Gen Z Debt Levels Exceed Those of Millennials at Same Age

Gen Z adults carry higher debt loads than Millennials did at the same age, even after adjusting for inflation. TransUnion data confirms this trend, which credit counselors have observed in recent client interactions.

Ted Rossman of Money Management International reported that demand from Gen Z clients rose by 35% over the past year. The average debt level for these clients is currently 12% higher than it was one year ago. Student loans, elevated rent prices, and buy now, pay later plans are primary drivers of this increase.

Many young adults are living paycheck to paycheck with minimal savings. Rossman noted that early career financial pressures are intense. "You have student loans, you have high housing costs. Those household formation years are very expensive," he said.

Rossman advises clients to track their budgets and monitor buy now, pay later spending closely. These plans are popular among people in their 20s, but they represent debt. "It’s not a free lunch," Rossman said. He warned that even six weeks of interest-free payments require immediate outlays and can lead to overspending.

Interest rates on credit card debt often reach the 20% range. Rossman cautioned that borrowers should be aware of the total cost of credit. He added that individuals who feel overwhelmed by their obligations can seek assistance from counseling agencies.