Gen Z Is Relying on Debt More Than Millennials Did at This Age (2024)

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Gen Z Is Relying on Debt More Than Millennials Did at This Age? ›

Gen Z consumers ages 22 to 24 have higher debt levels and delinquency rates for a number of credit products – from credit cards to mortgages and student loans – than Millennials did at the same age a decade ago, according to a new report from credit bureau TransUnion.

According to the Federal Reserve Bank of St. Louis, Gen Z has an average of $20,900 in student debt, which is 13 percent higher than millennials. That translates to a median loan of $12,800, which again is around 14 percent higher than that of millennials.

Gen Z is spending more than millennials on housing and insurance. Gen Z has more debt than millennials did, even after accounting for inflation and higher incomes.

The Gen X debt situation

The cohort also has the largest share of people with debt, nearly 99% carry some type of balance, LendingTree found. Gen Xers led the way in three of the four categories analyzed. The group — between 44 and 59 years old — has the highest median credit card, auto loan and student loan balances.

Now, inflation and cost of living are contributing to increased debt balances—for Gen Z as well as for all consumers. For some types of consumer debt, Gen Z balances are about half that of the overall consumer population.

Generation Z vs Millennials: Key Takeaways

Millennials value stability (34%), while Gen Z puts more of an emphasis on finding their dream job (32%). More Gen Zers follow their parents' influence (42%), compared to their Millennial counterparts (36%).

King said millennials' purchasing preferences and the soaring cost of living has led many into "a vicious cycle of taking on more debt." Many were "forced" to rely on credit cards and loans to meet their needs, adding to their "crippling debt pile."

For example, a new study by the Investment Company Institute (ICI) finds that “Gen Z households have nearly three times more assets in the [retirement] plan accounts (adjusted for inflation) that Gen X households did at the same age.” More Gen Z-ers have retirement plans set up and they've saved more in those accounts.

While millennials entered adulthood during a financial crisis, Gen Z came of age during an economic boom. The majority of American Gen Z have strong credit scores and less school debt than previous generations. They're ready and able to deploy capital at unprecedentedly young ages.

Because, as the first generation to have had full access to the internet, they are fully immersed in the world online. In fact, they dominate it. "Zoomers stand out for their innate ability to adapt to and excel in today's digital landscape.

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Generation X Debt

Gen X (ages 43 to 58) not only carries the most debt on average of all the generations, but is also the debt leader in credit card and total non-mortgage debt.

Baby boomers have the most wealth among four recorded generations. Other generations have less wealth, but it's not necessarily an indication of financial problems. Plan for upcoming economic issues such as higher housing and medical costs by investing early.

Mental health can be one of the most taboo problems with Gen Z in the workplace, as Gen Z struggles with mental health conditions at higher rates than other generations.

Generation Z must contend with 32% cumulative inflation over the past decade. Their average annual income of $45,000 might seem more than the $39,000 of millennials, but adjust millennials' income to 2024 dollars, and it becomes $52,000.

Researchers and popular media use the mid-to-late 1990s as starting birth years and the early 2010s as ending birth years, with the generation most frequently being defined as people born from 1997 to 2012. Most members of Generation Z are the children of younger Baby Boomers or Generation X.

Young people are more likely to have student loan balances: 24.3% of millennials and 20.2% of Gen Z are in student debt, compared to 14.9% of Gen X, 6.1% of boomers and only 1.4% of the silent generation. But among those who have student loan debt, Gen X owes the most, on average.

Almost half of millennials have student-loan debt and are, on average, $40,614 in the hole. In 2020, Insider reported that nearly 45% of millennials had student-loan debt. As of June 2022, 43.5% of older millennials aged 36 to 41 had a student-debt balance of $20,000 or less, according to the St. Louis Fed.

Gen Z are less likely to drop out of high school and more likely to be enrolled in a two-year or four-year college, 52% compared to 43% of Millennials and 43% of Gen X. (Pew Research Center). They are still looking for engagement as part of their learning experience.

While it may be surprising that Gen Z has the lowest financial literacy levels — and these levels are even lower among Gen Zers who don't attend college — financial experts say there are several reasons as to how this came to be.