@Ethan S. It must be tough for your friend to have worked hard in school to get his masters and not be able to find a job. He is not alone: this happens to a multitude of new grads. You are a great friend to him to care so much for him. I don't have the answers about renting to him or not. I could tell you not to get involve but I did just that when my friend was in need of a consigner for personal loan at 23. Everyone told me not to do it but I trusted my gut knowing the kind of person she was and did it. Three years later it was all paid off. You have to trust your gut on this. I agree with @Jonathan R McLaughlin that he is most likely depressed and need to address that issue. But if you decide to help him, you better have a long talk about the conditions such as: renting for a fixed amount of time, job searching, seeking help for depression, exit strategy and how this may hurt your friendship. While his parents are well meaning they are certainly aggravating the situation. Regardless of your decision you need a talk with him (non confrontational) to discuss your concerns about his approach.
Good luck
