Record Gen Z Turns to Debt Counseling Amid Rising Costs

A record number of young adults are finding themselves overwhelmed by debt, and they are increasingly seeking professional help to manage it. According to the national non-profit Money Management International (MMI), adults aged 18 to 29 are now its fastest-growing client group. These Gen Z clients carry an average unsecured debt balance of a staggering $22,848, signaling a significant financial challenge for the nation's youngest generation of workers and consumers.

The Growing Debt Burden

The trend of rising debt among young adults is accelerating. Over the past year alone, MMI has seen a 35% increase in its Gen Z clientele. The amount of debt they carry is also climbing, with the average unsecured balance for these clients rising 12% from 2025. Unsecured debt refers to obligations not backed by collateral, such as credit card balances, personal loans, and medical bills, which can quickly spiral out of control.

For many, this debt isn't the result of lavish spending but of necessity. Rahanatou Souley, a 22-year-old from Carmel, accumulated $9,000 in credit card debt while trying to cover essentials like college books, groceries, and even costs for her wedding. She admitted to not fully understanding how compounding interest worked, a common pitfall for many new credit users. With the average interest rate on credit cards now exceeding 23%, making only minimum payments can cause balances to swell, making it nearly impossible to get ahead.

Causes and Contributing Factors

Experts point to a combination of economic pressures and financial vulnerability as the root cause. According to Thomas Nitzsche, VP of Public Relations at MMI, younger people often have fewer assets or savings to rely on during a financial emergency. As a result, many in Gen Z have come to depend on credit cards as an "extension of their income" to bridge gaps.

This reliance on credit is happening against a backdrop of rising inflation. The average monthly living expenses among new MMI clients have climbed 7% to $4,655. When costs for housing, food, and transportation are already high, a single unexpected event like a job loss or a significant medical bill can be enough to turn manageable debt into an unmanageable crisis.

Finding Help in the Digital Age

As digital natives, it’s no surprise that many Gen Z-ers are turning to technology to find financial solutions. In an interesting modern twist, thousands of clients found their way to MMI’s resources in 2026 through the AI tool ChatGPT. After the tool rolled out a new personal finance experience in May, referrals to MMI tripled, with the non-profit receiving over 3,000 referrals from ChatGPT that month alone. Nitzsche notes that AI "does a great job of warming people up to having that conversation," reducing the stigma and friction often associated with seeking financial help.

Conclusion: Next Steps and How to Pay Off Debt

Taking the first step toward getting help can make a significant difference. Rahanatou Souley is now on a debt management plan (DMP) through MMI, which consolidated her payments and reduced her interest rates. She now makes a single affordable payment of $183 per month toward her credit cards. Her advice to her peers is simple but powerful: "Do all your research. Make sure you know about your credit."

If you are struggling with debt, a reputable non-profit credit counseling agency can be a lifeline. These organizations can help you create a budget, negotiate with creditors, and set up a DMP. However, it's crucial to be cautious of predatory companies. The Federal Trade Commission provides tips on avoiding debt relief scams, warning consumers to steer clear of services that charge large upfront fees or promise to eliminate debt completely. Legitimate help is available, and taking action is the first step toward regaining financial control.