. "Student loan debt burden" is defined as the percentage of earnings devoted to student loan payments. A high student loan debt burden is an indicator that repayment may create hardship. Individuals with high student loan debt burden are less likely to own a home, have a car loan, or even make rent payments. High student loan debt burden is a challenge for a growing number of college graduates, men and women alike, but is particularly widespread among women, in large part because of the pay gap.
The National Organization for Women (NOW) has a long history of supporting equal pay, comparable worth and other policies that advance women's economic security. NOW was proud to support Elizabeth Warren in her successful campaign for the U.S. Senate, and we are equally proud to support her urgently needed legislation to reduce the burden of student loan debt.
It's hard to imagine how anyone could oppose a bill that simply requires the Fed to set interest rates for students at the same low rate the big banks get. But get this: an opponent of Sen. Warren's bill reportedly suggested -- presumably hoping we've all forgotten about the taxpayers' bailout of the too-big-to-fail banks -- that unlike students, the big banks deserve to pay a super-low interest rate because they never fail. And they say the 1 Percent has no sense of humor.
Elizabeth Warren has planted the flag for student loan reform by introducing her bill, and now it's up to us to mobilize support and pressure Congress to pass it. This is grassroots democracy at its best. So, blog about this, write letters to the editor, lobby your senators and your representative.
Help ensure that a college education is a pathway to fulfillment and success for women, and not an opening to crushing debt.