Personal Finance

Saddled with debt, grads head to most expensive cities

New York City and its borough of Brooklyn both placed among the most expensive U.S. destinations. Pictured, the Brooklyn Bridge and lower Manhattan.
Tim Robberts | Getty Images

Nearly two-thirds of millennials graduated, or will graduate, with student debt, averaging $27,162 per borrower, according to a new report by LendingTree.

Despite that hefty student loan burden, newly minted grads are moving to some of the nation's most expensive cities, heavily concentrated in the Northeast, LendingTree found.

Boston was one of the most popular cities to live post-college, LendingTree said, followed by Irvine, California, and San Francisco. The states with the highest outstanding college debt per student loan borrower included Washington, D.C., and Maryland.

Particularly with regard to housing expenses, the cost of living in those locations far exceeds the national average. In Boston, for example, the average cost of renting a two-bedroom apartment is $2,821, which means that you would need to earn $120,900 a year just to afford it, according to a separate report by personal-finance site SmartAsset. (To calculate the gross income required, the site set the rent-to-income ratio at 28 percent.)

Millennials make $48,146 a year, on average, and pay about $317 a month toward their student loan repayment, according to LendingTree. Those monthly student loan payments amount to more than 11 percent of net income each month. [In this example, monthly take-home pay is $2,808, on average, factoring in federal and state taxes, Social Security, Medicare, insurance costs and a 401(k).]

The majority of those polled said that monthly bill affects their spending ability "very much."

Too often, graduates choose cities based on career opportunities and highest starting salaries. However, they overlook the bigger picture, according to Doug Lebda, founder and CEO of LendingTree.

"Consider the total cost of life," he said, which means it might make sense to look at other cities where the cost of living is lower and the salaries are, too, he added.

"Think about where you are going to get the highest return," he said.

Many graduates expressed buyer's remorse regarding their education, according to the study. More than half said they have feelings of financial regret related to their post-secondary tab, LendingTree said. Most said they wished they had chosen a more affordable school. Slightly more than 10 percent said they shouldn't have attended college at all.

LendingTree surveyed more than 1,300 millennials — born between 1980 and 1995 — who enrolled in at least some post-secondary education.