Repayment tips for women struggling with student loan debt

Nearly two-thirds of the country’s outstanding student debt is held by women.

Women graduate college owing $2,700 more, on average, than their male counterparts, according to the American Association of University Women. Among undergraduate students in bachelor’s degree programs in 2019-2020, 54% of men graduated with student loans, compared to 66% of women, according to higher education expert Mark Kantrowitz.

One major reason women tend to borrow more, experts say, is the fact that they often face additional caretaking responsibilities that can leave them with higher expenses and less able to work while they’re in school.

After graduation, men also typically pay down their student debt faster, since they earn more. Men with a bachelor’s degree pull in a median weekly earnings of $1,632, compared with $1,248 for women, the U.S. Department of Labor has found.

“We find that women borrowers tend to have multiple financial pressures that contribute to their student loan struggles,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.

“Over 63% of the borrowers that reach out to us for advice are women,” Mayotte added.

CNBC spoke to Mayotte and other student loan and financial experts about how women can manage their education debt.

There used to be a working mother and parental leave deferment for student loans, but these options are not available for more recent borrowers, Kantrowitz said. (If your federal student loans were disbursed prior to July 1, 1993, you could still qualify.)

Still, there are ways to pause your loan payments if you’ve hit an especially hard patch financially, he said.

If you’re out of work, you can request an unemployment deferment with your servicer. If you’re dealing with another financial challenge, meanwhile, you may be eligible for an economic hardship deferment.

Those who qualify for a hardship deferment include people receiving certain types of federal or state aid and anyone volunteering in the Peace Corps, Kantrowitz said.

With both a hardship and an unemployment deferment, interest generally doesn’t accrue on undergraduate subsidized loans. Other kinds of loans, however, will rack up interest.

The maximum amount of time you can use an unemployment or hardship deferment is usually three years, per type. Other, lesser-known deferments include the graduate fellowship deferment, the military service and post-active duty deferment and the cancer treatment deferment.

Student loan borrowers who don’t qualify for a deferment may request a forbearance.

Under this option, borrowers can keep their loans on hold for as long as three years. However, because interest accrues during the forbearance period, borrowers can face a larger bill when it ends.

A better option for federal student loans may be enrolling in an income-driven repayment plan, experts say. Those plans cap your monthly bill at a percentage of your discretionary income and forgive any of your remaining debt after 10 or 25 years.

To determine how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org.

It’s deflating for women to have to direct all their extra cash to their student debt, said certified financial planner Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California.

“I like to recommend a hybrid approach,” said Curtis, who is a member of CNBC’s Financial Advisor Council. “Even if a person puts a small amount towards each goal, they can feel less anxious about their finances and know that they are doing the right things with their money.”

Because federal student loans tend to have low interest rates, you’ll likely see more of a benefit from meeting your minimum payment and then funneling any extra cash toward long-term investing for retirement, Curtis said. (Research shows women’s retirement savings tend to lag men’s.)

If your company matches your 401(k) retirement plan savings, try to salt away at least enough to get that full matched amount, Curtis said. “I always emphasize trying to capture that free money,” she added.

Women who have children may also want to consider putting even small amounts on a regular basis into a 529 savings plan so that they don’t need to borrow more when their kids are ready for college, Curtis added.

But Winnie Sun, co-founder of Sun Group Wealth Partners and another member of CNBC’s Advisor Council, added an asterisk to that point.

“When it comes to helping your kids with their college costs, just remember that you need to prioritize your own retirement savings,” Sun said.