Young Borrowers: Gen Z Debt Surpasses Millennial Levels

Gen Z carries a higher debt burden than Millennials did at the same age, even after adjusting for inflation. TransUnion data confirms this trend, which credit experts say is reshaping the financial lives of young adults in major U.S. cities.

Ted Rossman, a credit counseling expert at Money Management International, reports a 35% jump in demand from Gen Z clients over the past year. The average debt load for this group rose by 12% in that same period. These figures indicate a sharp increase in financial strain for those in their early career years.

The primary drivers of this debt include student loans, high rental prices, and the widespread use of buy now, pay later services. Rossman notes that these costs make the years of forming a household exceptionally expensive. Many young adults are living paycheck to paycheck with minimal savings to buffer unexpected expenses.

Rossman advises Gen Z members to start with basic budgeting and to monitor their usage of short-term financing tools. He warns that while these plans can be useful, they are still debt. "It can work in your favor. Sometimes you can get a good deal, but just be mindful that it’s not a free lunch," Rossman said. He emphasized that even interest-free periods require timely payments to avoid accumulating interest.

Credit card debt remains a major concern, with interest rates often reaching the 20% range. Rossman encourages individuals who feel overwhelmed to seek professional help. The data suggests that the combination of housing costs and education debt is creating a distinct financial profile for the current generation of workers.