When it’s time to pay off college debt, there’s no place like home

How long is too long for young adults to live at home after college?

Responding to a recent survey by TD Ameritrade, teenagers on average said it would become embarrassing to still be living at home at age 26. Young adults ages 20 to 26 — probably because they’ve already been out in the real world — thought the cutoff should be 28.

But 27 percent of those surveyed said they wouldn’t be ashamed to be living at home even in their early 30s.

Here’s the reality: Nearly half of post-college millennials have boomeranged back home.

Wages are stagnant, and many graduates with debt find it’s hard to live on their own. Survey participants said their debt is causing them to delay saving for retirement, buying a home, getting married and having children. Twenty percent said the education they received wasn’t worth the debt they accumulated.

“In many cases, people view young adults moving back home as a sign that they were lazy or not doing things ‘right,’” said JJ Kinahan, chief strategist at TD Ameritrade. “But many people doing it are being fiscally responsible.”

I’ve long advocated for young adults graduating with burdensome debt to move back home if they can.

I’ll go even further. College graduates should make every effort to find a job in the area where their parents live or another relative or friend is nearby. And in exchange for rent-free living, they should pledge to extinguish as much of their student-loan debt as they can.

I know many of you are already scrunching your face in disagreement.

You may think that living at home is an improper failure to launch or that it delays the all-important lesson of learning to be independent.

But may I suggest we all make an effort to remove the stigma of young adults returning home as a financial embarrassment? It is not, especially if parents allowed or encouraged a student to attend a college that necessitated some heavy borrowing.

Soon-to-be graduates often ask me for advice on how to pay off their student loans. Some don’t even know how much they owe. But they know it’s more than they can comfortably handle on their starting salaries.

What they’re really asking for is a miracle. They ask hoping there’s some get-out-of-debt-free card. Although there is a public service debt forgiveness program for borrowers working for the government or a not-for-profit, the vast majority of borrowers won’t get the relief they seek.

So, without any hesitation, I recommend they live at home, if possible. I need to add that caveat because for some, of course, this may not be an option.

Still, if it is possible, and the young adults are struggling under the weight of student loans or the financial storms that come with life, I tell them to move in with their parents.

But here’s the thing. Even if a new graduate isn’t mired in debt, I suggest he or she live at home for a couple of years to supercharge their savings and investing.

With discipline, young adults could save the majority of their annual income. They’re already used to living spartanly like a student, so why not continue to do so for a few more years? My husband and I are encouraging our children to come back home after their studies to save.

To make the move back home work, here’s what I recommend:

• The new graduates need a plan. They must share their timeline to pay back debt if that’s the primary reason for moving back home. Parents, you need to be clear that their return home must be part of a defined goal with specific strategies.

• If it is about getting out of debt, have them create an aggressive debt-payment plan. Bankrate.com has a calculator that shows the impact of extra payments (http://www.bankrate.com/calculators/college-planning/loan-calculator.aspx).

• Schedule regular budget meetings. With adult children who are working to pay off debt, verify that they are making the extra payments. For those saving, this is a chance to monitor their progress.

• Don’t rush them. They may need to be home for a few years. Let them know that’s OK.

• Don’t require rent if you don’t need the money. The point of the return home is to allow them to take as much of their income — and it should be a significant percentage — to save or get out of debt.

• State that if you see errant financial behavior — eating out a lot, taking vacations you wouldn’t take, shopping sprees — you will charge rent.

When it comes to helping your young adult to successfully launch — and stay in flight — there’s no place like home.