The nation’s youngest adults are facing steep financial challenges, as the cost of housing, education, transportation and everyday essentials has more than doubled over the past two decades. That comes as starting salaries for college graduates have grown by just 12%, according to a new study from the TEFL Academy, which analyzed data from the U.S. Bureau of Labor Statistics, the Census Bureau and other national sources.
The report finds that Gen Z faces a far tougher financial reality than Millennials did when they entered the workforce in the mid-2000s.
In 2005, the average starting salary for a college graduate was approximately $39,000 per year, or about $3,250 per month before taxes. By 2025, that figure has risen to around $65,700, or roughly $5,475 per month. While this appears to be a notable increase, it has not kept pace with the rising cost of living.
Housing illustrates the starkest change. In 2005, a one-bedroom apartment rented for around $759 per month, representing about 23% of a new graduate’s monthly income. By 2025, average rent for the same unit has climbed to between $1,650 and $1,671, now consuming roughly 30% of a graduate's income.
“While the share of income spent on rent has risen moderately, the absolute cost has more than doubled, leaving less disposable income for other essentials such as groceries, transport, and savings,” TEFL noted.
“This highlights the growing challenge of achieving financial independence compared to two decades ago.”
Public university tuition has nearly doubled, rising from about $5,000 per year in 2005 to $10,000 in 2025. Adjusted for inflation, average monthly student loan payments have risen from the equivalent of $376 in 2005 to more than $530 in 2025—a 41% increase.
Transportation expenses have also climbed across the board. Public transit fares rose from $70 per month in 2005 to $130 per month in 2025. The average new car now costs $49,000, up from $23,000 in 2005 and gas prices have increased by 50% in the same period.
TEFL Academy highlights the long-term consequences of these trends. Many Gen Z adults are delaying key milestones like marriage, family formation and homeownership. More are living with parents well into their late 20s, and many are relying on gig work or credit cards to bridge financial gaps.
“Although Gen Z is more educated and digitally connected than Millennials were, they feel less financially secure,” the report concluded. “Milestones once common in early adulthood are being postponed indefinitely.”
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