Young people in Amsterdam are increasingly struggling with debt: “The brain is still developing”
Sky-high rents, poorly paid student jobs, one financial misstep and before you know it you’re deep in debt. This is happening to young people in Amsterdam more and more often, according to figures from debt collection agency Flanderijn. Getting a loan is becoming increasingly normal among young people – but how responsible is that?
That life in Amsterdam is not cheap comes as no surprise, especially for young students who have just left home and must make do with the meagre wage from a part-time job. In the capital, a room now costs on average €945 a month, compared with €900 a year ago. Then there is the growing popularity of Klarna: the Swedish company that allows you to buy now and pay later. Even a Lowlands ticket (€350) can nowadays be paid in three instalments through Klarna. Popular online shops such as Temu and Shein also offer deferred payment options.
So, the amount of loans that is taken out is increasing. Flanderijn notes that the number of Amsterdam residents aged 18 to 25 in its records who can no longer pay their bills has increased significantly in recent years. In 2020, 10 per cent of claims were against young adults; this has now risen to 14.6 per cent. A similar increase can be seen in the group just above them (25 to 30 years old). According to Flanderijn, key causes are the rising cost of living and financial temptations such as crypto, poor investments and “buy now, pay later” firms like Klarna.
Neuroscience
Nadja Jungmann, Professor of Debt Problems at the UvA, recognises this pattern. “We see that daily life is becoming more expensive, also for young people. For students in Amsterdam, housing is of course a major issue. This forces young people to spend more money. They get into a squeeze with their budget and can’t pay their bills as easily.”
As a result, getting a loan is becoming more normal – a worrying development, says Jungmann. “When young people can’t solve their financial problems on their own, they often don’t take the step of asking for help.” That also applies, albeit to a lesser extent, to adults: in total, fewer than ten per cent of people with problematic debts are properly visible to support services. Yet there is something specific to young people: “Neuroscience shows that the brain develops until around age 25. In young people this makes them more inclined to take bigger risks. You are financially authorised to make such decisions from the age of 18, but during that period your brain is still developing.”
At the same time, it is precisely this group that is especially tempted to use sites such as Klarna. “Pay-later websites are currently not classified as consumer credit, but many young people have hundreds or even thousands of euros outstanding with them,” says Jungmann. “If you have a themed party coming up, the temptation to get an outfit that way can be quite strong, particularly if you don’t have enough money for everyday living. We’re asking for a level of self-control from young people that’s not very realistic.”
According to Jungmann, it’s not just Klarna or student loans; young people also often have credit card debts or buy their laptops or scooters on instalment. “Life has become expensive. This generation can access a basic grant, but it’s nowhere near enough to live on when you look at Amsterdam’s high room prices. It’s hardly surprising that many students are not only in debt to DUO, but also use other financial products.”
Solution or problem?
Yet this is not a plea to ban loans, Jungmann stresses. “Getting a loan also makes things possible. If parents can’t offer financial support, buying a laptop on credit can be a real lifeline. But because of that ongoing brain development there are risks. Susceptibility to temptation is greater at that age. The question is whether buy-now-pay-later is a solution or a problem.”
Right now, it may simply be too easy to get money, the professor observes. “Should an 18-year-old be able to get a loan as easily as a 36-year-old?” she wonders aloud. “I’m not saying young people should have fewer rights, but perhaps a compulsory conversation with a bank employee would be a good idea before they take out a loan. We could also show more compassion for the clumsy decisions young people make.”
She emphasises the importance of financial education, both at school and at home. “Schools often struggle with this. Usually there are one-off lessons, but ideally financial education would be woven throughout the entire curriculum. It starts in Year 5 or 6 with a chat about pocket money and should continue consistently throughout education.”
