Tasha Kaminsky, director of development at a St. Louis nonprofit, would like to have children. In many ways, the timing couldn’t be better. Kaminsky, 33, is married, has a stable job and owns a house. However, a major obstacle stands in her way: her student debt.
It’s been 10 years since Kaminsky took out a $75,000 federal loan for her college education, and she’s never missed a payment. Before the pandemic-era pause on federal loan repayments took effect in March 2020, between $250 and $500 of his salary was used to pay off his debt each month. After a decade of payments, Tasha still owes $107,411.
“I honestly think I’m just going to die in debt,” Kaminsky told Know Your Value.
As President Joe Biden plans to take steps to cancel some federal student loans, the federal student loan repayment moratorium is set to expire in August. Once that was done, child care costs — an average of $10,041 a year in Missouri — plus Kaminsky’s student loan debt made the idea of starting a family even more daunting. . “We can either continue to live comfortably or live on a shoestring because of student loans,” she said.
Kaminsky is far from alone. Nadia Yusuf, a 28-year-old lawyer in New York, said she would change jobs with a better work-life balance for less pay without her student loans. Another New York lawyer, Tochi (who declined to share her full name publicly for fear of offending her employer), said she would pursue a career in domestic violence law if her loans were cheaper.
“How am I supposed to accumulate wealth to venture out on my own or do something different?” Yusuf wondered.
Of the 45 million Americans who owe a total of $1.7 trillion in federal and private student loans, two-thirds are women. Women of color are particularly affected, a situation exacerbated by a racialized and gendered wage gap.
According to a recent CNBC and Momentive survey, black and Hispanic women are twice as likely as their male counterparts to have student debt.
And, the racial gap in student loan debt has widened over the past 20 years. Between 2000 and 2018, median student debt for white borrowers rose from $12,000 to $23,000. For black borrowers, it jumped from $7,000 to $30,000, according to an analysis by the Roosevelt Institute. Black women owe an average of $41,466.
“Student loan debt for many is now unsustainable,” said Dr. Nicole Smith, chief economist at the Georgetown University Center on Education and the Workforce. “Are student loans an investment in human capital? Absolutely. But should we pay for this investment 10, 20, or even 30 years after graduation?
She added that for many black women, trying to pay off student loans is “like running against the wind.”
That’s exactly how Joella Jones, a 33-year-old litigator, feels. Jones said she would be able to save enough money to buy a house without her student loans.
Growing up in Denver, Colorado, Jones never imagined making as much money as she currently does in New York. Her father and uncle grew up in poverty and became the first in their family to attend college. After earning his doctorate, his father became a professor at the University of Denver, serving as a beacon for the kind of mobility made possible by higher education.
So when Jones graduated from Columbia Law School and started at a high-paying firm last year, she felt like she had struck gold. But the reality of paying off her student loans quickly emerged. Jones currently owes $363,066 in federal loans for his law, masters and undergraduate degrees. Not to mention that she and her husband have another mouth to feed with the birth of their baby boy, Abraham, in April last year.
They were hoping to buy a house so Abraham could have more space than their current one-bedroom apartment. But when the pause on loan repayments ends this summer, Jones planned to have to contribute $3,000 a month to his loans, pushing his dream of buying a house away.
“It’s really overwhelming,” Jones said.
Many mothers in debt face the same dilemma. According to a study by the American Association of University Women, women spend an average of $920 per month on housing, $396 on car loans or leases, and $307 on student loans. For the 16% who are mothers, an additional $520 is spent on childcare each month, leaving them with a monthly deficit of $372.
Dr. Richelle Brooks, K-12 director and founder of ReTHINK It, an organization dedicated to addressing systemic racism in education, also feels this deficit.
After the pause on loan payments ends in a few months, Dr. Brooks will have to contribute $598 a month to his $240,000 student debt through an income repayment plan. As a single mother of two, she doesn’t see this as an option. “I’m in the hole every month. Where will that $598 come from? ” she says.
As co-founder of the Los Angeles chapter of The Debt Collective, a national debtors’ union, Dr. Brooks advocates for complete student loan forgiveness as a means of economic justice. “I would even go so far as to say debt is Jim Crow 2.0,” she said.
According to a Morning Consult poll from December, at least 62% of Americans support student loan forgiveness, with 20% supporting full forgiveness. Another 15% said only the lowest income graduates should have their balances cleared.
If not full debt forgiveness, Dr. Brooks argued for loan forgiveness that includes a threshold that takes into account a student’s generational wealth (or lack thereof).
This is a feature of loan forgiveness that researchers at the Brookings Institute have also advocated. “If implemented correctly, student debt forgiveness could be a powerful tool to dismantle institutional discrimination by reducing racial wealth disparities,” wrote Dr. Andre Perry.
There are, of course, success stories of women repaying their debt in full. Liz Lee, a corporate lawyer from Seattle, managed to repay her student loans, but at a significant cost.
In her first job out of law school, Lee, now 41, owed $200,000 in federal loans to the University of California Hastings and Scripps College, where she earned her undergraduate degree. She was confident she would repay her loans on time – she grew up in what she described as extreme poverty, with parents, both Chinese immigrants, who earned a combined income of $30,000 a year. If Lee knew how to do anything, it was to hustle.
Then the financial crash of 2008 happened and all sense of financial security disappeared. “I was a corporate lawyer,” Lee explained. “I went from a very busy day to crickets the next day.” Within weeks, his company began laying off employees. She knew that several of her colleagues had safety nets. “It’s okay. My husband is an engineer,” she recalled a colleague telling her.
“I don’t have anyone,” Lee recalled thinking.
So, Lee decided to hustle once more. She surfed the couch at friends’ apartments while maintaining her job at the law firm. She saved nothing and contributed nothing to her 401K retirement plan. It was difficult, but it was doable – she was unmarried, had no children and had minimal expenses to justify. For three years, Lee contributed as much of his paycheck — sometimes $15,000 to $20,000 — toward paying off his loans.
“People thought I was crazy, but I was driven by fear,” she explained. “I was afraid of being homeless with a huge debt over my head.”
A week before turning 30, Lee completely paid off his debt.
Eleven years later, Lee owns a home with her husband and 8-month-old son. The fact that she and her husband were in debt made all the difference in starting a family and saving money for retirement. “It’s been a lot easier to pursue what we want from our family life because we don’t have this debt hanging over us,” Lee explained.
Still, Lee says she would support a student debt forgiveness program that takes into account the borrower’s occupation and economic background.
“I think there’s probably a way to make it work,” Lee said. “So that you don’t have people repaying their loans in their 40s, 50s, 60s, 60s or until they die, basically.”
Yusuf shared this sentiment. “The American dream story is that if you work hard and get an education, you’ll get a job, you’ll be successful, and you’ll be ready,” she said. “But it feels like the conditions are stacked against that, especially for women and especially for black women.”