TULSA, Okla. — Young adults are drowning in debt, and the numbers are getting worse.
Gen Z adults — those between 18 and 29 — are the fastest-growing segment of clients at Money Management International, one of America's largest nonprofit credit counseling agencies. Over the past year, MMI has seen a 35% increase in Gen Z clients, with their average unsecured debt burden up 12% from 2025.
"Gen Z is rapidly rising the debt ranks, unfortunately. Really, a lot of what's happening here is inflation, in a word. These people in their 20s are dealing with student loans, high housing costs, high childcare costs — all outpacing paychecks," Ted Rossman, Principal Consumer Finance Analyst at MMI, said.
Christina, a young adult dealing with the weight of student loans firsthand, said the burden feels endless.
"I'm just in so much debt from tuition, and that will be the case for many, many years down the line," Christina said.
MMI's data shows the problem extends well beyond Gen Z. Total U.S. household debt has reached $18.8 trillion, according to the Federal Reserve Bank of New York — a record high. Debt management plan enrollments at MMI hit a 10-year high in the first half of 2026, while financial counseling sessions rose 9.5% year-over-year and 143% since the first half of 2021.
Gen Z is turning to AI for financial advice
With debt mounting, 35% of Gen Z adults are turning to artificial intelligence for financial guidance, according to MMI's data. Thousands of clients navigated directly from ChatGPT to MMI's website in 2026, including a threefold increase since ChatGPT rolled out its personal finance platform in May. That follows a sixfold increase in MMI website visits from generative AI applications in 2025.
Rossman said the trend reflects a generation that is actively trying to solve its financial problems.
"These are optimizers, these are tinkerers trying to make their finances work. The worst thing you can do is nothing. At least people are trying," Rossman said.
Why AI debt advice can backfire
But Rossman cautions against taking all AI-generated financial advice at face value.
One solution frequently suggested by AI financial advisers is to take out a personal loan — with a lower interest rate and fixed payments — to pay off credit card debt. But it only works if you don't turn right around and run up more debt on your cards.
"So then they have the personal loan debt AND the credit card debt. It is risky to pay off debt with more debt," Rossman said.
MMI's data backs that up. Nearly half — 45% — of new MMI clients have unsecured personal loans, a 10-point increase from 2020. Among new clients with a personal loan, the average balance is $18,870, 11% higher than in 2025. Clients referred to MMI by ChatGPT carry an average unsecured debt balance of $42,500, and 60% hold at least one unsecured personal loan at the time of initial counseling — 15 percentage points higher than the average among all new MMI clients.
One family's path out of $60,000 in debt
Hannah, a mother of 4, and her husband came out of college carrying significant student loan debt. They chose a different path to pay it off.
"We did Dave Ramsey when we first got married," Hannah said.
The Dave Ramsey program is a 7-step plan focused on intense debt elimination followed by gradual wealth building.
"We paid off about $60,000 in a couple of years, so it is — it is possible," Hannah said.
Along the way, Hannah said she discovered that living frugally could actually be enjoyable.
"I'm a big Aldi shopper and Plato's Closet. Most of my kids' clothes are from Plato's Closet, so you can find a lot of nice things there that are lightly used and pay a couple dollars for," Hannah said.
Nonprofit credit counseling: A human alternative to AI
For those who don't want to navigate debt alone, nonprofit credit counseling services offer another option that can consolidate unsecured debts into a single monthly payment at an interest rate of around 7% to 8%, with an average setup fee of $37 — and a person to answer questions instead of an AI chatbot.
Rossman said the average MMI client saves $250 a month in interest through a debt management plan. Over 4 years, the average participant also improves their credit score by 82 points.
More information about MMI is available at moneymanagement.org.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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