Licensed to drive? Gen Z — and their parents — increasingly say “no, thanks” due to soaring costs
For generations of American teens, getting a driver’s license has been an important rite of passage. But for Gen Z, the thrill may be wearing off.
Amy K. lives in metro Atlanta with her husband and two sons, aged 19 and 24. Both of her sons put off getting their driver’s license well past age 16, the earliest age at which teens in Georgia can move from a learner’s permit to an intermediate license.
“When I asked around,” she says, “it didn’t seem to be as weird as I would have thought it was. A lot of kids were delaying it.” She thinks that the advent of ridesharing services like Uber could go a long way to explain modern teens’ willingness to wait: “When I was a kid, your only other option was you walk, you bike it, or you get somebody else to take you.” Now, she says, there’s more flexibility for young people without licenses.
But flexibility isn’t the only thing leading teens and their parents to put off that exciting moment — the cost of auto insurance is also a major factor. Amy’s oldest son held a learner’s permit for four years before getting his driver’s license in his early 20s. When he finally took the test, the impact to the family’s finances was significant.
“It doubled our insurance,” Amy says. Despite owning older cars with no outstanding loans, she saw her insurance bill go up overnight — and it’s made her more cautious about getting her younger son his driver’s license. “He’s 19,” she says. “He has his permit and he would love to get his driver’s license, and I have put it off because I don’t know what it’s going to do to our insurance.”
Amy and her sons aren’t alone. Less than 25 percent of 16-year-olds and less than 50 percent of 17-year-olds hold a driver’s license today, a sharp decline from decades past. Bankrate’s insurance editorial team looked into the trend of declining teen licensure — and its potential implications for families seeking relief from steep insurance bills.
The 30-year decline in teen driving: 16- and 17-year-olds most likely to delay licensing
Over the past three decades, there’s been a steady decline in the percentage of teens licensed to drive in the U.S., with younger teens seeing a more significant decrease in licensing.
As of 2022, just under 25 percent of 16-year-olds in the U.S. hold a driver’s license, according to data from the Federal Highway Administration (FHWA). That’s a drop of nearly 17 percent compared to 1994, when over 40 percent of 16-year-olds held a license.
But we see an even bigger decline among 17-year-olds — the age at which state licensing laws allow most teens to move from the learner’s permit phase to a full driver’s license. Licensing among 17-year-olds has dropped by more than 18 percent in the past three decades, dipping under 50 percent for the first time in 2008. Today, just 43 percent of U.S. 17-year-olds have a driver’s license.
Older teens, however, are still getting their licenses at a rate only slightly lower than in past years. Among 19-year-olds, nearly 69 percent were licensed in 2022, down from a peak of 78 percent in 1998.
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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Why teens may wait to get their driver’s license
There’s no doubt that teens are holding off on learning to drive — but why? Researchers and commentators have pointed to a wide range of factors driving the trend, from shifts in teen culture and politics to legal changes. Bankrate’s insurance editorial team took a closer look at some of the key changes contributing to delayed licensing.
Financial reasons
For many families, like Amy K.’s, the decision to postpone licensing is primarily a financial one. Teen car insurance is notoriously expensive, and waiting until age 18 or 19 to start driving means skipping out on the two most costly years of insurance.
We took a look at rate data sourced from Quadrant Information Services to see just what the delay could mean for your wallet. On average, families that delay licensing for their teens could save between $1,500 and $3,000 per year on insurance costs. The table below compares average annual full coverage rates for a family with two married parents and one teen driver to the potential savings with the teen driver removed.
| Age | Average annual family premium | Annual savings from delayed licensing |
|---|---|---|
| 16 years old | $5,229 | $2,934 |
| 17 years old | $4,842 | $2,547 |
| 18 years old | $4,501 | $2,206 |
| 19 years old | $3,933 | $1,638 |
Keep in mind that some insurers may still ding your older teen for having less experience behind the wheel, regardless of age, which means your savings may not be as big as you expect if you wait. Also, car insurance is just one major cost of car ownership that a teen driver can incur. Car prices, fuel costs and maintenance could also deter teens and their families from investing in licensing at an early age.
Galina S., who lives in the Atlanta area, has two teens aged 15 and 17, both of whom have learner’s permits. “My daughter got her permit the first day when she turned 15,” Galina says — but since then, two years have passed, and her daughter is still unlicensed.
In Galina’s case, the cost of auto insurance isn’t the primary barrier to licensing her daughter. “Honestly,” she says, “we can afford it.” But even when teen insurance is affordable, the benefits of getting a driver’s license may not be worth the expense. “Where we live,” Galina says, “everything’s right around the corner. It would be helpful three to four times a month if she did drive herself, but is that worth the $200 to $300 a month for us?”
And it’s not just the cost of car insurance on Galina’s mind — she’s also worried about her home insurance. “Some insurance companies will offer cheaper auto insurance, but then it’s a more expensive home insurance, so you’ve got to look at the total package.” Sometimes, she says, it feels like “you need a spreadsheet to figure it all out.”
Eventually, Galina says, her daughter will take her driving test and get her license. “We want her to have that experience and that freedom,” she says. But when that day comes, it will add more than one expense to the family’s budget: the cost of an additional car to make the added insurance expense worth it.
A new car could also change things for Galina’s son, 15, who currently holds a learner’s permit with no plan to get his license in the near future. “We might bite the bullet for him to get his license,” she says, “since we’ll have the car for him to drive.”
Shifts in teen culture
Today’s teens live in an increasingly digital world — one where cars just aren’t relevant.
According to the Pew Research Center, 95 percent of U.S. teens have access to a smartphone, and the majority of those teens use apps like YouTube, TikTok and Snapchat on a daily basis.
What’s more, 50 percent of teens aged 15 to 17 — that is, driving age — say they’re online “almost constantly.”
When you’re able to interact constantly with friends and strangers online, who needs a driver’s license to have a social life? While teens in past generations needed a ride to a friend’s house or the mall to hang out, Gen Z can have fun without a driver’s license — and the same will likely be true of rising Generation Alpha when its first members reach driving age in 2025.
Additionally, rideshare services like Uber now offer teen accounts (with parental permission), so teens can get rides to see their friends without the previous indignity of showing up with mom or dad.
Environmental concerns
For some teens, opting out of car culture is more than a question of finances or convenience: it’s a serious political choice.
Deloitte’s 2024 Gen Z and Millennial Study found that climate change is a top concern among Gen Z, with 62 percent of the generation feeling anxious about environmental issues within the last month. In the same study, 57 percent of Gen Zers said they felt that they have moderate or significant influence when it comes to protecting the environment — and for some, choosing not to drive may be one way to shrink their environmental footprint.
Graduated driver licensing requirements
When looking at the drop in teen driving over the past few decades, it’s worth remembering one simple fact: It’s harder to get a driver’s license today than it was 10, 20 or 30 years ago.
Since the late 1990s, every U.S. state has instituted graduated driver licensing (GDL) programs that put strict requirements on teens getting their first driver’s license. There’s typically a learner’s permit period during which teens must log a certain amount of driving practice or complete a driver’s ed course, followed by an intermediate license that comes with restrictions like a curfew on nighttime driving and a cap on passengers. And for each phase of the program, teens simply have to wait, drawing out the process of licensing across months and even years.
“It’s a lot of hurdles to jump through for something that feels less necessary than it used to,” says Rebecca Weast, research scientist at the Insurance Institute for Highway Safety (IIHS).
For some families, those hurdles may be insurmountable. In 2021, a study published in the Journal of Transport & Health found that delayed driver licensing is most common among vulnerable populations. Black and Latino teens, along with teens from single-parent households, are less likely to go through graduated driver licensing, particularly in states that require a lot of practice hours.
The risks of delayed driver licensing
Despite the many reasons teens and their families may have to wait until 18 (or older) to get a driver’s license, there are risks to delaying the process too long.
“Waiting is problematic,” Pam Fischer says. Fischer serves as Senior Director of External Engagement at the Governors Highway Safety Association (GHSA), and has authored extensive research on teen driving safety. In her view, teens who wait to get their license until they’re 18 miss out on the benefits of GDL programs.
“Whether you start driving at 16, 26 or 46,” Fischer says, “you’re still inexperienced.” That’s why graduated licensing exists in the first place — to put up guardrails around new drivers during their most risky years of driving. But in nearly every state, graduated licensing requirements end at age 18. This means that older teens who delay licensing can hit the road with none of the restrictions and training they would have had just months earlier.
“That’s really unfortunate,” Fischer says.
The parents we spoke to for this story shared some of experts’ concerns for their children’s safety on the road. While safety isn’t the primary reason Galina S. waited to get her daughter’s license, it’s on her mind. “I can’t imagine when she actually starts driving on her own,” she says. “It’s gonna be tough for the first few months.”
Amy K. has similar feelings about her older son, who has now had his license for a few years. “It’s been a relief that he has it,” she says, “but at the same time, just like parents of younger people who put their beloved into a weapon of destruction, we still worry.” Even though both of Amy’s sons have been through professional driver training, the fear lingers: “We know that first accident is going to happen at some point.”
Should you wait to get your teen licensed?
If you’re considering waiting a year or two to get your teen their driver’s license, take the following into consideration:
- You should understand your state’s laws: Before making a decision about licensing, research your state’s GDL laws to understand the timeline and requirements your teen will need to follow in order to obtain their license.
- You may have less access to driver training: If you wait until your teen is 18 or older to get them licensed, you’ll likely miss out on the guidance provided by GDL laws, leaving it up to your family to agree on any restrictions or requirements your teen has to follow when learning to drive.
- You could save significantly on auto insurance: The cost of teen car insurance is undeniable, and for some families it may be enough to deter licensing for at least a year or two. But it’s worth taking a look at your budget and shopping around for cheap coverage before you rule out the cost of licensing.
- Your teen could be added to your insurance anyway: In some cases, insurers may require all household members who are of driving age to be listed on your auto policy — even if they don’t hold a driver’s license. If this happens, speak with your insurance agent about your options.
While adding a teen to your auto insurance can be expensive, it may not be a prohibitive cost. You may want to talk to your insurance agent or an independent broker about ways to save with a teen on your insurance.
Methodology
Bankrate utilizes Quadrant Information Services to analyze November 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:
- $100,000 bodily injury liability per person
- $300,000 bodily injury liability per accident
- $50,000 property damage liability per accident
- $100,000 uninsured motorist bodily injury per person
- $300,000 uninsured motorist bodily injury per accident
- $500 collision deductible
- $500 comprehensive deductible
To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
Status: Rates were evaluated based on the following marital/family status: single (base), married, 40-year-old married man and woman with a 16-year-old teen driver. Marital status is not a rating factor in Hawaii and Massachusetts.
Age: Rates were calculated by evaluating our base profile with the ages 18-60 (base: 40 years) applied. Depending on age, drivers may be a renter or homeowner. Age is not a contributing rating factor in Hawaii and Massachusetts due to state regulations.
Teens: Rates were determined by adding a 16-year-old teen to their 40-year-old married parents’ policy. The rates displayed reflect the total cost of a driver this age added to their parents’ policy.
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