Do you want your kids to move back home after college?
There’s been quite a few articles lately about how young adults have “failure to launch” syndrome. Here and here. They aren’t growing up the same way people did 40 years ago. They aren’t completing as much college, aren’t graduating as quickly, aren’t getting career-type jobs as easily, are living at home more, and are marrying later than ever before. There’s probably many reasons why. But I think debt has a lot to do with some of them. (I also think debt is a symptom of bigger issues, but that’s not what this post is about.)
Some stats for you from creditcards.com:
The average college graduate has nearly $20,000 in debt.
Nearly one in five 18-to 24-year-olds is in “debt hardship,” up from 12 percent in 1989.
41 percent of cardholders from the ages of 18 to 29 made only the minimum required payment on a credit card in some of the past 12 months.
Undergraduates are carrying record-high credit card balances. The average (mean) balance grew to $3,173, the highest in the years the study has been conducted. Median debt is $1,645.
Since 2004, students who arrived on campus as freshmen with a credit card already in-hand have increased from 23 percent to 39 percent.
Follow me on this one:
- 39% of freshmen enter college with a credit card.
- Then when you’re in college, you’re carrying on average $3,100 on your card.
- By the time you graduate, you’re now carrying $20,000 in debt total.
- 41% of cardholders ages 18 to 29 are only making the minimum payments.
So, you graduate from college. The economy is as tight as he has been in a while. It’s hard enough to find a job in your field. But to make it that much harder on yourself, you now have to find a job that allows you to pay your real bills (rent, utilities, groceries) and your loan payments. I don’t know what the monthly payment is on $20K, but I’m sure it’s not pocket change. I can easily see why only 41% can make the minimum payments. I can see, where with that much debt, people are moving back in with their parents. For a lot of them, it’s not really about building a nest egg so much as building the tree that could house the nest egg.
All that debt has got to make growing up harder. It makes it harder to feel like an adult when you’re living with your parents. It makes it harder to afford to court a girl, buy a ring, throw a wedding, afford a decent place. You’d be less likely to see yourself as a great potential spouse. The opposite sex is less likely to see you as such.
So what do we do? Another interesting stat from creditcard.com:
“Two-thirds of survey respondents said they had frequently or sometimes discussed credit card use with their parents. The remaining one-third who had never or only rarely discussed credit cards with parents were more likely to pay for tuition with a credit card and were more likely to be surprised at their credit card balance when they received the invoice.”
If you’re a parent, talk to your kids. WAY before they go to college. Help them pick out a college they can afford. Help them have a plan for how they’ll pay for tuition, books, room & board, late night pizzas.
If you’re already there (in debt), get a cheaper life. Get drastic. Cut up the plastic. Move some place cheaper. Trade in the BMW for a Schwinn. Cook at home. Eat leftovers. Don’t go on ski trips to Colorado. Have a staycation. Get more money. Get a second job. Get a third job. Get better skills for a promotion. If warranted, ask for a raise.