Insolvencies among under-25s in the UK are up by almost 20 per cent year-on-year according to the latest figures from accountancy company Moore Stephens.
Between 2016 and 2017 insolvencies in the under-25 age group rose from 4,709 to 5,640.
Figures from the Insolvency Service also showed that among the under-25s women were more likely to enter bankruptcy, with 3,175 young women going insolvent in 2017, compared to 2,465 young men.
However, the insolvency rate amongst men is actually rising slightly quicker in this age group, up by 20 per cent compared to an 18 per cent rise for women.
The news comes after insolvency trade body R3 revealed overall personal insolvencies had risen 27 percent over the last year.
The rise in student loans has been partly blamed for the increase in young people being unable to cope financially.
The monthly student loan repayments lead to a reduction in disposable income and therefore increases the likelihood of young people using more expensive consumer credit to fund their living expenses.
The UK government currently loans more than £14 billion to approximately one million students in England each year. Figures released by the Student Loans Company in June showed the average debt among the first major cohort of post-2012 students was £32,000.
There is also a fear that the latest rise in the base interest rate could lead to further problems for young people.
Head of restructuring and insolvency at Moore Stephens, Jeremy Willmont, said: ‘There is a concern that this new generation of borrowers, having never experienced a substantial rate rise, will not be budgeting for the potential increased costs of repayments on their loans and car finance deals. As such, there is the risk the number of under-25s becoming bankrupt will increase in the future.’
He continued: ‘The 20 percent increase in insolvency rates among the under-25s poses real questions about the financial predicament of many millennials.
‘Young people now tend to be under more pressure to go to university and most will need to take out an expensive loan to pay for their tuition fees. The cost of repaying that debt, combined with an increase in consumer credit overall, means that the under-25s are more likely to become insolvent.’