NEW YORK – For many older CU leaders who may not fully recognize how financial challenges have grown for younger generations, a new report reveals how the cost of living for young Americans has surged over the past two decades, with Gen Z facing “significantly greater financial strain” in 2025 than Millennials did at the same age in 2005.
According to The TEFL Academy (the TEFL stands for Teach English as a Foreign Language) the study draws on data from the U.S. Bureau of Labor Statistics, U.S. Census Bureau, Department of Education, and trusted independent labor market surveys, using inflation-adjusted benchmarks across housing, transport, education, groceries, and debt to paint a generational picture of how affordability and purchasing power have shifted for Millennials entering the workforce in 2005 compared to Generation Z in 2025 relative to income.
A Tough Landscape
“In 2005, Millennials graduated in a landscape where housing and education costs were more closely aligned with their financial situation,” the company said. “Today, Gen Z faces an economy where the cost of basics has consistently outpaced their financial capacity. Although prices are expected to rise with inflation, some expenses have increased faster than the inflation-adjusted levels. This means Gen Z has less money available to cover essentials, leaving them more financially strained than Millennials at the same age.”
According to the TEFL Academy, graduate salaries have seen a moderate real increase over the past two decades.
The Findings
Among the findings:
Starting salaries for college graduates in 2005 were approximately $39,000 annually, which breaks down to about $3,250 per month before taxes.
The average annual salary for college graduates in 2025 is estimated at around $65,700 annually, or roughly $5,475 per month before taxes.
“This represents a roughly 12% real increase in earnings when adjusted for inflation,” TEFL Academy said. “Despite this growth, salary gains have generally lagged behind the rising costs of living, contributing to the financial pressures faced by recent graduates.”
Can’t Get in the Door
Housing, in particular, illustrates a stark affordability shift. The company noted that in 2005, Millennials could rent a one-bedroom apartment for around $759 per month, which represented about 23% of a graduate’s monthly salary.
“By 2025, Gen Z faces average rents between $1,650 and $1,671, roughly 30% of the median graduate’s monthly income,” the company said. “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, highlighting the growing challenge of achieving financial independence compared to two decades ago.”
Getting Schooled
In addition, education expenses show a similar squeeze. Public university tuition has nearly doubled, from $5,000 per year in 2005 to $10,000 in 2025.
“In 2005, the average monthly student loan repayment was approximately $227, which, when adjusted for inflation, is equivalent to about $376 in today’s dollars,” TEFL Academy said. “This contrasts with the average monthly repayment of over $530 reported for 2025. Comparing these figures directly, the current average monthly repayment is roughly 41% higher than the inflation-adjusted 2005 repayment amount, reflecting the increased burden of student debt repayments on graduates today.
‘Heavier Load’
“This heavier financial load reduces disposable income, forcing many young professionals to delay other financial goals such as saving for a home, investing, or building emergency funds, and further contributes to the challenge of achieving financial independence early in their careers,” the report added.
Can’t Afford to Get There
Meanwhile, TEFL Academy reported that transportation costs have increased significantly over the past two decades. Public transit fares have nearly doubled, rising from an average of $70 per month in 2005 to around $130 in 2025. The increase reflects fare hikes implemented by transit agencies to cover rising operational costs and inflation, making everyday commuting more expensive for young adults.
“Meanwhile, the cost of buying a new car has more than doubled in 20 years, creating a steep barrier for Gen Z drivers,” TEFL Academy stated. “In 2005, the average new light vehicle cost around $23,000; by 2025, that figure has climbed to nearly $49,000, a 112% increase. For young adults, this surge not only makes car ownership less attainable but also puts additional pressure on transportation choices and monthly budgets.”
In addition, TEFL Academy said transportation costs have become a significant burden for Gen Z. Fuel prices, in particular, have seen substantial growth, rising from $2 per liter in 2005 to $3 per liter in 2025, a 50% increase. For young professionals who rely on personal vehicles, this directly translates into higher commuting costs, whether for work, study, or daily errands.
Reshaping Lives
“The financial impact is reshaping lives. More young adults are living with parents well into their late 20s, delaying marriage, children, and homeownership,” the company stated. “Many rely on gig work, credit, and side hustles to fill the gap, signs of resilience, but also of a generation pushed into financial precarity. Although Gen Z is more educated and digitally connected than Millennials were, they feel less financially secure, with milestones once common in early adulthood postponed indefinitely.”
The Report
The report, The Cost of Being Young in 2005 vs 2025 in the United States, underscores the widening affordability gap in America and calls for urgent attention to wage growth, housing affordability, and student debt reform. Without action, the gulf between income and essential costs will continue to grow, leaving today’s youth with fewer opportunities to build stable, independent lives.
For the full study, visit The Cost of Being a Young Adult in 2005 vs 2025 in the USA
