With recent news revealing the dire state of the employment market for young people, there’s an obvious question about how far this is leading to debt problems for young adults who can’t get jobs and aren’t studying or training. This group includes a wide variety of people, ranging from those who’ve graduated from university to those who simply haven’t been able to find employment after leaving school.
At StepChange, 11% of our new clients in 2025 were aged 18-24, which is in line with the wider UK adult population, so younger adults aren’t necessarily overrepresented among people seeking debt advice. However, when looking at the next age group up, 25-34 year olds, they are significantly overrepresented, standing at one third (33%) of all our clients, compared to 17% of the wider population – suggesting the vulnerability to debt that many young adults can face as they enter their late twenties.
What we did find in previous research digging into the debts of our 18-24 year old clients was that, unlike other age groups, unemployment and work-related instability is a leading driver of their debt problems. In contrast when looking at all clients, this is the third most common reason for debt.
At a time when young adults should be happily on the cusp of beginning to forge careers, build their financial base and make progress towards their long-term aspirations, a significant proportion are instead simply struggling to make ends meet. Often ineligible for state support yet trapped in a cycle of high housing and essential costs, low and fluctuating incomes, and a difficult employment market, their problems are frequently compounded by anxiety or other mental health impairments that act as a further constraint on breaking free of financial stress.
According to Office for National Statistics data, in 1996, only 53% of those aged 18-24 lived with their parents, while today this is 62%. Taking a longer term view, it’s particularly striking to see the changes in the housing tenure of young adults. In 1991, 36% of those aged 16-24 were homeowners. By 2012, this had declined to 10%, and is around 11% now. Young people are far more likely to be private renters. Their incomes are less likely than older workers to be keeping pace with the rising cost of living, housing costs and essential household bills such as electricity and gas. At the same time, those who have recently graduated are likely to be carrying significant student debt, which is likely to exert an influence on both their current and future financial decision making.
There are few short-term fixes in view. However, the recent Milburn review has reiterated the nature of the problems. It’s clear that the employment market, student loan repayment costs, cost of living pressures and mental health pressures are together currently conspiring against the chances of young people being set up for success. Unemployment is one major issue, but even for those in work, it can be difficult to make ends meet and keep out of debt. To prevent the incidence of debt as young people establish themselves in the adult world, public policy reform must be holistic – considering financial resilience, adequate pay and welfare support, as well as employment opportunities.
