Do Student Loans Cause Graduates to Boomerang?

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Richard Pallardy

By Richard Pallardy

April 30, 2019

Millennials have been dubbed the “boomerang generation.” After moving out of their parents’ homes and enjoying a period of independence, they move right back in. This has been attributed to everything from the enduring consequences of the Great Recession to shifting social mores to plain old laziness.

And, of course, the student loan crisis has taken some of the blame. With average student loan debt after graduation standing at $29,669 according to the most recent data from the National Postsecondary Student Aid Study (NPSAS:16), this might seem like a reasonable conclusion. After all, that’s triple what it was three decades ago. If popular media coverage is to be believed, it may be one of the main drivers of the phenomenon.

Correlation, however, does not always equal causation. Though few longitudinal studies have tracked the effects of student loan debt burden on returning to the natal home, numerous other analyses have found that a host of factors are in fact responsible for this generational shift.

A 2012 Pew study linked boomeranging to the drop in median income and the increase in poverty rates following the recession in 2007. It found that nearly 40% of adults 18-34 lived with their parents or had done so recently. Numerous other studies have landed upon different diagnoses, none of which serves to explain boomeranging in and of itself.

While it is nothing to sniff at, student loan debt does not appear to be among the primary factors driving Millennials back to the nest.

Boomerangers and Student Loans in Popular Media

In the years following the Great Recession, the boomerang generation became a popular subject for journalistic investigation. In many of these pieces, frustrated parents and their stymied children discussed the complications of deferred adulthood. Both recent graduates and their families had expected a more rapid transition to living independently after graduation.

Coverage often focused on student loan debt as a major cause of the delay. According to this narrative, students simply could not afford to live on their own while still paying down their debt. These conclusions were bolstered by studies that appeared to corroborate the apparent connection between indebtedness and returning home.

The reports also highlighted the housing and employment crises as secondary causes of the trend that saw many Millennials trading some of their newly won independence for the security of living with their parents.

In the past several years, though, more nuanced analysis has emerged, casting doubt on the simplistic cause-and-effect relationships initially proffered as explanations for this startling demographic trend.

Boomeranging in Historical Context

Here’s the thing: despite popular belief that boomeranging — or never leaving in the first place — is a new societal development, history paints a different picture.

Like most social trends, cohabitation with parents into adulthood has fluctuated over time, influenced by both economic and cultural factors.

Current perceptions of the “ideal” time to leave home and start an independent life hearken to the 1950s. The anomalous economic prosperity of the post-war years allowed for young people to leave the family home and establish their own households at earlier ages than ever before.

Prior to that point, though, particularly in the era preceding the second industrial revolution, a more gradual process was typical. Young adults slowly established themselves financially, with some parental support, before eventually leaving the nest. Interestingly, young adults were also more likely to be offering reciprocal support to their parents at this point. Marriage was usually delayed until financial stability had been achieved.

The unique conditions of the post-war years shifted this dynamic.

Subsidized college education, notably in the form of the Servicemen’s Readjustment Act of 1944 or, GI Bill, saw marked increases in higher education attainment. Because of government support, there was rarely much debt attached.

A booming industrial sector that provided plentiful jobs allowed increasing numbers of men to leave their parents homes soon after completion of secondary or higher education, usually in their early 20s. Their marriages facilitated a simultaneous exit of women from their natal homes as well.

When the manufacturing sector began to cave in the 1960s and 1970s, the trends of the previous decades reversed. With fewer jobs available, remaining in the parental home again became an appealing option to many young adults and levels of co-habitation with parents rose.

A 2010 study found that since its nadir in the 1980s, the proportion of young men aged 25 living at home has quickly approached levels closer to those at the beginning of the 20th century. Some 30% lived at home in 1900 while in 1970, levels had fallen to around 12%. At their lowest, they were at around 11% during the 1980s boom. In 2007, levels had climbed closer to 25%.

A further complication emerged in the wake of the war: more women began pursuing higher education and entering the workforce. This delayed marriage and parenthood, thus increasing the time spent in the natal home for a sizeable part of the population.

Further societal changes reduced the stigma against divorce and single parenthood, both of which led to increased rates of failed fledging. That is: many divorced women and single mothers began boomeranging as well.

Increased immigration has also affected the proportions of young people staying with their parents into early adulthood, with second-generation immigrants doing so at rates greater than their peers born to native parents.

This confluence of economic and social factors led to what has been perceived as a delay in maturation. But, what has really shifted is the definition of adulthood itself. This has never been a stable category. It only makes sense that the factors that define adulthood should shift with the economic and social forces of the era.

The reversal of the economic fortunes of the middle portion of the 20th century combined with the shifting social mores that brought women into the workplace, delaying the formation of families. This all but ensured that multi-generational cohabitation would become more common.

A 2016 Pew study found that in 2014, adults were more likely to be living with their parents for the first time in 130 years. These figures included those who didn’t pursue higher education, demonstrating that the trend cannot be pinned on student debt alone.

Analysis of Long-Term Trends

Only a handful of longitudinal studies have attempted to diagnose the causes of boomeranging. None of them found a strong connection between student debt and returning to the family home.

The National Student Loan Survey (NASLS), conducted in 1987, 1991, 1997 and 2002, found that some 15% of Pell Grant recipients moved back home while 12% of graduates who had not received Pell Grant support moved back home.

The survey showed relatively stable rates of returning home: 13% in 1987, 12% in 1991, an anomalous 21% in 1997 and 13% in 2002. The percentage of those who delayed marriage and having children due to their loan burden nearly doubled over the course of the survey, from single digits to low double digits.

A 2012 study of British youth using the British Household Panel Study (BHPS) results from 1991 to 2008 found that the increase in co-residence with parents was restricted to young women in their 20s who had pursued higher education.

Rates of return increased for women because more women were pursuing degrees rather than marriage and children in their early 20s. Childbearing in particular was inversely correlated to returning home. That is: women who pursued degrees were likely to return home whereas women who left and had children were not.

Conversely, rates of return for men were relatively stable, suggesting that boomeranging had become “normative” for that group. Current trends suggest that it has become normative for women as well.

A 2017 study of American young people using the 1997 Cohort of the National Longitudinal Survey of Youth found little association between student loan debt and boomeranging on the whole. There was, however, a noticeably higher level of return among black students. The researchers found that a 10% increase in the amount of debt carried by a black student translated to a 20% increase in the likelihood of returning home.

There was also a higher rate of return among students who did not complete their degrees.

These findings are broadly in line with previous research that suggests that there is a degree completion problem rather than a student debt problem in the United States and that this problem is racially stratified. Non-white students are more likely to drop out and thus be saddled with debt without the benefit of a degree that would translate into a higher earning position, allowing them to pay it off. They are thus more likely to move back in with their parents.

Another 2017 study using data from the Panel Study of Income Dynamics compiled by the Institute for Social Research at the University of Michigan from 2005 to 2011 found that a complex array of factors was responsible for the boomeranging phenomenon. The study found little direct connection between economic conditions and boomeranging and instead suggested that changing social norms were among the principle drivers of increased rates of parental co-residence in early adulthood.

A 2014 study that used data from the Federal Reserve Bank of New York (FRBNY) Consumer Credit Panel/Equifax (CCP/Equifax), however, did find that some 30% of boomeranging could be explained by student debt between 2005 and 2013.

So Why Do Graduates Boomerang?

If it’s not student loan debt that is driving boomerangers back to the safety of the nest, what is? While the 2014 FRBNY study did find some correlation between the burden of student loans and the increased recourse to cohabitation with parents, even that study left a full 60% of the cause unaccounted for.

Certainly, housing and employment difficulties precipitated by the recession may have also played a role. But a variety of more specific studies have advanced other explanations.

Marriage, Informal Partnerships, and their Dissolution

A 2012 study from Ohio State University found that the tendency for young people to delay marriage — and cohabit prior to formalizing their unions — might play into the increased rates of return to the natal home. A 2014 study found that 22% of Millennials were married, as opposed to 50% of the silent generation (born c. 1920-1940).

Because young people are more likely to cohabit with significant others prior to marriage, and because such unions do not always last, some of them tend to return home following the dissolution of those unions.

A 2014 study found that marriage was delayed by 2% a month for every $1,000 in student loan debt.

Holding Out for a Better Job

A 2012 study from the University of Pennsylvania found that graduates lived at home as a stop-gap against accepting less than ideal work conditions. That is: they used the safety net provided by parental support to offset against the acceptance of sub-optimal positions. Had they been living on their own, they would have had no choice but to accept undesirable positions in order to support themselves.

The parental safety net allowed them the luxury of declining such positions in the hopes of more remunerative ones. In 2010, poverty rates for youngsters living with their parents were half what they were for independents of the same age. The parental safety net is thus thought to provide a valuable economic buffer.

Race and Culture

A 2006 study comparing cohabitation with parents in Northern and Southern Europe found strong correlations between the likelihood of parental cohabitation and cultural and social welfare factors. Young people in Northern Europe were far more likely to move out in their early 20s due to the presence of the strong welfare networks that subsidized such moves.

In Southern Europe, weaker social welfare networks motivated young people to remain with their families for longer periods. In North America, particularly in the United States, social welfare is considered to be on the weaker side and thus patterns of cohabitation with parents mirror those in Southern Europe.

A 2010 report found that children of immigrants, especially those whose cultural background emphasized intergenerational connections, were more likely to live with their parents.

Mental Instability

A 2015 study found that mental illness and the tendency to abuse drugs and alcohol were associated with higher rates of boomeranging.

So, while student debt is hardly inconsequential, it doesn’t necessarily explain the dissatisfied Millennial presence that defines the modern household. The boomeranging tendencies of the Millennial generation cannot be attributed to a single factor, or even to a handful.

They are the product of a Western society in a state of slow-motion upheaval, a function of a century’s worth of social, economic, and political changes.

Benefits of Boomeranging

There are several benefits of having adult children return home after college.

When adult children boomerang, it can improve their relationship with their parents. Parents may miss their children and enjoy spending time together. This gives them the opportunity to build a relationship with their children as mature adults.

Adult children can contribute to household expenses, if they have some income. Otherwise, they can help around the house if they have limited financial resources.

The money a child saves on the cost of housing can be used to pay off their student loans more quickly.

About a third of parents will charge their adult children rent, to help defray the increase in household expenses and to give them an incentive to strike out on their own. Some parents secretly save the rent payments and later use them to surprise their children with a gift to help them pay off their student loan debt or as a down payment on a house.

But, there are also a few disadvantages to boomeranging, especially if it lasts more than a year. Having a child return home can strain the family relationship if the parents feel that the child is not trying to find a job and move out on their own. There can be a lack of privacy due to limited space. If the parents are providing financial help, they may get upset if they feel that the child is irresponsible with money. Adult children may feel like they are in a limbo state, trapped between childhood and full-fledged adulthood.

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