The Burden of LGBTQ Student Loan Debt

This school year, and every year, LGBTQ college students have to adapt to financial challenges that may not be a concern for straight peers. LGBTQ students are being hit hard by a combination of discriminatory obstacles that leave them saddled with significant student loan debt which weighs down their financial futures. 

LGBTQ students face barriers in paying for their education at every level of the process, at times even before they enroll. Homophobic families may not financially support their students, leading LGBTQ students to turn to loans and greater self-reliance to finance their schooling. A 2019 survey conducted by Student Loan Hero found that LGBTQ borrowers had a higher debt burden on average, with $16,000 more than their cis/het peers. 

But even once enrolled, LGBTQ students also face harassment in the process of getting loans, during their studies on campus, and entering into the job market after graduation. Such hardships can make earning a degree more difficult and more costly while in school, and more difficult to repay after leaving. Student Loan Hero found that nearly 30% of LGBTQ student loan borrowers found their debt “unmanageable.”  

Family Matters 

One reason LGBTQ students have more loans is that their families may be unwilling to fund their children’s higher education. LGBTQ youth are more likely to be homeless, live in poverty, and not have access to key financial support systems. One key factor driving lack of support is a lack of an accepting family.  

A 2018 Human Rights Campaign report found that 78% of LGBTQ youth weren’t out to their family for fear of retaliation. Part of this retaliation includes financial manipulation, parents refusing to pay for college unless children renounce their LGBTQ identity or withholding financial aid altogether. It is this type of home life that forces LGBTQ students to be more dependent on borrowing money for higher education.   

According to Student Loan Hero, LGBTQ students that reported feeling unwelcome at home were 12% more likely to say their debt was unmanageable. But when LGBTQ students are turned away from their home as a source of financial support, they are met with a financial system that may not welcome them with open arms.  

About 40% of LGBTQ students encountered discrimination during the loan acquisition process, up from 32% in 2018. David Rae, founder of a Los Angeles-based wealth management firm, put in bluntly: “Reaching out for financial help is hard enough. Throw in discrimination and homophobia, and it can be downright miserable.” 

On (and Off) Campus  

Though college can be a liberating time for students, LGBTQ students frequently face financial and mental health challenges that end up costing them. Students that can’t rely on their families for financial support are often forced to turn to financial aid or working to support themselves. The harassment they face can hinder their educational attainment and cause mental health barriers that keep them from focusing on their courses.  

There are of course now hundreds of scholarships and grants focused on aiding underserved LGBTQ students. However, these opportunities are competitive and don’t guarantee funding for every applicant. But without scholarships or grants, there are very few other options to finance a college degree. Students without family support or grants and scholarships must either take on student loans or work a job—at times several jobs—to obtain an education. In order to finance their degrees, LGBTQ students end up taking on $16,000 more than their cis/het peers, on average. 

And unfortunately, when students end up working, they often work at the expense of their studies. A Georgetown study of students from high- and low-income families found that a majority of students worked over 15 hours per week, with a quarter of low-income students working over 35 hours per week. Students that work at these rates exchange academic success for financial security: Georgetown found that working beyond 15 hours per week can worsen academic performance.  

Paying for It 

The burdens of student loans persist well after graduation and worsen aspects of LGBTQ student borrowers’ lives. The Student Loan Hero survey found that among LGBTQ borrowers, 87% were stopped from reaching major milestones due to their student debt. Coupled with barriers in the workplace such as wage gaps and hiring discrimination, LGBTQ individuals are facing a mountain a debt with fewer ways to achieve repayment.    

By disqualifying students from wealth creation and independence, student debt weighs down prospects later in life. Nearly a third of LGBTQ student borrowers weren’t able to move out of their parent’s house due to their debt burden. In cases where family is a source of discrimination, the debt burden keeps students locked in a stressful and potentially harmful situation.  

Additionally, student debt prevented 40% of LGBTQ borrowers from buying a house, and 23% from buying their first car. Homeownership and auto ownership are important ways for individuals to build wealth and create economic security. Unable to acquire these beneficial assets, LGBTQ students with steep debt burdens may also struggle to take additional steps toward financial security and creating savings for the future. 

LGBTQ borrowers have a harder time paying off their debt, in no small part part, because of discrimination in employment. In The Economic Case for LGBT Equality Lee Badgett cites seventeen different studies where resumes for LGBTQ applicants were less likely to receive an interview. A 2019 study showed LGBTQ workers were less likely to be employed than their straight counterparts. When they were employed, they are more likely to have lower wages. The fewer chances LGBTQ people have to earn money or attain high paying jobs, the less likely they will pay off their loans.  

Conclusion

The $16,000 extra in loans LGBTQ student borrowers carry on average appears to be the result of navigating discrimination they face from families, classmates, financial professionals, and coworkers. And the extra debt burden weighs down LGBTQ students’ financial futures.  

The student loan issue is one that needs to be tackled from all sides. We must prevent new borrowers from sinking under a debt burden, extend relief to those in repayment, and help ensure that LGBT students are able to access affordable higher education. So, what are some things LGBTQ students (and universities) can do to create a more secure financial future for themselves during and after college? 

• Current or future students can apply and access funding from: 
  • LGBTQ Student Grants, like those offered by the Stonewall Community Foundation or the Pride Foundation.  
  • LGBTQ Scholarships, such as the Point Foundation, LEAGUE Foundation. The Human Rights Campaign has a list of various organizations that offer scholarships. 
• Student borrowers with difficulties managing their private student loan debts may benefit from help from a financial or student loan counselor—even though Federal student loan payments are presently deferred as a result of the pandemic until Januaray 2021. CLEAR offers LGBTQ-competent certified financial counselors trained in student loan issues, available by online appointment.
• Institutions of higher education can ensure their financial aid professionals receive sufficient training and oversight to ensure LGBTQ students receive adequate financial help from financial aid departments 
• Allies can donate to LGBTQ organizations offering grants and scholarships to LGBTQ students, listed above, as well as to organizations working to improve school environments for students and educators, such as the Gay Lesbian and Straight Education Network (GLSEN), Gay-Straight Alliance Network (GSA), and Our Family Coalition. 
• Congress & Policymakers can pursue debt-relief for student borrowers by offering forgiveness for federal student loans, as well as pursue policies to reduce tuition at colleges and universities and advance a system of free higher education that is available to all.