Gen Z Faces a Cost of Living Crisis Far Worse Than Millennials Ever Did

New York, 15 October 2025 – A new report by The TEFL Academy 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. The study draws on data from the U.S. Bureau of Labor Statistics, U.S. Census Bureau, Department of Education, and trusted independent labour 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.

In 2005, Millennials graduated in a landscape where housing and education costs were more closely aligned with their financial situation. 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.

Graduate salaries have seen a moderate real increase over the past two decades. 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. Despite this growth, salary gains have generally lagged behind the rising costs of living, contributing to the financial pressures faced by recent graduates.

Housing, in particular, illustrates a stark affordability shift. 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. 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.

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. 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. 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.

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. This 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. 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. Additionally, 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.

Rhyan O’Sullivan, Managing Director at The TEFL Academy said: “Despite the pressures they face, Gen Z represents a generation that won’t be boxed in. They’re driven not just by survival, but by a desire to live with meaning, to explore, to teach, to connect, and to make an impact. That spirit of courage and reinvention is exactly what the world needs right now.”
The financial impact is reshaping lives. More young adults are living with parents well into their late 20s, delaying marriage, children, and homeownership. 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.

Perilie Yang, a US citizen working as an TEFL (Teach English as a Foreign Language) teacher in Kazakhstan, shared her experience and said: “Leaving the U.S. and becoming a digital nomad was one of the best decisions I’ve ever made. I wanted more freedom and a lifestyle that didn’t revolve around work alone. Over the past two years, I’ve traveled to a new country each month while teaching English online and earning about $2,000 USD per month. I chose to base myself in affordable countries, which made a huge difference, like in Ho Chi Minh City, where my apartment cost just $350 USD a month and eating out rarely went over $5. Living abroad has allowed me to save money, experience new cultures, and build a life that feels both adventurous and sustainable.”
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

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