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Full-Nest Syndrome

How Millennials can get out of debt and back out on their own.

You've just graduated from college and your anticipated job has disappeared into the black hole of the recession. You've moved back in with your parents -- for only a few months, you assure yourself. Your monthly student-loan payments are looming. Apart from hiding under the covers in your childhood bed, what can you do?

 

First, it helps to know that you're in good company: A new survey of 1,200 college grads and soon-to-be grads by the employment website Monster.com found that 71 percent anticipate living with their parents because of limited financial resources and 31 percent predict that they'll be doing so for at least a year.

Alexandra Eastburn, 24, wound up doing just that. She graduated from the University of Colorado in 2008 hoping to pursue a career in journalism. Eastburn knew it would be tough, so for the first few months after college, she applied for any job available -- waitress, secretary, paralegal -- to make ends meet. After six months, ends unmet, she returned home to Mom and Dad in Doylestown, Pa.

Eastburn is disappointed, but not surprised, at how hard it has been. "My parents prepared me," she says. "They told me a job is not just going to show up. But some of my friends were completely blindsided." After 15 to 20 interviews, Eastburn still hasn't landed a job, but at least she has concrete career goals and a plan to pursue them, unlike many of her peers.

 

Graduates often come out of school "without clarity," says Lisa Orrell, a business coach for 20-somethings and the author of Millennials Into Leadership. She suggests -- perhaps predictably -- that these novice job seekers consider contacting someone in her field for help. A career counselor can assess an applicant's strengths and interests, help sharpen a résumé, assist with interview preparation, and brainstorm networking ideas. It's a good idea to look into local community colleges as well--vocational counseling is sometimes available to non-students through a school's extension programs.

Some collegians envisage graduate school as a way to escape the uncertain job market. But Tamara Draut, vice president of policy and programs for the think tank Demos, cautions against pursuing an advanced degree solely as a way to sit out tough economic times. "If it's free, it's fine," she says. "And if you've dreamed of becoming a lawyer or doctor or social worker, then yes, you need to go to graduate school." But it's a bad idea, she warns, to take on more debt for "self-exploration with no endgame."

If you are clear on the career you want to pursue, consider writing a blog with interesting tidbits and news about the industry or field. "It's not that time-consuming, and you're positioning yourself as an entry-level go-to person in that area," Orrell says. Or you can put together a podcast (check out podomatic.com for ideas). Call up the head of a company -- you don't have to start with a Nike or a Microsoft -- and ask for a 20-minute interview to find out how he or she got started. "You're coming to them with something that strokes their ego, and you'll be on their radar," Orrell says. "When you're interviewing elsewhere as well, you'll be seen as a young person who has kept current on the industry."

It may sound like a long shot, but stranger approaches have worked. Jamie Varon graduated from the California State University (Chico) in 2008 and was looking to join an innovative start-up company in San Francisco. "I went into what-the-hell-will-I-do mode," she says. "I had sent out so many résumés to Monster.com, Craigslist, everywhere." So one night in a burst of energy and ambition, she created Twittershouldhireme.com. In a short time, her website went viral, and Varon's story appeared on CNN and in Fortune magazine. She had lunch with the folks at Twitter, and although a job never panned out, the publicity surrounding the site attracted interest. With encouragement from a newfound mentor, Varon began a freelance Web design business and -- no mean feat -- is supporting herself in San Francisco.

 

Managing Debt

Among other expenses, Varon is making enough to cover her monthly student-loan payment, something that many graduates struggle to do. According to the College Board, in 2007-08, 62 percent of students receiving bachelor's degrees from public four-year institutions graduated with an education debt; of those who borrowed, 43 percent owed $20,000 or more. The numbers were still worse for those graduating from for-profit four-year schools: 80 percent owed at least $20,000.

The key here is to avoid default, and there's plenty of information available on programs that can help by lowering monthly payments. Last summer, for example, a federal program called Income-Based Repayment, or IBR, was launched to help make payments on federal loans affordable for those with limited incomes. Another option is public service forgiveness. Again, this applies only to federal loans, but if you work for 10 years in the government, as a teacher, or for a qualified nonprofit, your loan will be forgiven -- and the 10 years don't have to be consecutive. In addition, short-term deferrals are available if you've enrolled in school or are facing temporary hardship, such as unemployment. Forbearance is also an option; it's easier to get than a deferral, but be aware that interest will continue to accrue.

If you need help repaying a loan, educate yourself before making a move. Deanne Loonin, director of the National Consumer Law Center's Student Loan Borrower Assistance Project, stresses that it's not enough to know the right questions to ask your lender: You also need to know whether you're getting the correct answers. Luckily, there are plenty of good websites with the information and tools you need to calculate your costs, including the Education Department's studentaid.ed.gov and the nonprofit sites finaid.org and projectonstudentdebt.org.

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Living At Home

Many young people returning home to live with their parents fear that they're losing their independence. But it's important to realize that dependence and independence aren't the only possibilities, says Rick Settersten, a professor of human development and family sciences at Oregon State University. Ideally, your family can achieve the happy medium of interdependence, which means living with your parents as a responsible adult, not as the teenager you were when you left for college.

Eileen and Jon Gallo, Los Angeles consultants who specialize in family and money issues, offer a four-step program to lessen the anxiety of returning to the bosom of your family. First, you should determine what your responsibilities are: paying rent? doing chores? Second, decide what you are going to do to earn money in the short term: Will you take a part-time job if you can't find a full-time one? Third, settle on steps to pursue a career: vocational counseling? internships? And finally, the big question: When are you going to leave? All of these elements can be renegotiated as circumstances require, the Gallos note, but all should be clearly spelled out up front.

It's also important to recognize that the whole moving-back-home trend may not be just an economic blip but part of a broader social reorganization. Settersten, who co-authored the upcoming book Not Quite Adults: Why 20-Somethings Are Choosing a Slower Path to Adulthood and Why It's Good for Everyone, notes that in the first few decades of the 20th century, many young men and women continued to live at home into their early 20s. It was only after the postwar boom enabled those with a high school education or less to find good employment that "marriage and childbearing took place almost in lockstep with the conclusion of schooling."

It would be wrong to say that moving back in with one's parents is the new normal -- the numbers don't bear that out yet. But it's possible that society is returning to a time when becoming an adult was a more gradual process, with young people waiting until they were economically self-sufficient to leave the roost for good. The reasons have changed --100 years ago, many families were tied to farms and agricultural jobs, while today they must cope with an uncertain job market -- but it may well be that, as Settersten suggests, "for most young people, whether by choice or circumstances, adulthood no longer begins when adolescence ends."

The author writes the Short Cuts column for The New York Times. Her first book, Better by Mistake, will be published next spring.

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