The burden of graduate debts, rising rent prices and increasing competition for jobs means that hundreds of thousands of parents are preparing to welcome their student offspring back into their homes after graduation - but for how long?
Return of the grads
The rise in tuition fees has had a significant effect on the amount of debt that many graduates find themselves in after finishing university, with the average student debt set to rise from £26,000 to £53,000. Recent research by Liverpool Victoria suggested that as a result of this, more than 50pc of graduates would have to return to their parental home either immediately after or at some point in their future.
According to Office for National Statistics, nearly 3 million adults in the 20-34 age group (one in four) are already residing with their parents - a rise of 500,000 since 1997. LV’s findings suggest that this figure could double in the coming years as a ‘boomerang generation’ is created where many students leave home just to return later on in life.
44pc of parents fund mortgage
Graduate debt may not be the only factor fueling young adults’ return to the nest. As house prices are rapidly rising and the dream of homeownership is pushed further away for those struggling to save for large deposits, this is another reason many young people are returning to their family home.
The ONS report stated:
“There are a number of reasons that might account for this growth in numbers living with parents, but it is noteworthy that the increase over the past decade coincides with an increase in the average price paid by first-time home-buyers of 40 per cent between 2002 and 2011.”
Moreover recent research by Halifax has highlighted that many young adults are not only reliant on the hospitality of their parents whilst they are saving for a deposit, but their money too. Over half of those aged between 20 and 45 have failed to make any financial provisions for their mortgage deposits relying on ‘the Bank of Mum and Dad’ to help. 44pc of parents having offered or made plans to offer an average of £12,800 to help their children secure a mortgage.
In an economic climate where incomes are at their lowest for twenty years and out of sync with the price of living, parental dependence in the later years can cause significant strain for many families. Halifax’s research highlighted that a third of parents were worried for their own finances as a result of this, with some even borrowing against their own homes to help fund their young person’s deposit.
Nicholas Ayre, Director of Home Fusion said:
“It can be a shock to the system for both parties but parents need to recognise that, at this stage in life, their offspring are supposed to be independent and responsible adults – or risk being their own worst enemies. “Reverting to a pre-university arrangement of doing your kids’ washing, ironing and cooking really isn’t helpful.”
Matt Hutchinson, Director of SpareRoom.com advised:
“The best way to deal with the situation is to treat the arrangement as you would with a lodger. It’s certainly not unreasonable to ask for a monthly contribution towards bills and food.”
“Not only will this help with the family finances, it also teaches your offspring an important lesson in money management. I know one mother who took rent off her son for 10 years, and secretly squirrelled it away for him in a savings account.”