The majority now owe over £2,000 of debt, with 19% of 18-24 year olds and 22% of 25-34 year olds owing at least £10,000.
Some 27% of 18-24 year olds said they had fallen into debt just to ‘afford’ the basics, with 18% saying it was to cover rent.
Jo Salter, the Demos researcher who led the project, said: “Instead of saving for the future, they are being dragged into debt just to meet the costs of living.
“This is a time in their lives when previous generations would be thinking about starting a family or trying to get on the property ladder.”
55% of 18-24 year olds, and 48% of 25-34 year olds said that their debt had increased over the past five years, compared to just 13% for over-65s.
Salter added: “It’s a common mistake to assume that all debt is equally bad for all people.
“Providers of advice and support to people in debt can move away from treating everyone the same and towards a more tailored response, designed to tackle specific impacts of debt.”
30% of 18-24 year olds said they were falling into debt to invest in their future, while 28% cited ‘unexpected expenses’.
Young people are faced with the cost of living squeeze, rising rents and the governments housing benefit reforms.
Respondents were asked to calculate the full extent of their debt, including bank, student or payday loans, credit cards, rent and bill arrears.