Young people are burdened with increasing levels of debt, according to a poll published in 2014 and commissioned by think tank, Demos. People in their 20s-30s are either “putting their lives on hold or racking up substantial debt”.
The Populus poll found that more than half (55%) of those aged 18 to 24, and 48% of those aged 25 to 34 say their debts have increased over the past five years.
The majority of young people have debts of more than £2,000 – 45% of those aged 18-24 and 56% of those aged 25-34. However, almost one-fifth (19%) of 18-24-year-olds and 22% of those aged 25-34 owe more than £10,000.
Research in 2014 by Citizens Advice Bureau (CAB) found that more than six out of 10 young people – 62% – are turning to payday loans – high-cost loans aimed at people struggling.
High-interest loans often spiral out of control, leaving people in debt with nowhere else to turn but into a vicious circle of more borrowing. 10% of CAB clients in serious debt are aged between 17 and 24, of whom just 8 are in debt because of mainstream credit, such as an overdraft, bank loan or credit card. People aged 17-24 make up more than 15% of CAB cases where their debt has been caused by loans charging high rates of interest.
Because people under 18 can’t be held to loan contracts, and the debt cannot be legally enforced, no loan company offers loans to people so young. However, some young people have lied about their age and taken out payday loans online.
David Cameron has said that we are “all in it together” to tackle the deficit. That’s all very well. However, university tuition fees have been trebled while benefits for pensioners have remained.
Additional pressure is placed on people just starting out in life. The costs of studying for a degree, buying a house and starting a family are higher than ever. People in their 20s and 30s face a choice between putting their lives on hold, or racking up debts.
If you do need to borrow money, opt for a less expensive standard personal loan or credit card: usually a much cheaper alternative than a payday loan.
However, only take out a credit card, personal loan or other borrowing if you are sure you can pay back what you owe. Before resorting to that, be frugal and see where you can reduce your outgoings and make savings.
If you’ve already taken out a loan, or you are in debt and struggling to pay, do seek professional help. You can find your local Citizens Advice bureau in England and Wales on citizensadvice.org.uk. Get advice online at adviceguide.org.uk. Consumer advice is available from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers. Alternatively, call National Debtline on 0808 808 4000/ 0808 808 4000.
Founder, Arthur Coaching
Arthur trains individuals to become professional Young People Coaches. Our mission is to facilitate access to quality leadership coaching for young people.