This year’s new university alumni are heading towards a tougher job market than last year. Just as the Trump administration cracked down on student loan repayments, it was worse than previous classes.
The recent unemployment rate among graduates was 5.8% as of March, up from 4.6% the previous year, the Federal Reserve Bank of New York reported last week. The sharing of new graduates who do not need a degree (a situation known as “inadequate employment”) reached 41.2% in March, up from 40.6% in the same month in 2024.
“Things are pretty frozen right now,” said Alison Srivastaba, an economist at the Employment Lab, about the entry-level prospects. “Many employers and job seekers are both kinds of deer heads and don’t know what to do.”
Both employers and job seekers are like lights on deer heads and don’t know what to do.
Economist Allison Srivastaba actually hires a lab
It squares with Julia Abbott’s experience.
“I feel like I’m pretty screwed like I do now,” said the psychology major, who graduated this month from James Madison University in Harrisonburg, Virginia. She has applied for more than 200 roles in social media and marketing, but said “there are minimal interviews coming out.”
Internship posts usually rise sharply in early spring, but they actually fall behind last year’s levels mentioned in April. On employment platforms, internship demand is seen as a stronger gauge of new graduates’ job outlook than entry-level posts that increasingly target people with at least several years of experience.
In the worrying signs of the 2025 class, the opening of the internship is “a lot lower than where it is in 2023 and 2022 when the labor market was very competitive,” Shrivastava said.
Young college graduates have historically seen lower unemployment rates than the overall workforce, but they still do so. But, as the Atlantic pointed out Wednesday, the gap has shrunk to a record drop, stripping some of the sparkle from the traditional benefits of a bachelor’s degree.
Meanwhile, the Trump administration has resumed “unwilling” repayments of federal student loans by default. This is a move that could employ wages, tax refunds, Social Security payments, disability and retirement benefits from millions of borrowers.
In response to Covid-19, repayments have been suspended during President Donald Trump’s first term in 2020. The pandemic era grace from forced collections ends on Monday. This is an up 20.5% in February, up 10 percentage points from five years ago, as New Trans Union reports found that federal student loan borrowers’ record shares have been in the past 90 days and there is a risk of default.
Debt crackdowns occur when workers in the workforce confront a more demanding employment environment. Employers added 177,000 jobs more than expected in April, government data showed Friday, but analysts could quickly flag warning signs.
The average wage growth is slowing down to the krole, and unemployment metrics show that it will take more time for those looking for jobs to ensure it. The latest employment numbers point to a “resilient” labor market, but Orsonora, head of US economic research at Fitch Rating, said in a statement Friday. “The outlook remains very uncertain.”
The vague work forecast is consistent with the broader economic turbulence driven by Trump’s ongoing trade war.
Many large companies have warned about the recent impact of tariffs. Everyone except the wealthiest households are tightening their budgets, and consumer outlook plunged to 2013 lows in a meticulously viewed conference committee survey released Tuesday. A portion of the spending being made reflects the race as shoppers and businesses race and buy.
These headwinds have become increasingly cautious about hiring young graduates for many employers.
Employers have retook plans to hire more new graduates over the past six months, according to a February and March survey of national associations and employers who voted for major companies such as Chevron, Pepsico and Southwest Airlines. While most people say their recruitment plans for new graduates are stable, respondents’ share plans to expand entry-level employment this spring. This is down from 27% last fall, falling from the lowest rate of the pandemic depth in fall 2020.
In March, NACE released a salary forecast showing mixed photos of the 2025 class. Social Science graduates were set to pay 3.6% since last year, while the Agriculture and Natural Resources majors were on track with a bump of 2.8% to their 24 predecessors. But the estimates were based on employer survey data from last fall, weeks before Trump took office.
“We’re not surprised that new employment is being restricted,” said Andy West, a senior partner at McKinsey, a consulting firm that advises CEOs on corporate strategy and finance. He said he is increasingly debating how to “reallocate resources” amid tariffs and other macroeconomic concerns. As employers want cost reductions and stability, many tend to zero costs that fluctuate over time, including pay.
I walked into this world and felt really scary as if there wasn’t anything set for me.
Julia Abbott, James Madison University, Class of 2025
“In terms of employment and talent, these are often very short-term decisions on slowing down,” he said.
The ’25 job seeker class is adjusting expectations for a more demanding market.
A February survey by Handshake, a recruitment platform focused on alumni, found that over half have abandoned their “dream job” plans that have enrolled in college. And 56% of current seniors are either very pessimistic about starting the workforce now. That’s roughly the same share as last year, but outlook is declining more rapidly in areas like computer science.
While anxiety about landing your first full-time job is common among college students, this year’s deep uncertainty threatens to place dampers in the opening season.
“We can’t really celebrate the last four years,” said Abbott, JMU senior. “I’m really scared to step into this world and not have anything set for me.”