College graduates save by heading home

To Rep. Paul Ryan, college students forced to move back in with Mom and Dad are the poster children for the bad economy. But from a personal finance perspective, experts say returning home can be a triumph.

“College graduates should not have to live out their 20s in their childhood bedrooms staring up at fading Obama posters and wondering when they can move out and get going with life, “ Ryan said at the Republican National Convention last week.

It’s a growing trend: There are more adult Americans age 34 or younger sleeping in their childhood bedrooms now than at any other time in the past 30 years, studies show. Nearly one-quarter of those ages 20 to 34 were living at home between 2007 and 2009, up from 17 percent in 1980, according to a study released this month by Zhenchao Qian of Ohio State University. The rate is closer to one-third for 25- to 34-year-olds, says Kim Parker, the lead researcher on another recent survey, “The Boomerang Generation.”

But just because more young adults are moving in with their parents doesn’t mean it’s a bad thing.

Andi Cooper, 31, a communications specialist from Ridgeland, Miss. who recently moved in with her parents, says people shouldn’t feel sorry for her. “I’m extremely happy,” she says. And she’s not alone.

Some 78 percent of those surveyed in the Pew study say they’re satisfied with their living arrangements and 77 percent feel upbeat about their future finances. “If there’s supposed to be a stigma attached to living with Mom and Dad through one’s late 20s or early 30s, today’s boomerang generation didn’t get that memo,” Parker says.

It may also be part of a larger cultural shift: People are also getting married later in life and flying the coop later, Qian says.

To be sure, many young adults are living with their parents strictly because of joblessness, low wages or high housing costs. About one-third of 25- to 34-year-olds say they moved back or never left because of the economy, the Pew report found, up from 11 percent in 1980. But there’s a silver lining too. Nearly half of these young adults say they have paid rent to their parentsinstead of to some anonymous landlord, and 89 percent say they have helped with household expenses, the report found.

And many college graduates in their 30s who still live at home to save money say they’re glad they avoided buying a home at the peak of the market. Cooper says she has a lot of friends who bought homes in their 30s, before 2008 — and are now unable to sell them because they have negative equity. Despite having a graduate degree in Wildlife Science and a well-paid job, she says she never even considered buying a house. “I definitely feel blessed to have dodged that bullet,” she says.

Moving back in with one’s parents may even make sense for those who can afford a place of their own, others say. “Living at home promotes saving,” says Sheldon Garon, a professor of history at Princeton University and author of “Beyond Our Means: Why America Spends While the World Saves.” He says it could help students pay off the $1 trillion they now owe in student loans. “There has been a staggering increase in student debt in the last few years,” Garon says. “It may make a lot of sense for young people to trim their costs.”

On a personal note, college graduates also reap the benefits of having two mature roommates who can give them valuable advice about planning their future. Qian says this is a critical time for many young people. Case in point: Jennifer Marcus, 26, a public-relations executive and television blogger, works in New York and moved back to her childhood home in New Jersey last September. “They gave me emotional support after a really tough breakup,” she says. “I also switched jobs this year and myparents were monumental in helping me with that decision.”