Argentina's youth debt crisis grows as living costs outpace jobs

Argentina's mounting household debt has pushed young borrowers into distress, forcing Congress to debate relief proposals. The issue is fast becoming a political challenge for Javier Milei as jobs, wages and living costs squeeze families.

In Short

• Nearly half of Argentines owe money, with over five million overdue
• Borrowers under 25 face the highest delinquency rate at 37.6 per cent
• Students increasingly use payment apps for groceries, travel, books and repayments

Household debt is emerging as a major pressure point in Argentina, especially among young people, as rising living costs and weak job prospects push more families to borrow for everyday needs. The issue is also becoming a political test for President Javier Milei, with lawmakers now debating proposals to ease the burden on borrowers.

For many young Argentines, even studying at a tuition-free public university is becoming difficult. Martn Taborda, 20, who began studying law at the University of Buenos Aires at 18 in the hope of becoming the first in his family to graduate, said that goal now feels out of reach because he can no longer afford transport and books.

Unemployed and USD 1,300 in debt, Taborda said he had borrowed the equivalent of just over USD 100 through a mobile payment app in 2024 for education expenses. As interest built up on missed payments, the debt grew tenfold. “There’s hardly any work for anyone in this country right now,” he said. Forced to depend on others, he added, “You start to feel like a parasite.”

He is far from alone. According to the Center for City Studies, an Argentine non-profit that tracks debt using central bank data, nearly half of Argentina’s 45 million people owe money and more than 5 million are behind on payments. Borrowers under 25 have the highest delinquency rate of any age group, at 37.6 per cent.

Outside Congress on Wednesday, debtors and labour unions gathered as lawmakers agreed to take up 50 proposals aimed at easing household debt, including caps on interest rates and refinancing plans. Even Milei’s libertarian party voted to debate debt relief, though it did not endorse the proposals, reflecting the growing pressure on the government as voters look beyond lower inflation to concerns over jobs and wages.

“They borrowed to make ends meet, because their paycheques run out earlier and earlier in the month,” opposition lawmaker Pablo Juliano said on Wednesday. “Many are falling into a spiral of borrowing to repay other loans. Families want to pay, but they cannot find a way to restructure their debts with dignity or secure protection from abusive debt collection practices.” Milei has rejected calls for government intervention, saying unpaid debts are a private matter between borrowers and lenders rather than a sign of wider economic distress. Economy Minister Luis Caputo said at a recent press conference that banks were easing repayment terms, but added, “We shouldn’t confuse empathy with public policy.”

At the University of Buenos Aires, Taborda recently joined a few dozen other students in a classroom at the economics school to discuss the emotional strain of debt. The meeting followed confidentiality rules similar to those of Alcoholics Anonymous. A moderator asked who had bought groceries in instalments, who had borrowed through payment apps to get by, and who had taken on new debt to repay old loans. Most hands went up.

Since taking office in late 2023 on a promise to break with a discredited political establishment, Milei has cut the budget deficit and brought annual inflation down from a peak of 289 per cent in early 2024 to about 34 per cent in July. But while greater macroeconomic stability has encouraged banks to lend more, sharp cuts to subsidies for gas, electricity and transport have pushed bills up faster than incomes, leaving many Argentines borrowing simply to manage daily expenses.

In the past, wage rises meant to keep up with runaway inflation could gradually reduce the burden of fixed loan payments. Now, slower inflation means smaller pay increases, while borrowing costs remain very high under the government’s tight monetary policy. Digital payment apps require less paperwork than banks but often charge much higher interest because of the greater risk, with annual rates reaching triple digits.

“There was a time when people took out loans to buy a house, an apartment, a car,” said Vanesa Bittoco, a spokesperson for Organised Debtors, a group campaigning for repayment plans linked to workers’ incomes. “Now people take out loans to buy food to make it to the end of the month.” At the anonymous debtors’ meeting, students spoke of feeling trapped, ashamed and increasingly powerless over their future. The problem extends beyond campuses. More than 80 per cent of adults surveyed in Buenos Aires and its suburbs in April said economic problems had a major impact on their psychological well-being, according to the university’s Applied Social Psychology Observatory.

Analysts say the debt burden could weaken Milei’s support among young voters who were important to his rise and give Argentina’s divided opposition a chance to appeal to dissatisfied voters. “Clearly, the economic model is hitting young people much harder than other Argentines,” public opinion consultant Ana Iparraguirre, a partner at Washington-based strategy firm GBAO, said. “If this continues, Milei is putting his reelection at risk with the same electorate that helped him win.” In Argentina, the debate over debt is now centred not only on payments and interest rates, but also on jobs, wages and the strain on young people trying to build their future.

With PTI Inputs

- Ends