Study: It’s Student Debt, Not the Economy, That Forces Millennials to Move In With Their Parents

The old ball and chain at a 2012 Occupy protest in New York City.


Ask a millennial why so many twentysomethings live with their parents, and he’ll probably let out an exasperated sigh and then patiently explain that we’re a whole generation loaded down with student debt and navigating an economy that’s been cruddy for years. It’s hard to make your rent when you’re jobless and paying off a bachelor’s degree.

But that narrative may only be half-right, according to a new study by a pair of Federal Reserve Board economists. Student loans, the study argues, may be a big reason so many young adults are moving in with Mom and Dad. But the bad economy? Not so much.

Between 2005–2014, Lisa Dettling and Joanne Hsu write, the percentage of 18-to-31-year-olds living with their parents grew at an “unprecedented” speed, hitting a high of about 36 percent. Using credit agency data on more than 1.8 million young adults, they look at how changes in indebtedness and the economy writ large affected the rate at which the kids moved in with their parents. During this period, student loan burdens skyrocketed, while other types of debt shrunk back a bit. Meanwhile, we all know what happened to the unemployment rate.

Their conclusion? The rise of student debt and delinquencies could potentially explain about 30 percent of the increased frequency with which twentysomethings moved back in with their parents. The health of the economy, measured by factors such as local unemployment rates, had an effect during the heart of the recession in 2008 and 2009. But over the whole nine-year time frame, the downturn couldn’t sufficiently explain the changes that occurred.

Intuitively, it seems absurd to posit that the recession itself didn’t send millennials back into their parents’ basements. As Pew has pointed out, much of the increase in children living back at home seems to have been “concentrated” among young adults who never went to college. Are we really to believe that the astronomical unemployment rate didn’t play a role?

Dettling and Hsu’s paper also doesn’t draw a super-clean line between debt and the rest of the economy. It notes, for instance, that rising delinquencies seem to have increased the rate at which young adults moved back home. But delinquencies tend to rise when the overall economy goes sour. It seems hard to completely separate out causation.

That said, Dettling and Hsu’s findings may dovetail with other recent studies. As Neil Shah reported earlier today at the Wall Street Journal, for instance, Census Bureau researchers have shown that “the Great Recession’s impact on kids living with parents isn’t actually that special as far as recessions go.”

New studies with counterintuitive findings should always be treated with a dash of skepticism. But consider this one a bit of ammo for those who are particularly alarmed at the rise of student debt: College loans may bear greater responsibility than the Great Recession for the growing ranks of boomerang kids.