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Does Your College Degree Determine When You’ll Move out of Your Parents’ House?

Living at home is having a moment. Young adults are now more likely to live with their parents than in any other living arrangement, according to a recent report by the Pew Research Center. Recent college grads aren’t alone; adults in the 25-29 and 30-34 age brackets are also moving home in record numbers.

What forces are steering people into their parents’ basements? We wanted to find out, so we turned to our data. We analyzed a dataset of more than 60,000 student loan applicants responses to understand how factors like gender, age, location, and education influence post-grad living situation.¹

15% of the adults in our sample live with their parents, but that figure is higher in parts of the country with a high cost of living, underscoring the fact that income and pay scale is a key determinant of one’s living situation. Accordingly, people who have greater lifetime earning potential – as a result of earning a graduate degree or specializing in a STEM field (science, technology, engineering, or math) are the most likely to live independently.

Which College Graduate Demographics are Most Likely to Live at Home?

To answer this question, Earnest broke application information out into different demographics to offer multiple perspectives on the data.

Are Men or Women College Graduates Living at Home More Often?

We first wanted to look at the impact of gender on living arrangement. Although it’s been found that men have been earning college degrees at lower rates than women in recent years, men and women seem to be virtually even when it comes to who’s more likely to live at home, as illustrated in the chart below.

living-at-home-gender

What Age Groups Are Living at Home More Often?

We next considered age to assess whether or not it’s fair to characterize people who live at home mostly as recent college grads? We broke our sample into eight age groups and charted the percentage of each group that lives with their parents below.

living-at-home-age

Indeed, younger adults are far more likely than older ones to live with their parents. In our sample, the average age of a person living at home was 27. The average renter and owner were 31 and 37, respectively.

At the tail end of this graph, we see a small number of older adults reported as living with their parents. This could represent a group that lives with elderly parents to provide care.

Which States Have the Most Adults Living at Home?

We wanted to know where these multigenerational households are located. Are they equally common across the country, or are there certain hotspots where adults are more likely to live at home? We calculated the percent of the population that lives at home in each state for which we received at least 10 responses.

screen-shot-2016-11-18-at-3-44-17-pm

The likelihood of living at home varies significantly by location. More adults live with their parents in places like Hawaii and the New York metropolitan area, where the cost of living and thus the bar one must clear to live independently is high. (That being said, as we’ve written in the past, having roommates helps.)

Conversely, states in the middle of the country are associated with both a lower cost of living and a larger proportion of independent adults. Indeed, our map resembles one showing cost of living across the U.S.

living-at-home-map

What is the Annual Income of Graduates Living at Home?

If cost of living influences living arrangement, many people are likely living at home out of financial necessity. We would then expect low incomes among people who live with their parents. Is that the case?

living-at-home-income

For each of four income brackets, we calculated the percent of adults living at home, considering only the respondents who specified an income. Users who left this field blank were not included.

Our data suggests that people with higher incomes tend to have a higher chance of living independently than those who make less. The group that lives at home makes an average annual income of around $6000; that’s not enough to pay the rent, no matter which state you live in.

And yet, some who live at home make a wage that should allow them to live independently. Like the older groups in our age analysis, these high earners could be older adults in established households who live with elderly parents to provide, not receive, support.

Consider the Return on Investment (ROI) of Your Degree

The Bureau of Labor Statistics came out with a study on the long-term investment return on a college degree. According to the study, “despite the soaring cost of attending college, the financial benefits of higher education still outweigh the expenses.”

Not only is the starting salary for a college degree holder higher, but the median salary during the lifetime of a college educated person’s career is also significantly higher. The initial cost of investment is eclipsed by the earnings potential over time. 

How the ROI of Your College Degree Affects Your Independence

A person’s income is strongly influenced by their college education. We examined whether those who live at home are less educated than their independent counterparts, grouping our data based on highest degree attained and calculating the percent of each group who live with their parents.

living-at-home-education

In general, achieving a higher level of education means it’s less likely you’ll live at home: Just 3% of PhDs live with their parents, versus a quarter of those with only a high school diploma.

Surprisingly, a two-year associate’s degree grants more independence than a bachelor’s degree: 18% of associate’s degree-holders live with their parents, compared to 20% of bachelors holders. This could be owing to the greater student loan burden faced by the latter group.

What College Degree Did Adults Who Live at Home Earn?

Even within one of those categories, not all degrees are created equal. A bachelor’s degree in a STEM discipline may offer access to more lucrative jobs than one in the humanities, but does it also affect living situation?

We grouped our sample based on self-reported major and chart the percent of each group that lives at home below.

living-at-home-majors

Just 8.2 percentage points separate all majors we considered, except law. Compare this to the 22-point spread between PhD-holders and high school grads in our degree analysis above. What you study matters less than the level of education you attain.

That said, college students who study hard sciences, law, and education, are more likely to live away from home, whereas students of the humanities and “soft” sciences like psychology have more trouble leaving the nest.

Do Adults Who Live at Home Hold STEM Degrees?

But a person’s independence is likely determined by a combination of what they study and the level of education they attain. Entry level jobs in STEM may pay as well as jobs held by those with advanced degrees in non-STEM fields. Does that translate to more independence in living situation?

To find out, we grouped our sample by highest degree attained and major (classified simply as STEM or non-STEM). The percent of each group living at home is displayed below.

living-at-home-stem

Having a graduate degree in any discipline matters more than having it in any particular one: those with master’s degrees – in STEM or not – live at home in the lowest numbers.

However, major matters for bachelor’s and associate’s degree-holders. For both degrees, STEM students are less likely to live at home than are non-STEM majors. Associate’s degree-holders in STEM are also more independent than holders of STEM or non-STEM bachelor’s degrees. Again, this may be due to the higher student loan payments faced by college graduates of four-year schools.

3 Ways to Help Grads Live More Independently After College

Our data indicate that there are several steps you can take to increase your chances of living independently. 

1. Choose an Affordable State to Live In

First, strive to live in an affordable state. Avoiding the coasts, and certainly the New York metropolitan area, would be prudent. When you’re considering where to live and work after college, check out our analysis of the most and least expensive states and cities for renters around the country.

2. Earn a College Degree from an Affordable School

Seeking higher education should also be a priority. Earning a bachelor’s or associate’s degree will reduce your chances of living at home, and signing up for a graduate degree will further increase your independence. At the same time, be smart with your schooling decisions. Weigh the amount of financial aid you’ll require against the earnings potential in your chosen career field. If you’ve decided to major in a non-STEM field, for example, it might be best to attend an in-state public school rather than a private institution.

Making college affordable is important too. Apply for financial aid, search for scholarships, and research the best private student loans to be sure your debt burden is not unmanageable after you graduate. It’s generally best to borrow no more than half your expected starting salary in student loans.

3. Consider the Earnings Potential of Your Degree

Finally, studying STEM will also help boost you out of the nest. In every degree program we considered, STEM majors lived at home less often than did students of non-STEM disciplines.

It’s perfectly normal to live with your parents as an adult for a time, but you can make the transition to your own home more quickly by making wise and informed decisions.

¹ Earnest’s analysis is based on the anonymized responses from more than 60,000 loan applicants, combined with historical birth records to estimate the likely gender of individuals based on their first name.

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.