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Study: Student Debt Not the Cause of Adult Children Living with Parents

TomSrOfBostonTomSrOfBoston Registered User Posts: 12,002 Senior Member
edited January 2017 in Parents Forum

"CONCORD, N.H. (AP) — While both college debt and the “boomerang” phenomenon are growing, a new study casts doubt on the notion that staggering student loans are driving young adults back to their parents’ doorsteps.
In the past decade, student debt has doubled, with the average 2015 college graduate owing $30,000. The rate at which young adults “boomerang” also is increasing — recent studies report that between 20 and 50 percent are returning home. Many assume the former causes the latter, but Jason Houle and Cody Warner — assistant sociology professors at Dartmouth College and Montana State University, respectively — found the opposite.
Their study, published Thursday in Sociology of Education and based on annual surveys of more than 5,000 people born between 1980 and 1984, found that so-called boomerangers had less student loan debt than young adults who didn’t return home."

Replies to: Study: Student Debt Not the Cause of Adult Children Living with Parents

  • juilletjuillet Super Moderator Posts: 11,776 Super Moderator
    This is so interesting, but it makes a lot of sense to me. In my small sample of my own friends and acquaintances from college and graduate school (mostly born between 1980 and 1990), the people who moved home generally didn't do so because of their loan debt, even though many of them did have enormous loan debt. In fact, they generally moved out of their parents' home long before they repaid the debt. Of my friends now with big loan debt, most of them don't live at home anymore. Generally, they moved home while they were job-searching and/or saving up enough money for the security deposits and savings necessary to rent apartments in the expensive coastal cities we all largely live in.

    I wondered if there was a non-linear shape to the curve - or some kind of stratification effect - in which for the students with low to medium levels of loan debt, college completion (or lack thereof) is the main factor driving them home, whereas for students with high levels of loan debt, the debt is what drives them home. The researchers thought of that, though, and it appears that paradoxically the students with the lowest loan balances are actually the ones struggling the most (and that's supported by previous research).

    There were also some interesting additional analyses. For example, the young adults who do return home tend to do so only once. Another is that debt seems to be more important for black youth than white youth - black youth seem to be more likely to go home with higher levels of loan debt, although that is also complicated by their socioeconomic position. What seems to be the case is that while being of low socioeconomic status is more likely to drive youth of all ages home, being black complicates that somehow and drives up the risk. Another interesting finding is kids who went to for-profit colleges are also more likely to return home as kids who went to non-profits.

    One interesting note about the analysis is that the researchers only kept in the analysis college-goers who eventually achieved residential independence - in other words, the college students who are still living with their parents by the conclusion of the time period analyzed were dropped from the analysis. That number was pretty substantial - at N = 552, it was over 10% of the eventual sample, so it's possible that could make a difference - that the students who are still currently living at home are the ones with the highest debt. It's not clear to me why the researchers made that choice, especially because in their supplementary analyses they included the full sample.

    Full text of the article is here, in case anyone is interested: http://journals.sagepub.com/doi/full/10.1177/0038040716685873
  • roethlisburgerroethlisburger Registered User Posts: 1,814 Senior Member
    edited January 2017
    It might be more interesting to look at debt to income ratios. That might be more reflective of a graduate's ability to repay the debt.
  • BuildingBuilding Registered User Posts: 99 Junior Member
    I would like to see the underlying data before agreeing or disagreeing with the authors. Also, the amount of debt really doesn't matter except in context. For example, 10k in debt but 50% of salary going to rent is far different than 10k in debt but 25% of salary going to rent. Also, are all of the respondents working? There are so many unaddressed questions in this summary.
  • calmomcalmom Registered User Posts: 18,835 Senior Member
    At least in urban areas, I think the high cost of housing is a factor. My kids have always lived on their own post-college -- the only time my son returned home was a period of about 3 months while he was between-colleges (he had a 3 year gap mid-way through undergrad while he worked) and he simply couldn't find a rental. So it wasn't money but the rental market.

    But I'd note that it was never possible for my kids to live solo -- living independently from parents has always entailed some sort of shared rental situation. My kids' now have incomes well above mine, but they also face a rental market that would be unaffordable to me--- but my home is affordable only because I am a homeowner of a house that was purchases 28 years ago --- the house would now sell for about 4 times the amount I paid for it.

    I think high debt is a factor that adds to the difficulty, but I know that my daughter's loan payments are well under her half of the rent of the apartment she shares with her husband. Obviously loan debt doesn't help matters --- but it at least gives responsible borrowers the ability to build up a good credit rating, which in turn probably improves their ability to find housing. (It's not just a matter of finding an apartment to rent; the renter also needs to pass a credit check, and in competitive market that can also be a barrier).
  • BingeWatcherBingeWatcher Registered User Posts: 551 Member
    Sorry @calmom, I don't want my kiddo to have student loans to build her credit. Nope there are other ways to start
    building credit than student loans.
  • calmomcalmom Registered User Posts: 18,835 Senior Member
    edited January 2017
    Re the initial post & link - I'd point out that another factor that differentiates student borrowers from non-borrower is economic status of their families when they start college. The borrowers may be less likely overall to have parents who are homeowners or who own homes large enough to accommodate them when they graduate from college.

    There are also lifestyle considerations related to economics -- my son lived in a variety of shared situations over the years after leaving home, many of which were objectively much nicer than the modest home he grew up in. (I'd visit him and see a more spacious home, larger bedroom for him, larger common areas, etc.). So in that context, it's also more economically feasible for the college grad to find a rental that equates or exceeds the living standard in the parental home -- whereas those whose parents have more ample and well-appointed home may also be less willing to downgrade their style of living to match what they can afford.

    Another counter-intuitive factor could be that students with debt feel greater pressure to get jobs when they graduate, whereas those without debt who have accommodating parents might be more likely to accept unpaid internships or part-time or temporary work. The need to have a job might also make living at home more difficult, as the location of the parental home might restrict job opportunities.

    I think that student loan debt is still a factor -- but it's part of the overall picture of economic status-- so I think any study would need to look at those variables.
  • MassmommMassmomm Registered User Posts: 2,987 Senior Member
    Students who don't finish college are going to have less debt than those who do, and those students will have a harder time finding a well paid job than people with degrees, so it makes perfect sense that those who end up living at home owe less than those who live on their own.
  • katliamomkatliamom Registered User Posts: 11,352 Senior Member
    @calmom, it's also been my experience that cost of housing is a huge reason for moving in with mom & dad for a while. I know a couple of kids now trying to save up for a down-payment for a house - and the only way they can afford it is by not paying rent for a while. My own daughter started a PhD program this fall, she's in my basement because she wants to continue paying off her loans from her Master's program, while also saving up to buy a car - something she didn't need in college, first part of grad school. She plans to move out by spring, with a car, some savings, and continued paying of school loans (something she doesn't HAVE to do while she's in grad school, but wants to do.)

    In many situations, moving back home for a bit is a smart decision and part of a larger financial plan. Nothing wrong with that in my book.
  • beth's mombeth's mom Registered User Posts: 3,361 Senior Member
    I think calmom is right about other variables. My first thought was that students with parents who were willing and able to help support them during college have less debt than students whose families were unable or unwilling to help. And those same supportive families may be more willing/able to have the student move back home after college, whereas other families may not be.
  • ChiselCheeksChiselCheeks Registered User Posts: 111 Junior Member
    edited January 2017
  • mom2andmom2and Registered User Posts: 2,210 Senior Member
    The first thing I noted in the paper is that the student population studied was born between 1980 and 1984, meaning they are in their early to mid-30s and not reflective of the current crop of students or recent graduates with much larger student debt. Tuition at Dartmouth for the 1998-1999 school year (when students born in 1980 would have started college) was $23,799. 10 years later, in 2008 it was $36,690 For the current year it is $49,998. That requires a lot more debt.

    The article states that not finishing is more predictive of whether or not someone moves home. That certainly makes sense, but hard to believe that large debt is not a factor too (which apparently it is for black young adults).
  • MotherOfDragonsMotherOfDragons Registered User Posts: 3,958 Senior Member
    There's another factor in play that the article didn't consider: after the Great Recession, banks began to include student loan debt in their calculations. It's nearly impossible to get a home loan now if you have student loan debt over 30k.
  • mom2andmom2and Registered User Posts: 2,210 Senior Member
    For students in that cohort loss of jobs in the recession was probably a greater factor in moving home than student debt.
  • mathmommathmom Registered User Posts: 29,835 Senior Member
    I lived in a shared renting situation until I was 31. We even shared an apartment in Germany the first few years of our marriage - it was housing owned by the institute dh was working at and they didn't have a smaller one available. A few years into the gig we traded with a woman who wanted our apartment and we took hers.

    Count my son as one of the lived at home because NYC was too expensive. Even sharing with friends would have been a big chunk of change and he actually likes living in the burbs better than in the city. Older son hasn't live with us since he started doing internships in CA (soph year of college.)
This discussion has been closed.