The number of young people seeking help with debt issues has increased by more than a fifth in the last year, an advice charity has warned.
New figures published by Citizens Advice show that 102,296 young people “saddled with huge unsecured debts” turned to the consumer champion for advice in the last year, up 21% on the previous year.
The charity warns of “exploding” levels of unsecured borrowing among young people, which risks trapping a whole generation in problem debt.
According to official data, young people now have an average unsecured debt of £12,215 – three times higher than between 2006-08.
Citizens advice says the average debts of young people soared by a staggering 200% between 2006 and 2012, which is the last year data is available from the Wealth and Assets Survey.
They’ve also helped a higher proportion of young people to file for bankruptcy with Debt Relief Orders.
As well as rising levels of debt, the types of loans young people are taking out is changing. While 45% of rising debts can be easily attributed to student loans, a growing number of young people are taking out ‘formal loans’ from banks and payday lenders.
There has also been a rise in young people borrowing from friends and family, with averages between £30 to more than £1,000.
Young people between the age of 17-24 now have an average debt to income ratio of nearly 70%, compared to 34% for 25-29 year olds and just 7% for 65-69 year olds.
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.”
Unsecured debt is rising faster than incomes. UK households now owe a combined total unsecured debt of £170 billion and this could rise to a shocking £350 billion by 2020.
Council Tax arrears tops the list as the main debt issue faced by UK households, while five years ago credit cards were the main debt issue Citizens Advice helped with.