We already know that the economic recovery has left many young people financially disadvantaged. But just how badly prepared are today’s 20-somethings to manage their finances?
A unique, multi-year study by researchers at the University of Arizona, has some fascinating answers.
In “Arizona Pathways to Life Success for University Students,” researchers found more than half of college graduates are still relying on their parents or other family members for financial support.
This is the third wave of the study, which has followed the same cohort of 1,000 college students since 2007, just before the recession began, checking in with them at various points over the last 7 years to see how they’re coping financially.
A sluggish economic recovery coupled with high levels of debt have left less than one-third of the students — who are now between ages 23 and 26 — financially self-sufficient.
"The fact that we saw so many young adults, including those who said they had full-time jobs and were still relying on their parents for financial support, was a big finding,” says Joyce Serido, lead researcher and assistant director of the University of Arizona’s Take Charge America Initiative, which promotes financial education. “It shows that just because you have a college degree doesn’t mean you’re [going to be financially successful].”
Less than half of the 20-somethings surveyed by the University of Arizona were employed full-time, and 20% were working part-time. Unsurprisingly, unemployed college graduates were much more likely get help from family (75%), but nearly half (48%) of college grads who have jobs are getting help, too, they found.
And as they struggle to get on their feet, college graduates are increasingly pushing off many traditional milestones of adulthood — nearly 30% say marriage and children aren’t a priority and one in five say they could care less about buying a home.
With the average student debt load hovering just under $30,000 in the U.S., it’s not hard to imagine why young college graduates may be struggling financially. And on top of debt, their job prospects haven’t been so great either. As many as 40% of young adults are considered underemployed today — meaning they are working in jobs that don’t require a college degree.
The chronic effect of debt
Over time, debt does not only hinder young adults financially. Serido, who also studies stress and coping in families, says she is most concerned about how the stresses of financial dependency are affecting young people psychologically.
Since the the first wave of the study, participants’ life satisfaction is even lower than it was before college. On a scale of 1 (low) to 5 (high), participant responses averaged 3.5 this year, down from 3.8 in the second wave of the study and 3.6 in the first.
“My prediction is that … we’re going to see more and more health problems that are tied to this chronic financial stress,” Serido says. “It’s eating away at their satisfaction about life.
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