More than 60 percent of young adults between the ages of 19 and 22 received some financial help from mom and dad, according to a new University of Michigan/Network study. The average amount they received – including help with college tuition, rent, and transportation – was roughly $7,500 a year.
The study, “Familial Financial Assistance to Young Adults,” by Network fellow Patrick Wightman, Robert Schoeni of the National Poverty Center at the University of MIchigan, and Keith Robinson of the University of Texas at Austin, is the first to use nationally representative data to calculate parental assistance to young adults. It is based on data from 2,098 interviews conducted between 2005 and 2009, with young men and women and their families, part of the Panel Study of Income Dynamics Transition to Adulthood Study at the U-M Institute for Social Research.
The findings predate the recession, which has likely only increased the costs. Recent estimates show that more than half of recent college graduates under age 25 are either unemployed or underemployed (working at jobs for which they are overqualified). In addition to the economic crisis of late, as readers of this blog know, the path into adulthood had begun to slow in the late 1980s, and this slowdown is a key reason for the rising financial burden on mom and dad.
Interestingly, the researchers find that a child’s disposition early in life helps predict how willing parents are later to support them. (Any 12-year-olds reading this: shape up and pitch in around the house.) If parents reported that children age 12 and under were cheerful, self-reliant, and got along well with others, they were more likely to give them financial gifts or loans when they were young adults.
“Basically, this finding shows that parents are more inclined to provide extra support to children whom they perceive as more positive and outgoing,” says Wightman, who is the MacArthur Network on Transitions to Adulthood research fellow at the Gerald R. Ford School of Public Policy at University of Michigan. “They’re more likely to help those who, even at a young age, help themselves.”
About 65 percent of the young adults lived at home for a significant portion of every year, and the analysis did not include the value of room, board or food. It did include how much parents gave or paid on children’s behalf for housing away from home, a vehicle, college tuition, help paying pills or just as a gift or personal loan.
Among the key findings:
- About 42 percent of respondents reported their parents helped them pay bills, with those receiving help getting an average of $1,741;
- Nearly 35 percent of young adults said their parents helped with college tuition, with those receiving help given an average of $10,147;
- About 23 percent received help with vehicles (about $9,682 on average);
- About 22 percent received help with their rent away from home ($3,937 on average);
- About 11 percent said they received loans from their parents ($2,079 on average) and nearly 7 percent said they received financial gifts (average amount of $8,220).
“As expected, we found a large difference between high- and low-income families both in terms of whether or not they provided financial help to young adult children, and in terms of the amount they provided,” says Wightman.
About 80 percent of high-income parents provided help to young adult children, Wightman found, compared with slightly less than half of low-income parents.
“The gap is especially large for education related assistance,” he reports–which should give us pause, given the growing income disparities between those with and without a college degree and the rising cost of education.
“While just 11 percent of low-income youth received tuition assistance from their parents, 66 percent of high-income youth did. And among those who did get help, kids from high-income families received an average of $12,877, compared to $5,788 for those from low-income families.”
Still, he reports, poorer families who did help their young adult children provided as great a share of their income overall as wealthier families did – about 10 percent.
The analysis was funded by the Research Network on Transitions to Adulthood with the support of the John D. and Catherine T. MacArthur Foundation. The Panel Study of Income Dynamics is funded by the National Science Foundation, the National Institute on Aging, the National Institute of Child Health and Human Development, and the U.S. Department of Agriculture.
Related Links: http://npc.umich.edu/publications/working_papers/
# # # # #
