Gender, Debt, and Dropping Out

The latest issue of the peer-reviewed academic journal, Gender and Society, has an excellent paper by Rachel Dwyer, Randy Hodson, and Laura McCloud on “Gender, Debt, and Dropping Out of College” (which is, unfortunately, behind a paywall).

The new paper finds strong evidence for one of the arguments that Heather Boushey and I made in a 2010 report for the Center for American Progress called: “The College Conundrum: Why the Benefits of a College Education May Not Be So Clear, Especially to Men” (pdf). We argued there that one reason why men may be falling behind women in college completion is that men have a lower tolerance for going into debt to finance their education. According to Dwyer, Hodson, and McCloud’s research, once men hit a debt level of about $12,500, further increases in debt reduce their likelihood of completing college. For women, the estimated debt threshold is about $2,000 higher, meaning that women are more likely to hang on as the debt piles up.

One explanation the researchers offer for this finding is that –in the short run, at least– men without a college degree face a much smaller wage penalty for not finishing college than young women do. The wage penalty increases for men and women later in their careers, but over a shorter time horizon, men can do much better than women without a degree, which may lead more men than women to drop out (or to skip college altogether).

As Sociologists for Women in Society and the Council on Contemporary Families note in a press release announcing the paper:

“…women’s willingness to stick it out longer in the face of higher debt is a paradoxical result of women’s continuing disadvantage on the job market. In the short run, men who drop out of college do not experience a wage penalty in comparison to their peers who go on to graduate. It may be harder for men than for women to see the advantage of staying in college because in the early years after college, men who complete college make no higher pay than men who drop out.”

This logic is consistent with one of the important findings in our CAP report. Among 25-to-34 year olds, about one-in-five men with a college degree actually earned less than what the average man with only a high school degree did. For women, the share of young college graduates that earned less than the average female high school graduate was also surprisingly high –but, at only one-in-seven, lower than the corresponding rate for men. In this particular case, women’s relative disadvantage in the short-term may be steering them toward better long-term choices.

The Dwyer, Hodson, and McCloud research should help in efforts to focus attention on several key issues: why more young people don’t go to college; why so many people start, but never finish college; and why the earnings of many recent college graduates are so low relative to the cost of their investment.

(This post originally appeared at the CEPR Blog.)

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