Cries for help soar as young struggle with debt

A NEW generation of young people are burdening themselves with “stifling” levels of debt after the number of requests for help has surged by a fifth in a year.

Citizens Advice has today published new figures which have revealed that people aged 17 to 24 across England and Wales have asked the charity for help with 102,296 debt issues in the last year – a figure 21 per cent higher than the previous year.

The organisation also said its analysis of official data, covering the UK as a whole, found that young people have £12,215 of “unsecured” – or non-mortgage – debt on average, more than three times the average £3,988 debt just before the financial downturn between 2006 and 2008.

There have also been changes in the types of loans they are shouldering.

The charity claimed that while much of the debt rise is due to student loans, there has also been an increase in “formal” loans such as bank or payday lending, as well as borrowing from friends and family.

Between 2006/08 and 2012, there was a fivefold increase in the average size of a formal loan debt, from £969 to £4,577. Loans from friends and family rose from an average of £30 to more than £1,000.

By contrast, the average credit card balances of this age group decreased from £332 to £234, the charity found.

Citizens Advice said its own data shows other age groups are twice as likely to go to the charity with credit card problems than 17 to 24-year-olds.

The charity said it also helps a higher proportion of young people than older groups with debt relief orders (DROs), which are a type of formal personal insolvency often taken out by people who have run up consumer debts they have no prospect of paying off.

The chief executive of Citizens Advice, 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.”

Joanna Elson, the chief executive of the Money Advice Trust, the charity that runs National Debtline, claimed the country is “facing the very real risk that debt becomes the norm for young people”.

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She added: “We need to do more as a society to give all young people the skills and knowledge to manage their money well, and to know where to turn for free advice when they need it.”

Citizens Advice has published debt tips for young people which include working out a basic budget, including rent, gas, electricity, travel and food, as well as prioritising the most important bills such as rent and council tax to avoid tough sanctions for nonpayment.

Young people have also been urged to make the most of the offers available to them – for instance, under-25s can often get discounts on travel and those in full-time education or on an apprenticeship may not need to pay council tax.