Before You Move Back Home with Your Parents to Save Money and Pay Off Student Loans, Consider This

 July 19, 2019
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When you graduate from college, it feels like you are finally free to start your life as an adult. You’re no longer stuck in school, and no longer at the mercy of anyone else’s rules. It can feel exhilarating and liberating to finally strike out on your own. But if you’re one of the 45 million Americans in student loan debt, you’ve likely pondered the question, “Should I move back in with my parents?”

The optimism you feel upon graduating can quickly be eclipsed by the costs of living independently. Let’s face it, being an adult doesn’t come cheap. Rent, utilities, insurance, groceries, transportation and more can add up quickly. And when you’re trying to dig yourself out of student loan debt, it can be a challenge to manage it all. Here’s what to consider if you’re thinking about moving back in with your parents to save money.

Should I move back in with my parents?

If you’re contemplating living at home after college, you’re not alone. According to a recent TD Ameritrade survey, 50% percent of millennials plan to move back in with their parents after college.

That number isn’t surprising when you consider that millennials have been moving home for years. The Pew Research Center reported that 15% of millennials between the ages of 25 to 35 lived with their parents as of 2016. Comparatively, just 10% of Gen Xers still lived with mom and dad when they were the same age. Millennials are also living at home after college for longer than other generations. According to Pew, 91% of millennials surveyed hadn’t moved in the past year.

As millennials continue to battle high unemployment and low wages, moving back in with their parents — or “boomeranging” — may seem like a good option. After all, it’s difficult to balance making rent, saving for the future and paying off student loans when they’re earning 20% less than their parents did.

There’s less stigma around moving home now as well, likely because so many young professionals are grappling with the weight of large student loan balances. In that sense, the social cost of boomeranging home is less steep.

But is it the right decision for you? Moving back in with your parents comes with emotional costs, and you may struggle with the social and lifestyle adjustments that come with living under your parents’ roof again. Certainly, those trade-offs may be worth it to get your own financial house in order. But it’s a decision only you can make, and one you’ll want to think through carefully. Here’s what you should consider if you’re thinking of moving back home after college.

Look at the situation realistically

Moving home to live with your parents in your 20s or even 30s can be tough. Once you’ve had a taste of freedom and independence, going back to the house you grew up in and living under your parents’ “house rules” can be challenging.

If you’re unemployed or underemployed, moving back home can make sense though. Even if you’re working and could technically make it on your own, it may seem like the best option for saving money.

But there are some important considerations you should think about before heading home. Consider the following:

  • What’s your relationship with your parents like? Do you get along with your parents? Will you drive each other mad in less than a month’s time?
  • What are you giving up to move back home? Everything comes at a price. Even though moving back home might make sense financially, it could mean giving up what you value most about your post-college life — autonomy, independence, freedom and personal relationships forged with roommates and peers on your own terms.
  • What are the terms and conditions of the arrangement? If your parents are cool with you moving back home, will they allow you to live rent-free or will they charge a nominal amount? Will you have a curfew? How will this move affect your personal and romantic relationships? If your parents plan to charge you rent, compare what you’ll pay them to how much you’d pay for your own place. Ask if they expect you to contribute to utility bills and groceries as well. You may find that you’re not saving as much by moving home as you expected, and that could prompt you to rethink whether it’s your best option.
  • What is your expected timeline? Moving back home can be tough at first, but then you can quickly get a little too comfortable. Mom buys groceries, cooks for you, does your laundry — maybe you don’t even pay rent. Sweet deal, huh? It can be easy to stick around and wear out your welcome, so come up with a realistic timeline for moving out. Decide on a firm plan of action, such as deciding to move back home, pay off your loans in a year and then move out.

Ultimately, it’s important to look at the situation realistically before giving up your freedom and decide if it actually makes sense for you. Will you be able to maintain a positive relationship with your family without losing your sense of self? This and all of the above are important things to consider before making the move back to your old bedroom.

Weigh the real costs and benefits of living at home after college

Beyond thinking about your family relationships and personal sacrifices, it’s also crucial that you look at all the hidden costs of moving back home. Make sure to take the following into account before making your decision:

  • Consider your employment situation — and the associated costs. If you are employed and your parents live near your place of work, you could save on both rent and commuting costs. But if your parents live a significant distance from your job, does it make sense to pay more for gas or public transportation, or find a different job so you can live rent-free?
  • If you’re unemployed, think about whether it’s easier to find a job where your parents live. You’ll also want to evaluate your job prospects in your hometown. How is the economy there? What is the job market like in your industry? Don’t assume you’ll be able to land something right off the bat unless you’ve been in touch with prospective employers or know there is a hiring boom. Moving back home to pay off debt may seem attractive, but if you can’t find a job, you won’t be able to make financial progress the way you hoped.
  • Look at the big picture. It can be tempting to move back home when you are struggling to pay rent and student loans. However, it’s important to evaluate all the factors and additional costs. If moving home means moving to another state, consider how you’ll do that. Will your parents drive out to help? Or will you need to rent a moving trailer or truck? How long will it take you to move home? And what are the differences in income tax rates where your parents live? It’s easy to overlook these expenses, but nothing is free, not even moving back to your childhood home.

While living with your parents sounds like a cost-saver on the surface, you may discover that the money you spent on the move and surviving until you find a job would have been better spent where you already are. You could put those funds toward your debts, or invest them in skill-learning courses that will help you land a better-paying position without giving up your newfound independence.

Amanda Abella, who was a boomerang kid herself and is now a millennial business coach, offers this advice: “It’s a Catch-22. Don’t live in a city where it’s cheaper but you can’t find a job, or go to a city where there are lots of jobs but you can’t even cover rent.”

For her, living at home after college made sense financially. “Even when I had a regular job, had I moved out [of my parent’s house] there was no way I would have been able to set up a retirement account, start investing and start a business,” Abella said. She admits that her entire paycheck would have gone to rent and bills, making it difficult to get ahead financially.

The bottom line

In the end, moving back home is a very personal decision. Consider not only all of the financial implications but also the emotional, social and psychological ones. How will it affect your lifestyle as a whole?

Some people find that moving back home isn’t the best choice, while others find that it makes the most economic sense. Only you can decide what is right for you. To make the decision, understand how much you will be saving, and if you do make that move, be sure the money you save is actually going towards your debts.

Most importantly, have a game plan for how and when you’ll strike out on your own once again. Moving back in with your parents can help you get on your feet while paying off debt, but this decision shouldn’t be made lightly or considered a long-term solution. Once you have built up savings and have sufficient income to pay bills and your student loans, it’s likely time to fly the coop.

Casey Hynes contributed to this report.

Interested in refinancing student loans?

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LenderVariable APREligible Degrees 
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N/A7Undergrad
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1.99% – 8.38%8Undergrad
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Visit Citizens

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1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022.


2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team.


3 Important Disclosures for SoFi.

SoFi Disclosures

Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.


4 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of April 29, 2021. Information and rates are subject to change without notice.
 


5 Important Disclosures for Navient.

Navient Disclosures

You can choose between fixed and variable rates. Fixed interest rates are 2.99% – 8.24% APR (2.74% – 7.99% APR with Auto Pay discount). Starting variable interest rates are 1.99% APR to 8.24% APR (1.74% – 7.99% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.


6 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.


7 Important Disclosures for PenFed.

PenFed Disclosures

Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.


8 Important Disclosures for CitizensBank.

CitizensBank Disclosures

Education Refinance Loan Rate Disclosure:  Variable interest rates range from 1.99%-8.38% (1.99%-8.38% APR). Fixed  interest rates range from 2.99%-8.63% (2.99%-8.63% APR).

IS Variable Rate Disclosure:  Variable Rates advertised are based on the one-month London Interbank  Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business  day, of the preceding calendar month. As of December 1, 2021, the one-month LIBOR rate is 0.09%.  Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will  vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may  be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York.  The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.

ERL Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of May 1, 2022, the 30-day average SOFR index is 0.29%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.

Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.

Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

Federal Loan vs. Private Loan Benefits:  Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
 
Citizens Student Loan Eligibility: : Applicants must be enrolled at least half-time in a degree-granting program at an eligible institution.
 
Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DC, DE, FL, MA, MD, MI, NH, NJ, NY, OH, PA, RI, VA, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
 
Automatic Payment Discount Disclosure:Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount. Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on  their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan  servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to  successfully withdraw the automatic deductions from the designated account three or more times within any 12-month  period, the borrower will no longer be eligible for this discount.