Is it worth investing in a college education? A story last month by David Leonhardt in The New York Times said, unequivocally, yes. "The pay gap between college graduates and everyone else reached a record high last year, according to new data from the Labor Department and the Washington, DC-based Economic Policy Institute," Leonhardt wrote. In the early 1980s, Americans with four-year degrees earned 64 percent more than people without degrees. By last year, they earned 98% more. What does that mean in actual dollars? After you factor in the cost of college, not going would cost you about $500,000, according to research by M.I.T. Economist David Autor.
Having to borrow to finance that increasingly costly education is a fact of modern life. Of the 20 million people who go to college each year, roughly 60 percent take out student loans — to the tune, on average of nearly $30,000, according to The Project on Student Debt. And yet, some new research shows that women are more reticent than men to borrow.
According to a survey conducted for the American Action Forum, just over half of voters don’t believe that a college degree is worth taking on $26,000 in debt. (Clearly, based on the above, they’re wrong.) What’s more striking, however, is that just 39 percent of women think it’s worth going into this much debt, compared with 45 percent of men. And of those survey respondents who already have bachelor’s degrees 55 percent of men claim the debt was worth it. Just 45 percent of women say the same.
“We were struck by this finding,” says AAF President Doug Holtz-Eakin. “We hear a lot of anecdotal stories about student loan repayment crowding out other types of debt — like mortgages. But we don’t know, specifically, why women are more resistant.”
I have some thoughts. I think there are three things going on. First, women are realists about the pay gap. As I noted on my blog in the wake of the Jill Abramson affair, the pay gap — for one thing — is still real and problematic. According to a study from the American Association of University Women, one year after graduation women were making just 82 percent of what their male colleagues earned. It wasn’t an issue of major, in most cases. Female business majors earned an average $7,000 less a year than male business majors, for example. Nor was it an issue of job choices. Even women who sought out jobs in engineering and computer science were paid almost 7% less than men. As a result, a greater percentage of a woman’s paycheck goes to pay off their monthly debts than that of a man.
Second, we’ve heard the horror stories — not just the ones about family members and friends who took on six-figure debts and are still struggling to pay them off, but those of Millennials just out of school living on their parent’s couches. Very few people want that.
And third, we are and have traditionally been more risk averse. Study after study has shown that when it comes to investing, women take fewer risks than men do — often to our detriment. But this is an investment of a different color, an investment in our futures. Of course, we need to step up to the plate. The key is to do it as economically as possible. Mark Kantrowitz of Edvisors, Inc. suggests not borrowing more than you expect to earn your first year out of school. And we should always maximize our ability to take out the more economical federal loans (that come with more options in repayment plans) before applying for pricier private ones.
What do you think about this trend? Leave a comment below.
Jean Chatzky is a member of the DailyWorth Connect program. Read more about the program here.