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Study Finds College Grads Confront Rocky Transition to Self-Sufficiency
Tuesday, June 17, 2014 6:20 AM

The majority of young adults are struggling to achieve financial security in their transition from college to adulthood, according to the latest report from a longitudinal study. Now in its 6th year, Arizona Pathways to Life Success for University Students (APLUS), an investigation at the University of Arizona that follows young adults from their college years to the workforce, is discovering how this time of passage affects financial attitudes, behaviors and overall well-being.

New findings from Wave 3.0 of APLUS, co-funded by the National Endowment for Financial Education (NEFE) and the Citi Foundation, show that 50 percent of the more than 1,000 participants continue to rely on their family for financial support after finishing school—including nearly half (49 percent) of those who are employed full time. Researchers note that it’s this financial instability that is interfering with young adults’ ability to achieve financial goals such as paying off student debt, making major purchases, buying a home and saving.

In their struggle to achieve self-sufficiency, young adults are redefining expectations which were long thought of as traditional goals. Many participants (28 percent) reported that marriage and having children (27 percent) were not important life goals; 19 percent feel home ownership is unimportant and 16 percent rate living on their own as irrelevant.

The Chronic Impact of Debt Total outstanding student loan debt in America has surpassed the $1 trillion mark—outpacing credit card debt and auto loan debt1. And although those who have secured full-time work rate their financial life satisfaction higher compared to other study participants, debt among young adults remains a crushing obstacle. The APLUS study finds 17 percent of participants employed full time and 19 percent of part-time employed rate their financial well-being lower. But the dissatisfaction with the quality of financial life climbs to 31 percent for those who are unemployed. Also, debt is associated with 4 percent, 8 percent and 10 percent lower overall life satisfaction among those same groups respectively.

During Wave 3.0, APLUS researchers noted that participants could be classified into one of three distinct pathways to adulthood based on the level of responsible financial behaviors they possessed as an incoming freshman. High-functioning participants (12 percent) maintained consistently high levels of responsible financial behavior through all waves of the study; rebounding participants (61 percent) started college with moderately responsible financial behaviors that had declined by year four but rebounded by Wave 3.0 two years later; struggling participants (26 percent) started college with poor financial behaviors, which had further declined by year four; though their behaviors had improved two years on, they still were worse than their first year of college and significantly lower than all other participants.

Researchers also note that two financial behaviors improved steadily from APLUS Wave 1.0: paying bills on time (up 7 percent overall) and learning about finances (up 5 percent overall). Yet three behaviors that had previously fallen returned to Wave 1.0 levels: tracking expenses, saving and investing. And spending within ones budget has steadily declined.