Gen Z is facing an unprecedented and historically heavy debt burden, primarily due to soaring student loan costs, a hyper-inflated housing market, and stagnant wages that have not kept pace with the cost of living.

While previous generations also faced debt, the unique combination of these factors has created a "perfect storm" that is severely impacting Gen Z's financial stability and delaying major life milestones.

The Crushing Weight of Student Loan Debt 

For Gen Z, the path to a college degree—once a reliable ticket to upward mobility—has become a financial trap. They are taking on the heaviest student loan payments of any generation. A recent survey found that Gen Z's average personal debt is $94,101, far higher than millennials at a comparable age. This staggering amount can be attributed to several key factors:

• Skyrocketing Tuition Costs: The cost of college tuition has consistently outpaced both wage growth and inflation for decades. This means that to get a degree, Gen Z has had to take on significantly more debt than previous generations, even when adjusting for inflation.

• Rising Interest Rates: Gen Z is also bearing the brunt of a steady increase in interest rates on student loans. This means that they are not only borrowing more, but they are also paying more in interest over the life of their loans.

• High Monthly Payments: Gen Z faces average student loan payments of over $500 per month, which is nearly double the average for all age groups. This massive monthly expense makes it nearly impossible to save for an emergency fund, a down payment on a home, or retirement.

The sheer scale of this debt is a fundamental challenge that most of Gen Z's parents and grandparents never had to face. It's a key reason why so many feel trapped and are delaying major life decisions.

The Housing Crisis and Its Impact on Gen Z 

The student loan crisis is compounded by a housing market that is at an all-time high in terms of unaffordability. Gen Z is coming of age in a world where homeownership, a traditional cornerstone of American wealth, is increasingly out of reach.

• Exploding Home Prices: The median U.S. single-family home price has nearly tripled in recent years, reaching a record high. This makes it incredibly difficult for Gen Z to save for a down payment, especially when their disposable income is already being consumed by student loan and credit card payments.

• High Rent and Cost of Living: Even for those who choose to rent, the high cost of living is a major financial burden. Rents in most major metropolitan areas have outpaced wage growth, forcing many Gen Zers to live with roommates or, in a growing number of cases, with their parents for longer than any previous generation.

• A Blocked Path to Wealth: The inability to buy a home is not just a personal inconvenience; it's a systemic problem that prevents Gen Z from building long-term wealth. Homeownership has historically been one of the most reliable ways for Americans to build equity and pass wealth down to the next generation. By being locked out of this market, Gen Z is being denied a key mechanism for financial security.

The Perfect Storm: Inflation and Stagnant Wages 

Gen Z's debt burden is amplified by a broader economic environment of high inflation and stagnant real wages.

• Inflation Outpaces Wages: While some members of Gen Z are earning more than their millennial counterparts at the same age, this increase is often not enough to keep up with the soaring costs of food, gas, and rent. Many Gen Zers are working multiple jobs to make ends meet, and are still struggling to cover basic expenses.

• Over-reliance on Credit Cards: The combination of rising living costs and a lack of savings has forced many in Gen Z to rely on high-interest credit cards to pay for daily necessities. This leads to a vicious cycle of debt, as they struggle to pay off the high balances and are hit with exorbitant interest rates. A recent survey found that the average credit card debt for a Gen Z consumer is rising rapidly.

In conclusion, Gen Z is facing an economic reality that is fundamentally different from that of previous generations. The combination of high student loan debt, an inaccessible housing market, and broader economic challenges has created a unique and heavy financial burden. This is not a problem of "irresponsible spending," as is often stereotyped, but a systemic issue that threatens the long-term financial security of an entire generation.