Why collecting from millennials is difficult - and how to do it anyway

It’s no secret that the millennial generation carries serious debt, from student loans and credit cards to auto financing.

Total debt from millennials in their 30s hit more than $3.8 trillion dollars in 2022, an increase of 27% from 2019, according to the Federal Reserve Bank of New York. The average amount of non-mortgage debt each millennial carries? $27,251, Experian reports.

That level of debt means a matching level of delinquencies - last year, for instance, millennials between the ages of 30 and 39 hit a three-year high on auto loan delinquencies of more than 90 days.

Cutout paper of man examining bills through magnifying glass
Photo by Monstera from Pexels

And millennials pose unique challenges for debt collectors, requiring new thinking and new pursuit and payment strategies.

The Challenges of Debt Collection with Millennials

Millennials May Be Harder to Find

Many millennials don’t have a home or apartment of their own. Accelerated by the pandemic, millions - more than one in four - still live with their parents, according to a recent survey from

Tracking down millennial debtors without independent addresses can take much more time and effort.

Millennials Don’t Have Landlines

In 2022, almost 90% of millennials lived in a home without a landline phone, according to the National Health Interview Survey.

Chart showing wireless-only households by age

Connecting with these cell phone users is more difficult for two reasons.

First, millennials generally don’t pick up the phone when they don’t recognize the number. Even if they know the caller, they prefer to communicate via text. If you can’t get a borrower to take your calls, collecting becomes a major challenge.

And second, the Telephone Consumer Protection Act imposes more stringent regulations on telephone calls made to mobile devices than calls made to landlines.

The Burden of Student Loan Debt

According to an Experian study, millennials carry an average of over $46,000 in student loan debt. The Education Data Initiative reports that 14.8 million millennials have student loans - more than any other generation.

Payments to the federal government’s student loan programs were paused as part of pandemic relief, but those with private loans had no such luck. 

Because they can’t generally be discharged in bankruptcy and have serious consequences for default, paying student loans is often a priority, leaving little room for payments to other creditors.

And feeling overwhelmed by their total debt balance, millennials may have given up on repayment altogether, leaving them unmotivated to deal with collections on outstanding balances of any kind.

Millennials May Be Less Interested in Preserving Their Credit

Many millennials feel financially helpless - the National Association of Realtors found that 35% of that generation felt locked out of home ownership due to existing debts. 

For those who don’t plan to take on more loans in the future, maintaining good credit becomes far less important. Without that motivation, millennials may be much less worried about how non-payment of debt will affect their future prospects.

Millennials Often Distrust Financial Institutions

Millennials came of age during the 2008 financial crisis, watching banks get bailed out while consumers got foreclosed on. Understandably, that created a wariness of financial institutions.

This can make it far more difficult for collectors to gain the trust of millennial debtors or to convince them that repayment is an imperative.

Tips for Collecting from Millennials

Despite these hurdles, there are best practices for collecting from millennials:

  • Make online payment easy: Most millennials prefer to conduct their financial affairs online. By making online payments easier, you may be more likely to get younger debtors to make regular payments.
  • Choose text messaging: We know millennials aren’t fond of the phone, but text messages are an underused strategy that can be highly effective, according to a McKinsey study
  • Personalize your approach to collection: When collectors remember and make reference to the borrower’s personal situation and understand the context of past calls, millennials will feel like they’ve made the type of connection they need to make any effort to repay.
  • Aim for a compassionate approach: It’s common for millennials to feel they’ve had a harder financial road to travel than previous generations. Agents who are empathetic to that generation’s unique life challenges can make them more responsive.

For collections teams who have been in the business for a long time, shifting to accommodate millennial preferences may seem difficult. But with Gen Z following in millennials’ financial footsteps in multiple ways, developing these tools and techniques now will pay future dividends.

The right software built for consumer finance conversations can help you get your strategies on track. We’re here to get you started.