Gen Z Debt Tops Millennial Levels by 12% Amid Housing and Loan Pressures

Young adults in their twenties carry debt levels 12% higher than those of Millennials at the same age, a gap that persists even after adjusting for inflation. TransUnion data confirms this trend, showing that the current generation faces a heavier financial burden during their early career years.

Ted Rossman, a credit counseling expert at the nonprofit Money Management International, reported that demand for services from Gen Z clients rose by 35% over the past year. He attributes this rise to the compounding effects of student loans, high rental costs, and the widespread use of buy now, pay later plans. These factors leave many young workers living paycheck to paycheck with minimal savings.

"That’s really showcasing a lot of these early career pressures," Rossman said. "You have student loans, you have high housing costs. Those household formation years are very expensive, so GenZer’s actually have more debt than Millennials did at the same age, even adjusted for inflation according to TransUnion."

Rossman advised that the first step for young adults is to establish a clear budget and monitor spending on interest-free shopping options. While these plans are popular among those in their twenties, they remain a form of 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," he noted. He warned that even with six weeks of interest-free payments, the requirement to make multiple installments can lead to overspending.

Interest rates on credit card debt often reach the 20% range, adding to the financial strain. Rossman emphasized that individuals feeling overwhelmed by their obligations should seek professional assistance. The agency continues to track these trends as young adults navigate the high costs of establishing independent households.