A generation of students facing higher tuition fees and lower job prospects appears to be embracing the mixed joys of budget travel in rising numbers – with the teenage dream of passing the test and driving a car now an increasingly unaffordable, minority pursuit.

Operators report that the traditional staples of budget travel, the young person's rail and coach cards, are being purchased in record numbers.

National Express, Britain's largest coach operator, reported a surge in sales of coach and regional bus discount cards last year, with 36% more being sold year on year.

Train companies said that record numbers of young people now have a railcard: over 1.2m were sold or renewed last year, almost a third higher than the 950,000 who had a discount railcard in 2005. The Association of Train Operating Companies (Atoc) said that 18-25 year-olds made over 50m journeys by rail last year, 60% up on five years ago.

Atoc spokesman Edward Welsh said: "We know a lot of under 25-year-olds are struggling to afford the costs of buying, running and insuring a car – and that's on top of paying for driving lessons."

The number of 17-year-olds taking the driving test has continued to fall year on year, as many of them deal with the loss of their education maintenance allowance coupled with a steep rise in university tuition fees. Nearly half of British 17-20 year-olds had driving licences two decades ago, but only 35% do now. Although the long-term slump in young people learning to drive eased slightly last year, the number of under-25s taking their driving test has fallen by over 20% in five years, according to Driving Standards Agency.

Rising fuel prices are dwarfed by rocketing car insurance premiums, which according to AA figures mean young men receive average insurance quotes of over £3,100.

At Victoria coach station in central London, student Lucy Hamer, 19, rolled her eyes when asked about driving. "I haven't learned to drive because it is far too expensive. I have to take the coach up to Liverpool and it's such a long journey, over five hours. The government really should be looking to cut the cost of driving but also public transport too. Every time I get on the bus it feels like the price has gone up."

Motoring organisations believe the economic conditions, rather than the emergence of a generation wilfully opposed to driving, are behind the rise in public transport use by young people. Edmund King, president of the AA, said: "You've got more young people going to university with tuition fees, and they basically don't have money to take lessons or insurance."

He maintained the dream of driving had not died. "There's still that desire, but financial circumstances have blunted the uptake. Despite the environmental talk and all else, I don't think the aspirations have changed that much."

The steep costs may have alarming effects. A recent survey for insurance firm Ingenie found that 89% of young drivers now take less than the recommended 40 hours of driving lessons before passing their test.

King warned of a vicious cycle for the non-driving young: "In times of high unemployment, it's quite useful for people to have a driving licence. For quite a few jobs, that's a prerequisite. And like learning to swim, it's easier the earlier you start. You'll end up paying even more."

If the coach has been the big winner from the age of travel austerity, not all passengers seem entirely enthusiastic, despite the promise of mod cons such as wifi, power sockets and leather seats aboard.

Also at Victoria coach station, Fay Ali, 23, an educational psychology student at Birkbeck, who paid £12.50 on the day for a single National Express journey to Sheffield, said: "I always intend to catch the train and then something happens so I'm left with nought options but to catch a coach. I had a train ticket booked but I missed it."

Alex Vardy-Meers, 25, a tree surgeon hauling his bags of tools, said that coach travel was the one thing that made his business viable. "Any money I earn would have to go straight into the costs of a car. The coach is OK. It would be easier to take a van but I can't afford that. If I didn't have a railcard I wouldn't ever take the train either."

But others have fallen in love with coach travel. Anne Wilkes, 66, a full-time carer for her husband, said it was also their favoured choice for European holidays. "If you're driving, you're low. On a coach you can see a lot more and I'm a nosy person. I like to see into people's gardens."

Carless whispers

Caroline Mortimer, 21, Harrogate, English student, University of Birmingham:

"Certainly the reason I don't drive, and haven't learned to drive, is the cost. I started taking lessons but I lost my job and couldn't afford to continue learning. I've always taken the train to travel between home and university and I do have a railcard, but I'm still forced to travel late at night when it's only £25 or at off-peak times as otherwise it's still too expensive. I can't take a coach either because it's not convenient where I live."

Nicholas Hughes, 21, from London, politics and economics student, University of Leeds:

"Living in London my need for driving isn't great, because the transport links are so good. However, at the same time, there's no doubt that the price of driving for young people – including lessons, insurance and petrol – is off-putting, and that's one reason why I haven't learned to drive. When I used to head up to university I would take the train, but even with a young person's railcard I feel that trains have become so expensive I've been priced out of those too. The coach is definitely much cheaper, and that's always how I travel back up to Leeds now."

Poonam Lad, 20, Ashton-under-Lyne, art student,Birmingham City University:

"I failed my test and it's far too expensive, if you fail, to have to pay for more lessons again. The cost can be hundreds of pounds. I take the train and the young person's railcard definitely makes a difference, and it's popular among students. A lot of students bank with NatWest, who provide the card for free when you open a student bank account. The NUS card is also helpful for discounts on the coach, but I still feel generally that the costs of travelling are too high at any age, not just students and young people."

Saoirse Linder, 20, Rostrevor (Northern Ireland), sociology student, University of Bristol:

"The cost of driving has been a big factor in deciding not to learn, and if you're a slow learner like myself it makes it that much more expensive. In Bristol, parking charges run into the hundreds of pounds too. Why would I drive when I can take a two-hour coach for a few pounds, and my university bus is free? Certainly railcard and NUS cards have an impact in that they are a hugely attractive alternative to driving, although whilst it is good that students have railcards you still have to pay for the railcard or your NUS card in the first place."