Spotlight: Recent College Graduates Are Struggling | Need to Know

January 26, 2026

Key takeaway:

Recent college graduates face a perfect storm: rising unemployment, a deteriorating entry-level hiring process, declining confidence in higher education's value, and resumed wage garnishments for defaulted student loans. For HR leaders, this signals both challenges in evaluating early-career candidates and opportunities to rethink entry-level hiring strategies as traditional signals like GPA and cover letters lose their predictive power.

What does unemployment look like for recent college graduates?

According to the Bureau of Labor Statistics, 9.7% of bachelor's degree holders ages 20 to 24 were unemployed in September—up from 6.8% a year prior. Recent college graduates are now spending more time unemployed than job hunters with only a high school diploma.

According to the Federal Reserve Bank of Cleveland, over the period of June 2024 to June 2025, 37.1% of unemployed workers between ages 22 and 27 with at least a bachelor's degree either found work or stopped looking each month, compared to 41.5% of their peers who only completed high school.
The recent-graduate unemployment rate is now slightly higher than the overall workforce rate, according to Higher Ed Dive.

Do Americans still believe college is worth the cost?

Confidence in higher education is splitting along employer and public lines. While 70% of U.S. employers have high confidence in higher ed according to AAC&U and Morning Consult, only 42% of American adults share that view per Gallup and Lumina Foundation.

Since 2013, the share of Americans who believe a college degree pays off has fallen by 20 percentage points, according to The Wall Street Journal.
63% of Americans say a college degree is not worth the cost, according to NBC News. Less than half (46%) of college degree holders believe it was worth it.

How are student loans affecting recent graduates?

According to CBS News and the Institute for College Access and Success, 43 million Americans currently have student debt, and about a quarter are behind on payments. Data from the New York Fed shows over 5 million borrowers (covering $140+ billion in federal student loans) are currently in default.

42% of borrowers say they are making tradeoffs between loan payments and covering basic needs, according to a Data for Progress survey.
20% of borrowers are currently in delinquency or default.
According to Vox, student loan debt is making it more difficult for borrowers to keep up with other bills, find secure housing, and save for retirement.

Wage garnishments have returned after a five-year pause:

This month, the Department of Education began sending wage garnishment notices, starting with 1,000 notices to defaulted borrowers—just a fraction of the more than 5 million who have defaulted.

Wage garnishments can impact up to 15% of a borrower's income, an amount experts say is a "giant hit" when every dollar counts toward family expenses and saving for the future.
The agency can further move to seize borrowers' tax refunds, something experts say may catch borrowers by surprise.
Seven million borrowers enrolled in the Saving on a Valuable Education (SAVE) repayment plan haven't had to make payments for the last year and a half. Experts say that's about to change.

Read more via Scripps News, NPR

Why is the traditional entry-level hiring process breaking down?

Grade inflation and AI-generated applications are eroding traditional evaluation methods. Companies are increasingly unable to distinguish between candidates, forcing graduates to submit far more applications than ever before, according to The Atlantic.

Traditional signals have lost their value:

At Harvard, A grades increased from fewer than 25% two decades ago to 60% today, making GPAs nearly meaningless, according to The Atlantic.
Seven years ago, 70% of new graduates' résumés were screened by GPA, according to the National Association of Colleges and Employers. That figure has dropped to 40%.
Until ChatGPT became available, research suggested cover-letter quality strongly predicted job performance and hiring success. Now, at least half of companies say cover letters are no longer helpful, according to The Atlantic.

Application volume is surging while openings shrink:

Job postings on career platform Handshake declined by more than 16% in the past year, while applications per open job increased by 26%.
Students at top colleges are reportedly applying to 150 internships just to get one or two interviews.

AI is filling the gap — on both sides:

To wade through the torrent of applications, many employers are deploying AI screening tools.
Job seekers are using AI to ensure their applications are not screened out.
Given the breakdown of traditional systems, experts say personal referrals matter more than ever.

Read more via The Atlantic

Are corporate recruiters changing their campus strategy?

Recruiters for some of the country's largest employers are returning to a more traditional entry-level recruiting strategy—hiring from a select few universities, according to The Wall Street Journal.

Corporate recruiters are pulling away from their previous strategy of one or two passes through 45 to 50 schools each year. Instead, they're attending several events at a slimmer shortlist of 15 select universities.
In 2025, 26% of employers said they were exclusively recruiting from a shortlist of schools, up from 17% in 2022, according to a survey cited by the Journal.
The same survey found diversity was a priority for school recruiting selection for 31% of employers in 2025, down from nearly 60% in 2022.

Read more via The Wall Street Journal

Does Google still require college degrees?

Google and other major tech companies are moving in a different direction—away from degree requirements entirely as the industry shifts toward skills-based hiring.

Google's job postings requiring a degree dropped from 93% to 77% between 2017 and 2022, according to the Burning Glass Institute.
Google co-founder Sergey Brin told Stanford engineering students the company now hires extensively outside traditional academic pipelines, noting workers without bachelor's degrees "just figure things out on their own in some weird corner."

Read more via Yahoo Finance

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