The Problem: Youth Debt
Universities, colleges, and schools want their students to have the best possible experience while there. Employers want a happy and productive workforce. Unfortunately, a significant number of young people are struggling with debt. Youth debt can impact on all aspects of their lives: family, work and health.
Borrowed Years, a 2016 research paper commissioned by the Money Advice Trust, found 51% of 18 to 24-year-olds regularly worried about money. More than a fifth of them were losing sleep over it.
In 2016 the Young Women’s Trust surveyed over 4000 young people: 25% of them were in debt all the time, with only 39% of them expecting to be debt-free by 40. Young people are encouraged into debt but are not given the tools to manage it.
In 2013, 15 to 17-year olds questioned for the Money Advice Service, identified their parents as the most useful source of financial advice.
The report also concluded:
Finally, and perhaps most importantly, our research shows that young people are likely to imitate – whether positive or negative – the financial behaviours of their parents.
This being the case, youth debt is part of a vicious circle, passed on from parent to child.
Parents are vital when deciding how to tackle the youth debt problem.
Interventions could include:
• Money management classes in schools for pupils.
• Budgeting workshops in the community for parents.
• Social media campaigns to explain the manageable use of credit and debit cards.
• Government-backed initiatives for companies to teach staff about managing and saving money.
Schools, colleges, universities and employers are important leaders in this. They can empower students and employees by actively promoting financial education so that young people can regain control of their money. A more financially literate population will result in greater well-being for all concerned. Subsequently, youth debt will diminish.
How It Can Be Done
Schools and other organisations can jump-start the process immediately. Small steps can gradually bring such ideas into the mainstream and help targeted groups, who perhaps need it most.
• Schools: English schools already have budgeting as part of the school curriculum, Scotland doesn’t. Money management lessons within Social Education classes would be especially useful for senior students who are about to leave school.
• Colleges & Universities: Information to students about how to use credit safely to grow a good credit score (and the pitfalls to avoid) would be easily accessible if displayed in busy areas around the campus. A regular workshop during freshers’ week and throughout the academic year would give students the opportunity to refresh their skills as they need them.
• Employers: You could provide budgeting courses for young staff as part of a new start induction programme. Established employees could undertake refresher workshops as part of their continuous professional development.
Managing money is a skill that many people wish they’d learned early on in life, but it’s so often overlooked. Don’t ignore the true cost of youth debt to your students or staff and we’ll all be richer for it.