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Soaring debts trapping young generation in financial difficulty

23 Medi 2015

The number of issues young people have come to the nation’s leading debt charity with have soared by more than a fifth in the last year, a new report shows.

Citizens Advice, which today publishes a major report Unsecured and Insecured?, said people aged 17-24 years old came to them with 102,296 debt issues in the last year – 21 per cent more than the previous.

The charity says this increase comes against a backdrop of exploding unsecured borrowing among young people which risks trapping a new generation in problem debt.

The consumer champion has analysed official data which shows young people have an average unsecured debt of £12,215 – more than three times what it was (£3,988) before the financial crash between 2006-08.

The average total debts of young people grew by more than 200 per cent between 2006 and 2012, the last year data from the Wealth and Assets Survey is available.

Citizens Advice says as well as an increase in the volume of debt, there have been changes in the types of loans young people are taking out.

Some 45 per cent of this debt rise is attributed to student loans, but the majority of this increase has primarily been driven by ‘formal loans’ – like bank and payday loans – and borrowing from friends and family.

The charity’s analysis shows a fivefold increase on the average formal loan, from £969 to £4,577 over the same period. Loans from friends and family also rose during this time, from an average of £30 to more than £1000.

In contrast, the credit card balances of this age group decreased from £332 to £234. Similarly, Citizens Advice data shows other age groups are twice as likely to go to the charity with credit card problems than 17-24 year olds.

Young people have an average debt to income ratio of nearly 70 per cent, compared to 34 per cent for 25-29 year olds and 11 per cent for 60-64 year olds, the report adds.  

The charity also helps a higher proportion of young people than older groups with Debt Relief Orders, which allow indebted borrowers on low incomes to file for bankruptcy.

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.”

The report adds that UK households already owe £170 billion in unsecured debt and forecasts suggest this could hit £350 billion by 2020. Unsecured debt is growing faster than secured debt and faster than incomes, pushing debt to income ratios back toward pre-crisis levels by 2020.

Researchers also found shifting patterns in debt - five years ago, credit  cards were the main debt issue Citizens Advice helped with and now council tax arrears top the list.


Debt to income ratio by age-group for non-students (2010-12)

Notes to editors

  1. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To get advice online or find your local bureau in England and Wales, visit
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  5. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.