US college graduates are finding it increasingly difficult to afford the consumerism that has become synonymous with the American dream. Traditionally, young adults would leave home, go to university, start a career and family, and enjoy the fruits of their labor with homeownership and other material possessions. However, economic uncertainty and rising costs have led many graduates to return to their parents’ homes, unable to afford the life they once aspired to.
A survey conducted by Harris Polls on behalf of Bloomberg News revealed that a staggering 45% of Americans aged 18 to 29 – approximately 23 million individuals – are now living with their parents. This trend can be attributed to the soaring mortgage rates, which currently stand at a 22-year high, and inflated house prices. The average sales price of homes sold in the United States was $495,100 in the second quarter of 2023, just $60,000 below the record average price set at the end of 2022. The cost of buying a home has risen by over $100,000 since the beginning of 2019, leading to a steep decline in mortgage demand and making it increasingly unaffordable for recent graduates to become homeowners.
Renting an apartment or house is not a viable alternative either, as rental prices continue to rise. The median asking rental price in August was $2,052, just $2 shy of the all-time high set a year ago. Greedy landlords are not solely to blame for this situation; institutional investors have also played a significant role. In the aftermath of the 2008 financial crisis, investment firms seized the opportunity to purchase hundreds of thousands of residential homes and rent them back to the American people at a premium. This practice drove up home prices across the country, making it even more difficult for graduates to find affordable rental options.
Further exacerbating the financial burden on young Americans are student loan debts and credit card balances. Many graduates find themselves struggling to make ends meet due to inadequate income. According to a survey by Life and My Finances, half of borrowers do not earn enough to cover their student loan payments, even with the three-year moratorium on payments granted by former President Donald Trump (due to end in October). The burden of debt has made many question the value of a college education that only plunges them further into financial hardship. As of the second quarter of 2023, Americans owe a staggering $1.77 trillion in federal and private student loan debt.
This bleak economic landscape has taken its toll on college enrollment as well. The National Student Clearinghouse reported a 4.7% decrease in student registrations in spring 2022 compared to the previous year, indicating a growing disillusionment with the prospect of higher education.
Despite these challenges, there is a silver lining for graduates who choose to return to their parents’ homes. Living with Mom and Dad allows them to save money and weather the storm of economic uncertainty. A survey conducted by RT revealed that the top reason graduates live with their parents is to save money (41%). Other reasons include taking care of older family members (30%), being unable to afford independent living (30%), assisting with family expenses (28%), COVID concerns (24%), saving for a down payment (24%), paying down debt (19%), recovering financially from emergency costs (16%), losing a job (10%), receiving help with childcare (6%), and other reasons (11%).
In conclusion, the American dream of consumerism has become increasingly unaffordable for US college graduates. Rising costs of homeownership and rental properties, coupled with mounting student loan debt, have forced many graduates to retreat to their parents’ homes in search of financial stability. This challenging economic landscape has also led to a decline in college enrollment, as students question the value of higher education in the face of mounting debt. However, for those who return to the safety of their parents’ homes, there is solace in the opportunity to save money and weather the storm until more favorable economic conditions arise.