Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Oct 26, 2012

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In an ever-difficult work economy, both women and men accept college debt and pursue higher education in hopes of securing a stable job after graduation. While college graduates earn a significantly larger income than high school graduates, the playing field for graduates is not equal.

A new study by the American Association of University Women (AAUW) reports that gender pay gaps still exist in the corporate world, in all field ranges. The AAUW’s study focused on average earnings for young professionals, one year after college graduation. In 2009, women who worked full time earned an average of 82 percent of what their male peers earned.

Although women make up half of the current workforce, they still earn less than men do throughout their entire career. The study found that although some women’s career choices—such as college major, occupation, and work schedule—account for part of the pay gap, there is an unidentified one-third of the pay gap that remains unknown. The report states this portion is likely due to workplace discrimination.

Tuition rates for students are not based upon a person’s sex, but rather on factors like educational and physical abilities, income level, and entrance exams. Both female and male college applicants are offered similar deals in regards to tuition, but why does that equality stop after college. According to the Chicago Tribune, more women attend college than men, and, while there, women earn higher grades. Yet when they graduate, with a similar  college debt average as men, they find it more difficult to pay off.

Somewhere in the education-to-work process, a gap arises.

Part of the reasoning for a wage gap can be explained. According to the AAUW report, men are more likely than women to major in fields such as engineering and computer science, which typically pay higher incomes. Conversely, women are more likely to major in fields such as education and social sciences, which typically pay lower incomes.

But the pay gap extends further than college majors. One year post graduation, women and men who majored in the same field earned different average incomes. For example, female business graduates earned an average of $38,000 while male business graduates earned an average of $45,000. Part of the reasoning can be due to the fact that men pursue higher paying positions within their major such as management positions, whereas women are more likely to work in administrative positions and occupations. Although both sexes received similar educations, and graduate with a similar amount of college debt, men and women tend to pursue differing positions within their chosen field.

Several other factors reviewed include hours worked and work sectors, but even with these factors accounted, a large unidentified gap remains. “Occupation, hours worked, and economic sector help us understand the pay gap, but these differences do not fully explain it,” the AAUW reported.

One reason for the study’s importance deals with the increasing number of graduates who leave school with college debt. After graduation, when college debt must be paid off, many women and men are faced with a “student loan debt burden.” This is defined as the percentage of earnings devoted to student loan payments. Higher college debt creates more burdens on the graduate, making him or her less likely to own a home, have a car loan, or make rent payments, the study suggested. Women earn a lower average salary, yet they are faced with the same cost of college debt as men. This causes the loan repayments to factor for more of women’s budget.

Many factors, both visible and hidden, cause for the gender pay gap. Not only can employers level the grounds for both men and women, but female employees can impact their wages by requesting a higher salary. One way to ensure equality on a nationwide scale is for Congress to pass the Paycheck Fairness Act. This act, which unfortunately has been blocked by Congress, would require employers to show that any salary differences between men are women are not gender-related. It also would prohibit employers from firing employees who share salary information with their co-workers.

If large societal barriers such as unemployment, gender wage gaps, and rising college debt are to be tackled, then a new sense of transparency and equality needs to be accepted. Now it is up to Congress to realize that gender inequalities exist, and without a nationwide reform, progress cannot occur.