Gen Z Debt Surpasses Millennial Levels

Gen Z adults carry more debt than Millennials did at the same age, even after adjusting for inflation, according to data from credit reporting firm TransUnion. The comparison highlights a sharp rise in financial obligations for the current generation of young workers.

Ted Rossman, a credit counseling expert with the nonprofit Money Management International, reported that the agency has seen a 35% increase in demand from Gen Z clients over the past year. Their total debt loads are approximately 12% higher than they were twelve months ago. Rossman attributed this growth to the combined weight of student loans, elevated rent prices, and the widespread use of buy now, pay later plans.

These financial pressures leave many young adults living paycheck to paycheck with minimal savings. Rossman described this period as a time of intense early-career strain. “You have student loans, you have high housing costs,” Rossman said. “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 young borrowers to monitor their budgets closely, particularly their spending through buy now, pay later services. While these platforms are popular among people in their twenties, they still function as debt. “It can work in your favor,” Rossman noted. “Sometimes you can get a good deal, but just be mindful that it’s not a free lunch.” He warned that even short interest-free periods require consistent payments and can lead to overspending if not managed carefully.

The expert also pointed to the high interest rates associated with credit cards, which often sit in the 20% range, as a compounding factor for those who cannot pay balances off quickly. For individuals who feel they are in too deep, Rossman said the best step is to ask for professional help.

The data suggests a structural shift in how young adults manage household finances. The reliance on credit for basic necessities is outpacing the income gains typical of early career stages. The 12% year-over-year increase in debt loads underscores the tight margin between earnings and expenses for this demographic.