College graduates under 30 strongly believe they’ll live as well as or better than their parents, according to a survey of 21- to 30-year-olds conducted by The NHP Foundation, a not-for-profit provider of affordable housing. Even those saddled with student loans are optimistic about their future financial and housing picture.
Researchers question if their optimism could be overblown.
Sixty percent of college grads surveyed say they fully expect to be able to “afford the kind of housing they most prefer” in one to five years. Seventy percent rated homeownership as “important” to “very important.”
The age group has been labeled “generation rent,” which refers to young adults faced with stagnant wages and high debt who – compared to other generations – are forced to stay renting longer due to the high costs of housing.
Forty-six percent of the graduates surveyed say they expect to live on their own, paying rent with no help from roommates or parents. However, more young adults are living at home with their parents than ever before. For example, in markets like New York, Miami and Los Angeles, as many as 45% of young adults are living at home, the study notes.
More than half of the college grads surveyed say they have student loans – with 10% owing more than $50,000. Nearly 40% say they expect to pay those loans off in one to three years, though. Researchers say it’s more likely it’ll take about 10 years to pay them off. The average bachelor’s degree graduate takes 21 years to pay off loans, the report notes.
College grads may not be completely unrealistic about their finances, researchers note. About 67% did say they expect to spend more than 30% of their income on rent. Most financial experts consider that “cost burdened.”
“We were surprised to learn that 54% of these young graduates know that they could potentially qualify for affordable housing under HUD’s definition,” adds Richard Burns, president and CEO of The NHP Foundation. “This helps us understand how we need to consider housing to suit these renters, who may be in apartments for longer than they think.”