Is Debt Driving Recent Graduates to Move Back in With Mom and Dad?

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Is Debt Driving Recent Graduates to Move Back in With Mom and Dad?

The growing total student loan debt in the United States has many experts worried about the future of both higher education and millennials entering the work force. In 2016, more 18-34 year olds moved back home than ever before and the total student loan debt market crossed the $1.4 trillion mark. To combat this, many students have moved home after college to cut costs and get a head start on loan repayments, but is it the best decision long-term?

Saving Money

The obvious reason many millennials are moving home is to save money. Recent graduates with jobs near city centers will likely find it cheaper to live with their parents in the suburbs than to try find a place to rent close to their job. Rising rents and stagnant wages are likely to blame. Although 2016 saw the best job market for college graduates in recent memory, many graduates still find it difficult to cover all of their expenses with an entry-level wage.

Parents Welcome the Change

For years, there was a stigma attached to moving back home with your parents. Students who did were seen as irresponsible or unable to make their own way. Nowadays, many parents welcome their children back home. Seen as a fiscally responsible move by some, graduates who spend a few years at home try to put more money towards their first home, marriage, or a larger move in a few years.

Student Loan Debt

One of the largest drivers of graduates moving back home with their parents is rising student loan debts. After college, many graduates are immediately on the hook to start the repayment of their federal student loans. While some loan programs offer deferment, graduates who are unable to find a job immediately after completing a degree program may find themselves moving back home to reduce their expenses and to start paying back their loans.

Is Moving Back Home a Smart Choice?

One study shows that student loan debt is not a reason to move back in with mom and dad. The federal student loan program in the US anticipates a 10-year repayment program for loans issued to students pursuing a bachelor’s degree. In reality, repayment times are often closer to an average of 21 years. As a parent, it may seem novel to have your millennial move back in with you to help them start the repayment process, but you may actually be preventing them from pursuing better job opportunities or post-baccalaureate programs by having them live at home.

Although the shock of moving out for the first time can be a harsh reality check for many recent graduates, the likelihood that student loan amounts will be paid-down shortly after graduation are low. Instead, recent graduates should explore their career options rather than stay at home to try and repay all of their remaining debt.

Many parents choose to live in the suburbs because of lower housing costs, better school choices, and more space to raise a family. While these were advantageous decades ago, recent trends have shown families moving closer to the city where job opportunities and cultural experiences flourish. As millennials make the decision of whether or not to move back home, they may only be delaying the inevitable jump into the real world and the longer they wait could have long-term consequences.


Readers, when you had recently graduated from college, did you move back in with your parents?  If so, was student loan debt a deciding factor in that decision?

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  1. I chose the job I did specifically because it meant I wouldn’t have to move back home after college graduation. It wasn’t in something I necessarily wanted to do and I eventually switched career fields.

    If I did move back in, my parents would have charged me rent. I think that’s a fair trade-off since it still would have been cheaper.
    Josh recently posted…Our Family Vacation in CincinnatiMy Profile

  2. I did NOT move back home, but I also didn’t have debt. I’m not sure if that would have changed things or not. I’m guessing not because I had a job lined up during my senior year and knew I’d be able to afford “life”. I think a bit part of the problem for graduates if they wait to long to plan their budgets, find their jobs, and prepare themselves. These things need to be done BEFORE graduation.
    Brad – recently posted…5 Things Every College Freshman NeedsMy Profile

    • Thanks for sharing Brad!!! I think you’re right on that pending graduates don’t spend enough time thinking about the future and should be a little more proactive!!!

  3. I had a ton of student loan debt and did not have a job lined up after law school, so I was probably a great candidate for moving back home. However, my parents live an 8-hour drive from my then-girlfriend/now-wife. I knew if I moved back it would be much easier to find jobs there than here and it’d be risking doing a long distance relationship for the foreseeable future.

    So instead I signed a 12-month lease with no income in sight and committed myself to making it work. I got a 30-hour per week legal job in Maryland, a 12-hour per week tutoring job in Virginia, and an 18-hour per week job counting metro passengers all around DC. I wasn’t home very often, but I made enough money to pay the rent and keep going until I lined up a more secure and consistent paycheck in a job I liked.
    Matt @ Optimize Your Life recently posted…The One Key to Optimizing Your ProductivityMy Profile

  4. I graduated with $30,000 of student debt during the dot com bust. I couldn’t find an entry level job for more than nine months. Hence, moving back home was mostly determined by my debt and the lack of employment. However, I found a job in another city after almost a year of searching and I moved there to start my career.

    After gaining employment, my highest priority was to pay off my student loan. It took me about three years. I would recommend that all new grads pay off their loans asap. You’ll open a lot of opportunities to yourself when you have more money to invest.
    Leo T. Ly @ recently posted…Protect Your Online Personal BrandingMy Profile

  5. I moved back home very briefly. To be honest, I wasn’t even thinking of it for money reasons. I wasn’t that “in tune” with personal finance back then. But, I couldn’t live under the same roof for very long and quickly found my own place!

  6. When I returned to my hometown 2 years after college, I planned on living with mom and dad for a while to save money (I thought I was heading to grad school soon). We lasted 2 weeks before both sides decided the savings weren’t worth it 🙂
    Paul recently posted…TGIF: Lazy SummerMy Profile

  7. I moved back in with my parents after college graduation because I hadn’t been able to find a job yet – I worked/lived on campus the summer after graduation, then moved home for a year before moving out to go to grad school. After grad school & two years living/working in another state, my fiance & I moved back and lived with my parents for three years. The deciding factor to that was an unlucky job situation, but the reason we stayed so long had a lot to do with debt (a large portion of which is student loans, both mine & my husbands). Long road ahead still to paying off the debt, but we finally make enough to pay our debts each month & our mortgage on our new home…

    • Thanks for sharing Kristen!!! My wife and I both lived at home at our parents homes. It definitely helped set up the foundation of where we are today.

  8. After college, I worked at a job about 3 hours from home. After a few months, I decided to take a better job opportunity that was about a 15 mile drive from my parents so I did move in with them for a year or so. I was able to save quite a bit of money, established a nice emergency fund and pay down some debt. I then moved out, got married and the rest is history. In hindsight, I wish I would have paid them rent but they probably wouldn’t have accepted it anyways.
    Mr Defined Sight recently posted…Moving Is A Pain But It Scratches An ItchMy Profile

    • Thanks for sharing Mr. Defined Sight!!! A three hour commute everyday. That has to be rough. I feel spoiled with the 15 minute commute I have right now 🙂

  9. I moved back in with my parents after college, not because of any huge amount of debt, but because I had trouble landing a full-time job initially. After finding a full-time position I was off on my own.
    Brian recently posted…Debt is a Four Letter WordMy Profile

  10. I didmove back for two years. I had huge student loan debt and worked 20 mins from a parents house. I hated every minute of it but I paid off the debt in that time and appreciated my appartmsnt there after even more. This was more then a decade ago though, so my data point may no longer be valid.
    FullTimeFinance recently posted…Slow Things DownMy Profile

  11. I have been financially on my own since I was 21. I could not imagine moving back in with my folks. Sounds like a terrible idea. Still if you do it with the goal of paying off your school debt over a year or two then maybe it is worth it.

    • Thanks for sharing!!! I did it for 18 months and it was definitely the right decision for me. Definitely set me up on good financial footing but I realize it’s not for everyone.

  12. I believe without a doubt that student loan debt is stifling the growth and advancement of an entire generation. When I was young I didn’t give financial independence a second thought. I’d like to think younger generations are more aware of burdening themselves with credit cards and car loans, but it seems student loan debt is still acceptable…even expected.
    Jason@Debt Reckoning recently posted…Is Leasing a Car a Good Idea?My Profile

    • I definitely agree that people are assuming that you have to have student loans to get ahead these days just like mortgages. I’d definitely love to see a reversal of both of these trends.

  13. I was with my parents all throughout college and would encourage the same for all (unless you’re super rich maybe). It teaches discipline and patience and helps to prioritize life at an early age. And of course paying the student loans faster is a big help for other large and inevitable expenses that will come later in life 🙂
    SMM recently posted…Get Quality But At A BargainMy Profile

    • Thanks for sharing SMM!!! I didn’t live at home during college but I can definitely see how it would speed up the process of saving money and paying off debt. Definitely a smart way of doing so!!!

  14. It has been so long but I think I spent the first six months back at home after graduating, but two of those months were doing an internship. I know I couldn’t wait to get out though! lol! After that I’ve never looked back. I can see both points of view. I do think that SOME enabling is happening letting your kids move back, especially if there are no set expectations like, “OK you have one year…” or some rent paid. But I’m also not a parent, so I reserve judgment.
    Tonya@Budget and the Beach recently posted…Real Money Stories: New House, New Baby, & Student LoansMy Profile

    • Thanks for sharing Tonya!!! I think if you have a plan in place it’s perfectly fine. Now just living there with no plan…I’m not so sure about 🙂

  15. Where my parents are from, living with family until you get married is the norm too. The family’s a unit, and as long as it logically makes sense to live at home, then there’s no reason not to.

    A small condo where I live costs at least 160,000 on the outskirts of the city; a townhouse is probably in the mid-300,000. A detached home starts in the high-400,000 right now, in the suburbs, just a few miles from the city limits. Houses closer to the core are more around the 600/700 – well into the millions.

    Living with my parents actually facilitates and allows me to pursue opportunities in my career that I would otherwise have difficulty taking on, would I be living on my own or renting. It allows me a home base, and the flexibility to relocate for work. Ever situation is different though. A lot of my friends have some pretty awful parents, and if I were in their situation, I likely wouldn’t be living with my parents either.

    • Thanks for sharing Ms. Raggedly!!! I definitely agree that it’s imperative that you get along with your parents if you’re going to move back in. Otherwise, that could make for a trying living situation.

  16. I do think that debt is keeping young people from doing a lot of things, particularly my students. Luckily, a lot of my students don’t have a lot of debt because I teach at a public institution and my students work. Many of them live at home until they are in the mid-20s.
    Jason recently posted…Learning to Be Good EnoughMy Profile

  17. I had rushed through graduate school for engineering in 12 months which left no time for part time work, internships or job hunting. After that I moved home for a couple months to relax and find a job. It was nice for about a month but then I got anxious and ready to get out. I had no concept of money so that really wasn’t a factor at all.

    Most people I know graduated around 2008-2010 so people were moving home because they simply couldn’t find a job.
    Grant @ Life Prep Couple recently posted…Staying Fit While TravelingMy Profile

    • Thanks for sharing Grant!!! I came home and my parents said I had to get a job pronto. Living at home and not working wasn’t going to work. I got lucky things worked out so quickly!!!

  18. I moved back home after college to save money. My parents philosophy was, as long as I was actively pursuing something, they didn’t really mind me being there. That could be another degree, paying off loans, saving up for a house, etc. That would keep the kids from being stagnant and getting too comfortable and not want to leave. Used that short time wisely to pay off my student loans and save up a decent sum for emergencies and a payment toward a place of my own.

    There is also a weird gender double standard that goes along with living with your parents. Seems like girls can do it no problem and no one really complains. If guys do it, they are labeled more like a freeloader, lazy, irresponsible, etc. And it is a huge turn off for the other gender when it comes up in conversation. Although I saw a few comments here already about wives or sisters staying at home till they were married and it wasn’t an issue. Guess it comes down to the people and their personalities or situations.
    Dividend Daze recently posted…The Impact of Rising Interest Rates on FinancesMy Profile

    • Interesting analysis. I didn’t think of the double standard but I definitely agree. If a guy is living at home, it’s like what’s wrong with him. If a woman lives at home it’s a different story.

  19. Great post and analysis. I guess a person can only live where they can afford. It might be ok for a graduate to live at home for a short period, but should get out on their own as soon as possible. I am currently on the opposite end of the spectrum. My fear is my parents comings to live in our house as they get older. We will do what we have to do for family.
    Dave recently posted…Sirius XM: Getting Past NoMy Profile

  20. I didn’t have a job lined up when I graduated so I moved back home. I think it was more than just the money, but having the emotional support from my family too.

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