A new report by Citizens Advice claims that in the last year there has been a 21% increase in the number of young people coming to the charity with debt issues.
Citizens Advice said that people aged 17-24 years old came to them with 102,296 debt issues – an increase of more than a fifth on the previous year.
The charity has also analysed official data which shows young people have an average unsecured debt of £12,215 – more than three times the figure (£3,988) before the financial crash between 2006 and 2008.
According to Citizen’s Advice, some 45% of this debt rise is attributed to student loans, but the majority of the increase has been driven by ‘formal loans’ such as bank loans and payday loans, and from borrowing from friends and family. There has also been a fivefold increase on the average formal loan, from £969 to £4,577 over the same period. Loans from friends and family rose from an average of £30 to more than £1000.
Gillian Guy, Chief Executive of Citizens Advice, said: ‘A new generation of young people are starting out with stifling levels of debt. Our research shows that student loans account for less than half of the debt rise amongst young people so it is crucial we understand why so many are turning to other forms of unsecured borrowing.
‘Many young people already face challenges getting on the career and housing ladders – doing this while saddled with huge unsecured debts make it an uphill struggle. As well as looking for a longer term solutions, it’s important people can get independent advice, guidance and support about how they can manage their finances.’
However, the Citizen’s Advice report also showed that credit card balances of the 17-24 year old age group actually decreased in the last year, from £332 to £234.