The Debt Crisis Facing Young People Today
Millennials and Gen Z are facing a daunting financial challenge: a mountain of debt. Student loan debt, credit card debt, and other forms of debt are weighing heavily on young people today. In this video, we explore the factors contributing to this crisis and the potential long-term consequences.
The Numbers in 2026
Total U.S. student loan debt, federal and private combined, reached about $1.87 trillion as of March 2026, per the Federal Reserve, roughly four times the level of 2006. The average federal student loan balance per borrower was about $39,600 at the end of 2025, roughly double the average in 2007, per the Department of Education. Borrowers carrying both federal and private loans average up to about $43,500 in total. Credit card balances stood at $1.25 trillion at the end of the first quarter of 2026, per the New York Fed. Student loan delinquency is climbing back toward pre-pandemic levels now that the payment pause is long over; collections on defaulted federal loans resumed in May 2025.
Rising Tuition Costs and Stagnant Wages
One of the main drivers of the debt crisis is the rising cost of tuition. Over the past few decades, tuition has increased at a much faster rate than inflation, making it increasingly difficult for students to afford a college education. At the same time, wages have remained relatively stagnant, making it even harder for young people to pay off their student loans.
The Cost of Living
In addition to rising tuition costs, the cost of living has also increased significantly in recent years. This includes housing, food, transportation, and healthcare. As a result, young people are finding it increasingly difficult to make ends meet, let alone save for the future.
The Emotional Toll of Debt
The financial stress caused by debt can have a significant impact on young people’s mental and emotional health. Many young people report feeling anxious, depressed, and overwhelmed by their debt. This stress can also lead to unhealthy coping mechanisms, such as overspending or avoiding financial responsibilities altogether.
The Potential Long-Term Consequences of Debt
The debt crisis could have serious long-term consequences for young people. It could delay their ability to buy a home, start a family, or retire. It could also limit their career opportunities and force them to take on lower-paying jobs.
What Can Be Done?
The debt crisis is a complex problem with no easy solutions. Young people carrying this debt should focus on what they can control: an income-based federal repayment plan that caps payments at a share of income, killing high-interest credit card debt first because no investment reliably beats a 20% guaranteed return, and never refinancing federal loans into private ones without understanding what protections they would give up. Policy changes like more grant aid and cheaper college help at the margin, but the individual math matters more than any single policy: spend less than you earn, aim raises at the principal, and treat the debt like the emergency it is.
- Lowering tuition costs: This could be done by increasing government funding for education, providing more scholarships and grants, and making college more affordable.
- Raising wages: This would give young people more money to pay off their debts and save for the future.
- Reducing the cost of living: This could be done by implementing rent control, expanding affordable housing options, and lowering the cost of healthcare.
- Providing debt relief: This could involve forgiving student loan debt or making it easier to refinance existing debt.
The debt crisis facing young people today is a serious problem that requires immediate attention. By taking action to address the root causes of this crisis, we can help young people get on track to financial security and success.
Winchell House 
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