Gen Z Debt Outpaces Millennial Levels Despite Inflation Adjustments

Gen Z consumers are carrying higher debt loads than Millennials held at the same age, even after adjusting for inflation, according to data from TransUnion. The gap reflects a combination of rising student loan balances, high rental costs, and the expansion of buy now, pay later services. These factors are pushing many young adults to live paycheck to paycheck with minimal savings.

Ted Rossman, a credit counseling expert at the nonprofit Money Management International, noted that the agency has experienced a 35% increase in demand from Gen Z clients over the past year. Debt levels for this demographic rose by approximately 12% compared to the previous year. Rossman attributed the strain to the high costs associated with household formation during early career years.

“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 young adults to focus on basic budgeting and to monitor their use of buy now, pay later platforms. While these services are popular among people in their 20s, they still represent debt. Rossman cautioned that interest free periods do not make the money free, as payments are still required on a schedule. He also warned that credit card interest rates often hover around 20%, which can compound financial stress.

“It’s very popular among people in their 20’s, but it’s still debt,” Rossman said. “It can work in your favor. Sometimes you can get a good deal, but just be mindful that it’s not a free lunch. Even if it’s that 6 weeks of interest free payments you’ve got to make a payment now and another one in two weeks and another one in two weeks, just need to be careful that you’re not overspending.”

Rossman stated that individuals who feel their debt has become unmanageable can seek assistance from credit counseling agencies. These organizations offer guidance to help clients create repayment plans and manage their budgets effectively.