TransUnion data shows Gen Z debt surpasses Millennial levels

The cost of entering the workforce has outpaced income growth for a new generation of borrowers.

Gen Z individuals now carry debt levels that exceed those of Millennials at the same age, even after accounting for inflation. This finding comes from TransUnion data cited by Ted Rossman, a credit counseling expert at the nonprofit Money Management International.

Rossman noted that his agency has experienced a 35 percent increase in demand from Gen Z clients over the past year. He stated that their current debt loads are approximately 12 percent higher than they were twelve months ago.

The accumulation stems from three primary factors: student loans, elevated rent prices, and the use of buy now, pay later financial products. These costs are leaving many young adults managing their finances with minimal savings and a reliance on monthly paychecks.

“You have student loans, you have high housing costs. Those household formation years are very expensive,” Rossman said. He added that these specific pressures explain why Gen Zers hold more debt than their Millennial counterparts.

Rossman advises young borrowers to track their budgets closely and monitor spending on interest-free payment plans. He cautioned that while these offers can be useful, they still constitute debt. “It’s not a free lunch,” he said. He also warned about the interest rates on credit cards, which often hover around the 20 percent mark.

Money Management International is available to assist individuals who feel overwhelmed by their obligations. Rossman said those in this situation can request help from the agency at any time.