I got the reaction I expected from my daughter when I suggested that for graduate school, to save money, she live at home.
She shuddered.
I understand her reservation. But for her greater good, my recommendation makes more financial sense.
My husband and I have enough saved to pay for her undergraduate studies at the University of Maryland, including room and board. And because we saved, we were OK with her living on campus even though we live only about a half-hour away.
Thanks to an academic scholarship she received, there will be money left over in her 529 college savings plan to pay for graduate school. But we will only have enough to cover tuition for an in-state master’s program. Her career choice requires further education. She wants to work with children in some counseling position. We are encouraging her to finish her education full-time while she’s unencumbered by other obligations.
With a ban on debt — for her or us — she has a choice. Live at home or find more scholarship money. We also don’t want her to become overburdened by working too many hours while attending graduate school to just pay for room and board.
With the high cost of housing and all the expenses that go along with independent living, we need to rethink the conventional wisdom that young adults need to be shoved out on their own.
Fewer young adults are living apart from their families than before the Great Recession, according to new data that the Pew Research Center mined from the Census Bureau.
“In fact, the nation’s 18- to 34-year-olds are less likely to be living independently of their families and establishing their own households today than they were in the depths of the Great Recession,” wrote Richard Fry, a senior researcher at Pew.
Given the economic severity of the Great Recession, one might expect that millennials would need to live at home. In 2007, about 42.7 million 18- to 34-year-olds lived independently. Since then, the number of young adults has increased by 3 million. Yet in the first third of 2015, nearly the same number — 42.2 million — lived on their own despite gradually improving job opportunities and earnings.
Fry points out that this trend may affect the demand for housing, furnishings, cable installations and other purchases that young adults would make if they moved into their own space.
What’s good for the macro economy isn’t necessarily in their best interest. Certainly we want our young adults to be independent. I know I do. And I want my space back. But I also think we shouldn’t bemoan this trend of more millennials living at home.
Here are situations in which it makes more financial sense for a young adult to live at home:
Need to borrow for college: If you are using loans to help pay for room and board, either as an undergraduate or graduate student, you’re borrowing for rent and food. In the real world you would get criticized for using debt to pay your rent or purchase groceries. At least if you’re using loans for tuition there’s a payback. But is it essential to live on campus or rent an apartment? Commuters have access to the same on-campus programs and amenities. And they probably get better meals at home. Will this limit their college choices? Perhaps. It will also teach them to do what they can afford.
Need to pay back student loans: Without the expense of independent living, an indebted college graduate can make tremendous headway in paying off loans early, saving interest costs.
Need time to save: Imagine how many more young adults could become homeowners a lot sooner and with greater financial stability if they spend their 20s or even early 30s living at home, using that financial breathing room to save rather than paying rent.
