Gen Z is facing significant debt, and it’s at a level that far extends past the elder generations.
In a new report from cash advance app Vola Finance, 63 percent of Gen Z users already had delinquencies on their record. Other generations were only delinquent 37 percent of the time.
Why It Matters
Young adults may be dealing with heightened financial pressures than their predecessors amid high inflation, a student debt crisis and widespread housing unaffordability.
A recent poll by Talker Research for Newsweek showed that Gen Z had the highest average personal debt when compared to older groups. Gen Z’s average personal debt was already at $94,101, far above millennials ($59,181) and Gen X ($53,255).
What To Know
Around 63 percent of Gen Z, which consists of those born between 1997 and 2012, had delinquencies on their record, according to cash advance app Vola Finance. Other generations only had delinquencies 37 percent of the time.
Across the board, 73 percent of users had at least one delinquent account, and 40 percent had multiple across different lenders.
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, said Gen Z’s financial debt is magnified compared to even millennials, who typically had less debt at the same age.
“Millennials had the Great Recession; Gen Z got the pandemic, inflation, and a housing crisis,” Ryan told Newsweek. “Plus, Gen Z is more likely to have parents who managed their finances for them, so they’re learning money management on the fly. Often the hard way. But the data is clear: when you adjust for inflation, millennials at the same age had lower debt, higher incomes, and more breathing room.”
Many young Americans are saddled with debt before they even have a chance to build any wealth, said Bryan Driscoll, an HR consultant who specializes in generational differences.
“Long-term, it means delayed or never-achieved milestones: fewer homeowners, fewer families, and growing skepticism toward traditional financial structures,” Driscoll told Newsweek. “Delinquencies aren’t about poor decision-making. They’re about a generation trying to survive in an economy that’s more hostile, more extractive, and far less forgiving.”
Financial experts urge those with cash advance debt, whether Gen Z or otherwise, to pay off the charges as soon as possible.
“If you find yourself with cash advance debt, the first step, obviously, is to pay it off,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “The second step is to never utilize these apps again. The immediate boost of cash for an easy purchase isn’t worth the financial headaches it will produce later.”
Low-limit cash advance apps have gained popularity as an alternative to the traditional payday or car title loan operations that have come under severe legal scrutiny in the past 20 years, said Drew Powers, the founder of Illinois-based Powers Financial Group,.
“With their low limits and no credit check requirements, these loans are more popular with people who earn lower incomes and have bad credit or no credit history—the same people who will have the hardest time managing this loan,” Powers told Newsweek. “Gen Z being the youngest generation over 18 and have typically lower earnings and limited credit history. Many are learning the hard way how difficult it can be to manage debt.”
What People Are Saying
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: “It’s not about being less responsible than their parents were at the same age. It’s about raw economics: Gen Z is coming of age during soaring living costs, stagnant wages, and relentless inflation. Where previous generations might have leaned on credit for emergencies, Gen Z is using it to survive the month.”
Bryan Driscoll, an HR consultant who specializes in generational differences, told Newsweek: “Budgeting won’t help. The issue isn’t that Gen Z is reckless or ‘bad with money.’ The issue is that they’re operating in an economy fundamentally different from previous generations. They’re dealing with inflated housing costs, crushing student debt, and wages that don’t even keep up with inflation. Meanwhile, older generations had access to stronger social safety nets, and then spent decades voting to dismantle them. Gen Z is paying the price for that.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “One of the troubling economic signs from Gen Z has been their lack of attention to both long-term debt like student loans and short-term debt like small cash advances from apps for quick purchases. Whether it’s through forgetfulness or an unwillingness to pay, these debts do add up, can dramatically hurt their credit scores, and make securing future loans for cars, houses, and other large purchases more difficult.”
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: “The long-term consequences are real. While these cash advance apps do not check your credit before issuing an advance, they are reporting your balance and repayment history to credit bureaus. Missing scheduled repayments, overdrafts on your banking accounts, and accessing credit too often will lower a borrower’s credit score. This, in turn, may make it more difficult to obtain an apartment or car lease, and more lead to higher interest rates home or auto loan.”
What Happens Next
Debt levels may continue to rise for younger generations as they face an altered economy, Ryan said.
“It’s a symptom of an economy that’s shifted. Housing is more expensive, student loans are crushing, and the gig economy offers flexibility but little security,” Ryan said. “Social media and digital spending make it easy to swipe, but hard to save. And let’s not forget: wages for young adults haven’t kept up with costs, making credit the only bridge to basic needs.”
If Gen Z starts adulthood with debt and a low credit score, it could affect their retirement savings and financial stability for years to come, he added.
“This isn’t just a personal problem, but a looming national crisis. A generation that can’t build wealth is a generation that can’t drive the economy forward,” Ryan said. “The real question isn’t whether they’ll grow out of it, but whether the economy will ever give them a fair shot.”
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