The dream of homeownership, once a cornerstone of the American dream, has grown increasingly out of reach for younger generations. It’s important for parents to understand the financial landscape has shifted dramatically from the time they were young adults. Today’s Gen Z and Millennials reportedly earn more at their age than Gen X did, but they still hold much less wealth than prior generations due to the higher costs of living, enduring recessions, and accumulating student debt.
Currently, the average loan balance for Gen Z college graduates is approximately $37,000. (Source).
The average cost of attendance over 4 years for a student living on campus in 2024 (Source).
- Public In-state: $108,584
- Public Out-of-State: $182,832
- Private: $234,512
The exponential rise in education costs, especially for private institutions, significantly contributes to the student debt crisis affecting Gen Z.
Housing is a significant expense for young adults, and its affordability has changed drastically over the decades in America.
| Year | Median Home Price ($) | Median Salary ($) |
| 1990 | 122,900 | 50,200 |
| 2024 | 420,800 | 59,428 |
The student debt crisis has profound implications for young adults striving to achieve financial milestones, particularly homeownership. Despite entering a volatile job market, many are constrained by the need to allocate substantial portions of their income towards debt repayment rather than saving for a down payment on a home. Moreover, stagnant wage growth relative to the rising cost of living further compounds these challenges, making it difficult to bridge the gap between aspiration and financial reality.
While the hurdles are substantial, proactive financial planning can mitigate some of these challenges for younger generations. In addition to working with a financial advisor or tax professional, keep the following points in mind:
- Open a tax-advantaged 529 plan – Financial advisors can provide expert advice on whether this is a suitable saving plan for your circumstances.
- Understand the long-term financial impact of college choices – Ensure your student is aware of the financial implication of the college of their choosing.
- Save early – With the power of compound interest, saving early can significantly grow your available finances when it comes time to pay for college. For example, saving $200 per month from birth at a six percent interest rate can give you a total of $78,058 by the child’s 18th birthday (Source).
- Get your child involved in saving – Once they reach an age where it makes sense, involving them in financial planning is beneficial. For example, encouraging a part-time job to put away money.
Rising student debt and increasing living costs have reshaped the financial landscape for younger generations, posing challenges as they look to purchase a home. However, proactive financial strategies and working with a financial advisor can be beneficial to both you and your children. By fostering resilience and prioritizing long-term financial health, younger adults can work towards making homeownership a tangible reality despite current economic pressures.