A new report from Citizens Advice has revealed the startling extent of the unsecured debt problems that are plaguing our nation’s youth. The charity has seen a 21% rise in requests for help from the 17 to 24 age group over the last year, and estimates the average amount owed at £12,215 – more than three times the pre-recession average of £3,988.
Key findings released by Citizens Advice include:
- People aged 17 to 24 asked the charity for help with 102,296 debt problems in the 12 months to the end of June 2015
- Around half the increase in average unsecured debt levels is due to student loans, but there has also been a move away from credit cards and towards personal and payday loans
- Between 2006/2008 and 2012, the average amount non-student loan amount owed rose from £969 to £4,577
- Meanwhile, loans from family and friends also rocketed from an average of just £30 to over £1,000
- Outstanding credit card balances fell from an average of £332 to £234, partly as a result of the more stringent lending criteria now applied to this age group
- On average, people aged 17 to 24 now owe £7 for every £10 they earn in income.
The figures form just part of the wider picture of UK household debt painted by the latest statistics released by the Money Charity. These include an eye-watering total of £1.447 trillion (including mortgages) at the end of August 2015 and outstanding consumer credit (unsecured) lending of £174.05 billion. These represent increases of £635 and £223.32 respectively for every adult in the UK since August 2014.
Commenting on the Citizens Advice statistics, Chief Executive Gillian Guy said: ‘A new generation of young people are starting out with stifling levels of debt. Many young people already face challenges getting on the career and housing ladders – doing this while saddled with huge unsecured debts makes it an uphill struggle.’
Andy Gorton, Managing Director of insolvency advice firm, Bankruptcy Clinic, added: ‘It’s notable that Citizens Advice are now helping more young people access Debt Relief Orders (DROs) than people in older age groups. A DRO is an alternative to bankruptcy that’s only available in very specific circumstances, such as having very little income and few or no assets. Whilst it’s a good way to help people get back on their feet, it’s sad to see so many young people having to tackle overwhelming debts when they should be enjoying life.’