The promise of a university degree as a reliable passport to prosperity is fading for the Class of 2025. According to recent analysis by The Economist and data from labour market sources, new graduates are facing the toughest job market in a decade.
Unemployment on the rise
Graduate unemployment rates have surged, with the Wall Street Journal estimating a 6.6% unemployment rate for recent graduates over the past year—the highest level since the pandemic, and well above the overall US unemployment rate of 4.2%. In the UK, similar trends are emerging, while in India, youth unemployment (ages 15–29) reached 13.8% in April 2025, according to the Periodic Labour Force Survey.
The experience paradox
Many entry-level jobs now demand several years of experience, creating a “catch-22” for those just leaving university. Nearly 90% of employers say they avoid hiring recent graduates, with 60% citing a lack of real-world experience as the main reason, according to a recent employer survey. As a result, even those who secure work often settle for roles that do not require a degree.
Debt and underemployment
Student debt is at record highs: in the United States, average graduate debt surpassed $38,000 in 2025, and UK graduates now owe an average of £45,000. Underemployment is also rampant, with 30% of graduates in OECD countries working in jobs that do not require a degree, as highlighted by The Economist. Oxford Economics notes that Gen Z graduates are more likely than previous cohorts to accept underemployment, simply to get a foot on the career ladder.
Fading optimism
The bleak job market has left over half of graduating seniors feeling pessimistic about their prospects. Hiring for college graduates is down 16% compared to last year, and 44% below 2022 levels. Despite rising starting salaries in some sectors, the cost of living and student debt are eroding any financial gains.
As The Economist and other analysts observe, unless there is a surge in demand from key industries or significant policy intervention, the outlook for new graduates will remain challenging—forcing many to question the return on investment of their hard-earned degrees.
Attribution: All facts, figures, and analysis in this article are drawn from recent reporting by The Economist, the Wall Street Journal, the Periodic Labour Force Survey, and supporting employer and economic data.
