Tags

Sorry to post so many news articles in a row… I just keep coming across articles on issues I think are important to think about.  This is one you might want to email to your parents And maybe pick up the book mentioned for yourself.

Why so many grads ‘fail to launch’

Many 20-somethings find themselves moving home to live with Mom and Dad, just like the movie ‘Failure to Launch.’ Blame it on the inertia — and some very real challenges.

By MP Dunleavey

 

At 24, Lorena Bravo would appear to be a card-carrying member of the so-called boomerang generation.

 

Despite being bright, articulate and well-educated (she has a bachelor’s degree in psychology and a master’s in teaching), Bravo couldn’t find full-time work after she graduated. So she recently moved back home with her parents in a Los Angeles suburb.

 

But if you’re thinking Bravo fits the model of “Failure to Launch” — the new movie starring a Porsche-driving Matthew McConaughey, who loves living with his parents so much he won’t leave — you’d be wrong. She doesn’t love living at home; she just doesn’t see another option.

 

That makes her a poster child for a darker side of the boomerangers, many of whom graduate unprepared for the daunting financial realities that await them — whether it’s dealing with massive debt, a dicey job market, the high cost of living or, D, all of the above.

 

“It’s a myth that 20-somethings don’t want to get on with life, that they don’t want to grow up,” says Abby Wilner, co-author of “The Quarterlifer’s Companion: How to Get on the Right Career Path, Control Your Finances, and Find the Support Network You Need to Thrive,” a book that aims to help recent grads get on their feet. “It’s a choice to move home and often something they do out of financial necessity.”

 

Rocky financial landscape

The transition from college to real life has never been easy. But today’s young adults face an unprecedented number of financial hurdles.

 

Whether you’re attending a pricey private college or a public one, college costs have nearly doubled in the last 20 years (and that’s after adjusting for inflation).

 

The average student will graduate with about $15,500 in student loans, according to the College Board. And that’s not including loans from parents, home-equity loans or credit-card debt.

 

About 25% of college students use credit cards to help pay tuition and fees

 

According to a 2004 survey by Nellie Mae, graduating students carry an average credit-card balance of nearly $3,000.

 

Years ago, a college grad could hope to land a good job to cover all these expenses, but it’s no longer that simple. Increasingly, all that BA will get you is a service-sector job, says Elana Berkowitz, editor of Campus Progress, a division of the Center for American Progress.

 

Half the workers in restaurants, grocery stores and department-store chains are under 24, she notes.

 

“Time was, you could get an entry-level job and be able to pay your way,” says Cathy Stocker, Wilner’s co-author. “Now, even if you’re lucky enough to get an entry-level job, many people can’t pay their student loans and make rent.”

 

Not surprisingly, a 2004 survey that Stocker and Wilner conducted found that 61% of college grads had lived at home between the ages of 21 and 25. More than half did so for more than a year.

 

Drowning in debt

Needless to say, this isn’t part of the college student’s game plan. “You go in believing that a BA is your ticket to the American dream,” says Lorena Bravo. “But for most of us, college just didn’t pan out the way we expected.”

 

Bravo emerged from college in 2003 with $18,000 in student-loan debt. “That’s nothing,” she says, “I know people who graduated with $100,000 in debt. I was one of the lucky ones.”

 

Still, she wasn’t able to find a job that paid more than $20,000 a year, even with the degree and plenty of college work experience.

 

So after temping for a year, Bravo impulsively decided to get a master’s degree in teaching — in the hope that an advanced degree would be the ticket to a better life. Instead, she racked up another $70,000 in student debt and discovered she doesn’t have the stomach to be an elementary-school teacher after all.

 

Now, living at home, Bravo says she knows dozens of young people who are doing the same thing, most of them struggling to save money, get a grip on debt or come up with some kind of viable career plan.

 

Bravo has decided to focus on her ballroom dancing skills — she hopes to compete in a national competition this fa
ll — and become a professional dance teacher. “They can make $70 or $80 an hour,” she says.

 

Lack of preparation

Nicole Relyea, 24, laughs pretty hard at the idea that anyone might believe 20-somethings move back home as a cushy exit ramp from life’s pressures. “Right, right, it’s much easier trying to live with your parents, looking over your shoulder all the time,” she jokes.

 

The real problem, she says, is that college students need more preparation to deal with the drastic shifts that life demands of them after graduation, both financially and career-wise.

 

“You think, six months ago I had a great on-campus job and social life. Now, I’m living at home, I have two friends and no academic stimulation for the first time in 20 years — sitting in the basement, surfing the Internet, looking for work,” Relyea says. “It’s like, wow, I was just studying the cultural history of aborigines and now I’m looking at jobs where the main duties are answering the phone and typing.’ “

 

“How are you supposed to make that shift? It’s really something nobody prepares you for.”

 

Relyea herself struggled to find a job after graduating in 2004 with $15,000 in student loans. She moved back home to save money and, like Bravo, she temped for over a year. Last fall she finally landed a full-time position with a nonprofit in her hometown of Madison, Wis.

 

Still, her $26,000 salary barely covers rent, living expenses and $160 in monthly student-loan payments. She’s also studying to get her certificate in massage therapy and is weighing graduate school.

 

“The graduate degree would be for me, because I like school,” she says, “but the massage-therapy certification might be the most useful thing I have.”

 

Real-life solutions

Because it’s Hollywood, the parents in “Failure to Launch” can hire a sexy consultant (Sarah Jessica Parker) to help get their reluctant son to move out — and give the audience a lot of laughs.

 

But “Quarterlifer’s Companion” co-authors Abby Wilner and Cathy Stocker worry that the mooching-off-mom-and-dad stereotype is getting more attention than the real issue: Most new grads need some helping making a realistic financial plan. Here are some steps:

 

Put aside preconceptions

Parents may assume that colleges provide seniors with some kind of exit strategy, but that’s not the case, says Relyea. “Nobody says, ‘Okay, today we’re going to learn how to write a cover letter.'”

 

There are on-campus career talks and seminars, of course, but harried seniors don’t always realize the importance of making time for those, Relyea adds.

 

Provide senior orientation

Start by helping your adult children recognize that things are going to be different now and ask them questions.

 

Six months before graduation, for example, ask about credit-card and student-loan debt. “You don’t want to stress them out,” says Stocker, “but you can say, ‘Let’s make a game plan together.'”

 

Offer financial training wheels

Wilner and Stocker recommend that parents and 20-somethings take advantage of the fact that living at home can be a kinder, gentler financial learning environment.

 

New grads “can chip in with some of the monthly bills, so you get hang of bill paying,” suggests Wilner. “This is also a good time to form a budget. Monitor your spending. Keep receipts. Get a realistic idea of what you spend and how to manage it.”

 

Stocker adds that parents can encourage saving by offering to “match” a portion of whatever their 20-something socks away.

 

Discuss expectations on both sides

While everyone I spoke to for this article stressed that living with the folks can be a smart financial move, without a clear plan or a deadline for finding a job, the situation can backfire.

 

To prevent nest-induced inertia, “The Quarterlifer’s Companion” offers a contract that helps both parties define the terms of shared living conditions, including how the new “roommate” is going to contribute to the household; what his or her goals are; and when he or she might move out.

 

Both parties review the contract every three months, say, to evaluate progress and make any needed adjustments.

 

Show, don’t tell

While it may be tempting to push your 20-something toward a job (“Let me introduce you to my friend Marv in accounting”), allow your adult child to hold the job-hunting reins. But do provide the same kind of networking advice you might to a friend. Relyea says the most helpful thing her mother did was to take her to networking events and professional lunches, where eventually Relyea met a contact who led to her current job.