It is the American Dream to graduate college and start living a life of independence and financial stability. Many proud parents look forward to the days when they can see their children successfully putting their hard-earned degree to use. However, that is not the case for a growing number of college graduates. Some grads have found themselves in a dilemma that they did not expect: figuring out what is next post-graduation all the while having to move back with their parents. This “Boomerang Generation” trend has become increasingly common. But why? Let’s explore seven possible reasons why college graduates are not thriving in today’s economy.
1. The Crushing Weight of Student Loan Debt
Many students are burdened with student loan debt. Student loan debt exceeds $30,000 with many borrowers owing much more. Monthly payments take a chunk out of the college graduate’s entry-level salary, leaving less money to pay for rent, groceries, and other basic living expenses. Students feel the pressure of repaying these loans and prioritize making the payments over saving for a home or building an emergency fund. Student loan debt is a major contributor to why college grads are struggling to make ends meet even with a degree.
2. A Mismatch Between Education and Job Market Demands
Many graduates struggle to find employment in their field of study. Technology and economic shifts have created a gap between traditional academic programs and the skills employers look for in a candidate. Graduates, in turn, settle for jobs that don’t require their level of education. Many graduates work in fields not related to their degree. Young professionals are often disappointed because their expectations of using their degree in today’s job market are challenging, having many wonder, “What did I go to school for?”
3. The Rise of the Gig Economy and Job Insecurity
Past generations were privileged enough to have traditional employment opportunities that allowed them to have security and longevity with a single company. In contrast, today’s generation of graduates find ways to make ends meet by juggling multiple part-time jobs or freelance gigs. Recent graduates seek to find careers that will give them opportunities to have financial stability and benefits associated with full-time employment. The setbacks in finding job security in their fields of study make it difficult for young professionals to save, plan for the future, or qualify for loans. The uncertainty of maintaining gigs and side hustles contributes to stress and anxiety among young adults causing them to be frustrated with the reality of not finding a job after college.
4. Skyrocketing Housing Costs in Urban Centers
Graduates often choose to live at home with their parents because of the lack of affordable housing near job opportunities. Career opportunities that graduates seek are located in urban areas where housing costs surpass wage growth. For example, rent prices in cities like New York, Seattle, and San Francisco consume over 50% of an entry-level salary. Young professionals have to decide whether they will pay lower rent farther away from the job with a longer commute or stay close to job sites room mating with other young professionals. Many opt to live with their parents, avoiding those two options.
5. The Impact of Economic Recessions and Global Events
The economic instability caused by global events has had a major impact on recent graduates who are entering the workforce. The 2008 financial crisis and the COVID-19 pandemic are still affecting the job market today. Hiring freezes, layoffs, and increased competition for available positions are a result of uneconomic uncertainty and global disruptions. These factors negatively affect recent graduates who lack experience or professional networks. Many graduates feel the pressure of finding a career in unstable job markets, adding to the frustration of not obtaining a desirable position that utilizes their degree.
6. Inadequate Financial Literacy and Preparation
Planning is the key to financial stability. If college graduates enter the workforce with limited knowledge of personal finance, budgeting, and financial planning they are more likely to make poor financial decisions. Lack of comprehensive financial education may cause young professionals to overspend, accumulate high-interest credit card debt, or fail to take advantage of employer-sponsored retirement plans. Graduates may find it challenging to maximize their salary, manage expenses, and save for the future.
7. Changing Social Norms and Delayed Adulthood
With many college graduates living at home, a cycle of dependency creeps in for young adults who often choose not to marry, have children, or pursue homeownership. This is a sharp difference considering past generations who pursued these traditional markers of adulthood, signifying independence. The shift in milestones for Millennials and Gen Z has changed the way society views young adults who live at home with their parents. Some question if the comfort of living at home will create a cycle of dependency for young people who should be more independent.
Many Obstacles to Overcome
We have explored the seven challenges that young professionals face. There are many more variables that we have yet to uncover. Nonetheless, it is clear: Recent college graduates have many obstacles to overcome. Young adults in today’s generation are grappling with issues in today’s economy that differ from those of previous generations, like the explosion of technology that fills positions that are suitable for graduates. It is important to consider and understand why college graduates are not thriving as they should be, find viable solutions, and put systems in place to help them thrive in the economy.