Gen Z Is Seeking Debt Help Faster Than Any Other Generation, New Figures Show

More young Americans are seeking professional help managing their debt, with Generation Z emerging as the fastest-growing group of clients at a major nonprofit credit counseling agency as rising borrowing costs and everyday expenses put pressure on household finances.

The number of Gen Z clients seeking assistance from Money Management International (MMI) increased 31% from a year earlier, while their average unsecured debt reached $20,200, according to new figures released Thursday by the nonprofit organization.

Although Gen Z clients carried less unsecured debt than any other generation, their average balance increased 10.5% compared with the same period in 2025.

The figures are based on aggregated client records from January through September 2026 and cover people who contacted MMI for financial counseling. They do not represent the debt levels of all Gen Z Americans. The increase in younger clients comes as the organization reports growing demand for debt assistance across age groups.

MMI said its overall counseling volume rose 9.5% year over year through September, while average unsecured debt among clients increased to $40,200 from $38,300 a year earlier, a 4.8% rise.

The nonprofit also recorded its highest monthly enrollment in debt management plans since March 2011, with more than 2,500 new plans started in September. More than 60,000 repayment plans were active at the end of September, the highest number since 2017.

The organization said it was managing more than $1 billion in client debt, a level it first surpassed in June and its largest total since 2013. "The story behind the numbers is all about the rising cost of living," said Ted Rossman, principal consumer finance analyst at MMI, in the organization's announcement.

Rossman said consumers were increasingly relying on credit to cover expenses such as medical bills, vehicle repairs, home maintenance, groceries and gasoline.

The latest figures also show a growing reliance on unsecured personal loans among people contacting the agency. The proportion of new clients carrying at least one unsecured personal loan increased from 42% in 2025 to 46% in 2026, reaching 48% during the third quarter.

In 2020, 35% of new clients had an existing personal loan when they first contacted MMI. The average personal loan balance increased 11.5% over the past year, rising from approximately $17,300 to $19,300.

Some clients used personal loans to consolidate other debts, including credit card balances, according to the organization.

Rossman warned that borrowers who continue using credit cards after consolidating existing balances can accumulate additional obligations before repaying their original debt.

The nonprofit's findings also point to an increase in more serious repayment difficulties. One-quarter of its clients now have at least one charged-off unsecured debt, compared with 20% in 2020. A charge-off occurs when a lender classifies a debt as unlikely to be collected, although the borrower may still be responsible for paying it.

Average debt balances held in collections increased 38% from 2020 to $11,200. The latest generational findings build on earlier evidence of growing demand for debt counseling among younger adults.

The rise in counseling demand comes against a broader backdrop of substantial household borrowing in the United States.

Americans held approximately $1.26 trillion in credit card debt at the end of the second quarter of 2026, up $21 billion from the preceding quarter, according to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit.

Total household debt stood at approximately $18.8 trillion, including mortgages, auto loans, credit cards, student loans and other borrowing.

The New York Fed reported that 4.7% of outstanding household debt was in some stage of delinquency at the end of June, slightly below the previous quarter.

However, it said transitions into new delinquencies on auto loans and credit cards remained elevated, even as overall delinquency measures were broadly stable.

MMI's latest data also revealed differences in demand for counseling across states. Among its 10 highest-volume states, Pennsylvania recorded the largest annual increase in clients at 24%, followed by Georgia at 17% and Texas at 15%.

Average unsecured debt among clients in Virginia reached approximately $45,900, up 15% from the previous year. North Carolina clients carried an average of $41,600, an increase of 10%.

The nonprofit also reported that the number of clients finding its services through generative AI searches, primarily ChatGPT, increased 48.8% year over year.

MMI compiled the findings from its own client records, comparing January 1 through September 30, 2026, with the corresponding period in 2025.