Parental Aid

By Laura Koss-Feder

So your kids have made it through college. That leaves you with a little money to spend on yourself, right? Not yet. What parents are discovering is that in a wobbly economy, the kids don't quite leave the financial nest. Sandy Nelson, 57, an elementary school teacher, thought her daughter Annalise could have her pick of well-paying positions in consulting firms like PricewaterhouseCoopers and Ernst & Young. But the senior at Harvard, set to graduate this June with a 3.75 grade-point average, is waiting out the tough economy by moving to France in August to teach English part time and try to get a job as an au pair. For Sandy, that means putting off her fleeting thoughts of retiring so she can keep her daughter on her health-insurance plan at $320 a month. The Nelsons are also prepared to spend an additional $600 or so each month to help their only child with living expenses and payments on a $15,000 student loan. "We'll happily underwrite this experience for her," says Annalise's father Jim, 67, a retired pastor in Minneapolis, Minn. "It's a good thing, though, that we live frugally and have the handy cash to be able to do this." Whether it's delaying retirement, putting off a major trip or holding on to the house so there's a spare room for Junior to come home to, parents of graduating college students are realizing that their financial obligations are not over once their children enter the working world. An economy that is still in recovery has left today's college graduates facing fewer job opportunities at lower starting salaries.

Pay for college graduates is now in the high $20,000s to low $30,000s, compared with high $30,000s and low $40,000s just two years ago, says John Challenger, chief executive officer of Challenger, Gray & Christmas Inc., an international outplacement firm based in Chicago. To make matters worse, this year's 1.2 million spring graduates could face job searches that last four to six months instead of being besieged with offers even before graduation, which was the case three years ago. Challenger predicts that about 30%--or 360,000 of these new graduates--will still be jobless by November, compared with 5% to 10% about three years ago. At Northwestern University, a sign of the times is that the number of on-campus recruiters is down 25% from last year, says Lonnie Dunlap, director of career services.

This is why Julia Turner Lowe and her ex-husband Bill Lowe have decided to continue paying their daughter's rent and some living expenses through the end of this year and, if necessary, into 2003--to the tune of $1,000 a month. They are anticipating that their child Naima, 23, who graduates from Brown University this month and wants to follow in the family footsteps of teaching, will need time to find a job, even if she's likely to land one eventually in that growth sector. For now, Turner Lowe is holding off taking any summer trips as a way to save money.

Financial planners recommend that parents avoid dipping into their 401(k)s or pension plans to help their children and instead cut back on short-term optional expenses like entertainment and vacations. Advisers also point out one way the tax code can help: if you continue to pay at least 50% of your child's total living expenses, you can still claim that child as a dependent.

Meanwhile, graduating seniors should look at government positions, night jobs, nonprofits and part-time jobs in areas like health care, telemarketing, manufacturing and security. And there's a possible silver lining. "This is a chance for me to explore, have fun and try something different," which is how Annalise Nelson sees the situation.