A new report has revealed a ‘staggering jump’ in borrowing among the UK’s young adults, and only around half of it is due to student loans.

Citizens Advice’s Unsecured and Insecured? report is based on data gathered from the 400,000 people it helped with debt problems last year.

It found unsecured debt is rising rapidly among 15-24 year olds, who now owe an average of £12,215 each, up from £5,785 in 2008-10.

The average total debts of this group grew by more than 200% between 2006 and 2012 – more than 10 times faster than the average among the wider population.

But how much of this debt is due to higher borrowing to meet tuition fees and living costs while at university? In the 15-24 age group, student debt made up 42% of the total, while for 25-29 year olds it was 38%.

A similar amount, however, is held in ‘other loans’ – from banks, payday lenders, and family members. This is a new development. There has also been a surge in logbook loans and guarantor loans, which Citizens Advice attributes to the regulatory crackdown on payday lenders.

Among this age group, personal loans were nearly five times higher than in 2006-8, while loans from friends and family rose from an average of £30 to more than £1000.

“Although the cyclical nature of debt through the course of adult life is well recognised and long established, the rate at which young people have been accumulating debt over the last few years is a cause for renewed concern,” the researchers said.

Young people are also more likely to be behind with their household bills – more than 20% were in arrears on at least one priority bill, compared to 10% of 25-29 year olds.

Rising arrears in priority debts is a new and worrying trend. Council tax arrears have increased 21% in four years, surpassing arrears on credit card debts, while rent and energy arrears are also up. Citizens Advice said it helped nearly 200,000 who were struggling to pay their council tax over the last year. Utility bills and council tax bill are classed as priority debts because there are severe consequences for non-payment – these can include suspension of utilities, eviction, fines, CCJs, even imprisonment in rare cases. People who fall behind with these bills also tend to be chased aggressively by debt collectors, including bailiffs, moreso than for other types of debt.

So what’s the reason for this rise? CA says it corresponds to Council Tax Benefit being scrapped in 2013 and replaced with localised Council Tax Support, alongside the low and irregular incomes of many of the people it deals with.

I wrote a blog post recently on what financial services firms will have to do to best serve Millennials, noting that right now many of these future business leaders are struggling with debt. Citizens Advice says under-35s make up 29% of the population but hold 48% of the debt. If we can’t give these people the right support to get control of their finances, this is going to potentially have a massive impact on the UK economy in the coming years. Our future entrepreneurs could fail to reach their potential because they’re shackled by debt.

These figures also show that it is more important than ever to have proper financial education in schools, before the age of 18 when people can legally borrow. Young people need to have a solid grasp of budgeting, understand the implications of borrowing, and know to avoid dangerous and expensive sources of credit before they end up stuck in a trap from which it can be very difficult to escape.

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.”

If you are struggling with debt or are behind on priority bills, don’t suffer in silence. Help is available:


Christians Against Poverty


National Debtline

Citizens Advice Bureau

Debt Advice Foundation