He Gets His Old Room but Not for Free, Not Forever

By Michelle Singletary
Sunday, May 18, 2008

They're coming home.

Many parents already know this, but after four, perhaps five or even six years of school, many college graduates -- faced with a tight job market, higher gas and food costs, and mountainous debt -- have no choice but to move home to get their financial bearings.

And you know what?

Despite assurances that they will stay for only a little while, this time next year many of those graduates will still be living at home. That's what MonsterTrak found in its annual nationwide survey of college students, recent graduates and entry-level employers.

Continuing a three-year trend, just under half of prospective graduates, 48 percent, plan to boomerang -- or move home -- after graduation, according to the online career resource company.

While only 22 percent of last year's survey respondents said they planned to live at home for six months or more, 43 percent have yet to leave, citing limited financial resources, MonsterTrak found.

Chief among the reasons recent graduates say they can't leave home: college loan debt. Forty-two percent of 2007 graduates said they had student loan debt of $25,000 or more, while another 33 percent have a credit card balance of more than $5,000.

Graduates may not earn as much as they had planned, either.

Thirty-two percent of employers expect to offer recent college graduates starting salaries between $30,000 and $40,000, according to CareerBuilder.com, the nation's largest online job site. An additional 15 percent will offer between $40,000 and $50,000. Only 11 percent of employers surveyed said they will offer more than $50,000. Forty-two percent will offer less than $30,000.

So should you allow your graduate to move home?

Lester Lefton, a psychology scholar and president of Kent State University, doesn't think this trend of boomerang adults is healthy.

"Students went to college to become independent and gain the expertise to make a living for themselves," Lefton said. "Therefore, it is not a good thing for college graduates to move back to their parents' home."

But Lefton also knows that for many, coming home is inevitable.

If your college graduate will be landing on your doorstep, here are some things that need to be discussed before the bags are unpacked:

· Rent. Will your graduate be paying for the privilege of living at home?

· Other expenses. What else will he or she be responsible for, such as utilities and food?

· Length of stay.

· Personal financial information. Will the graduate share it with you?

So let's start with how long the returnee should stay.

"It needs to be temporary," Lefton said.

I agree that the first thing you need to do is establish how long your child will be staying -- and put the agreement in writing. All parties should sign a rental agreement. You can get one in any office supply store or buy a generic one online at such sites as LawDepot.com.

The graduate should definitely pay for a share of food, utilities and other household expenses. If you offer a free ride, your boarder may never leave. Life will become too comfortable.

Charging for rent, however, is debatable. If you feel that your adult child needs a little financial breathing room, don't charge. However, be very careful about this decision.

Without the pressure of paying rent -- often the largest expense -- boomerang adults may end up spending irresponsibly on other things, such as a new, expensive car. Or they may live it up hanging out with their young, single friends.

"They'll be spending $12 on martinis instead of saving money or getting a second job to pay off their debt," Lefton said.

If you do decide to collect rent, be clear about the amount and when it is due. Impose a late fee if the money doesn't come in on time.

The late fee might seem excessive, but part of your job as a parent is to help your child establish good financial habits. Paying bills late is the No. 1 way to ruin one's credit rating.

Parents who decide not to charge rent so that their graduates can pay down debt and save (they should be doing both) should demand to see proof that they are following a plan.

Yes, I am suggesting that you keep taps on their progress. Ask to see bank statements. They should also show you their budget and a debt payoff plan. Push hard for them to verify their efforts to become independent.

I know what some of you are thinking. You can't pry into their personal finances.

But pry you must.

If you get resistance, hand that grown person the classified section of your local newspaper, folded to the rental listings. Or e-mail or text them apartment possibilities.

If they don't want to be accountable to you, then they need to get up and out of your house.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.