New college grads face a tougher job market — again

This year’s new college graduates are heading into a tougher job market than last year’s — who had it worse off than the class before that — just as the Trump administration cracks down on student loan repayments.

Recent grads’ unemployment rate was 5.8% as of March, up from 4.6% a year earlier, the Federal Reserve Bank of New York reported last week. The share of new graduates working jobs that don’t require their degrees — a situation known as “underemployment” — hit 41.2% in March, rising from 40.6% that same month in 2024.

“Right now things are pretty frozen,” Allison Shrivastava, an economist at Indeed Hiring Lab, said of entry-level prospects. “A lot of employers and job seekers are both kind of deer-in-headlights, not sure what to do.”

Employers and job seekers are both kind of deer-in-headlights, not sure what to do.

Allison Shrivastava, economist, Indeed Hiring Lab

That squares with Julia Abbott’s experience.

“I just feel pretty screwed as it is right now,” said the psychology major who’s graduating this month from James Madison University in Harrisonburg, Virginia. She said she’s applied to over 200 roles in social media and marketing, but “minimal interviews come out of it.”

Internship postings typically rise sharply in early spring, but they’re lagging 11 percentage points behind last year’s levels, Indeed said in April. The hiring platform sees demand for interns as a stronger gauge of new grads’ job prospects than entry-level postings, which increasingly target people with at least a few years’ experience.

In a worrying sign for the class of 2025, internship openings are “far below where they were in 2023 and 2022, when the labor market was exceptionally competitive,” Shrivastava said.

Young college grads have historically seen lower unemployment levels than the labor force overall, and they still do. But as The Atlantic pointed out Wednesday, this gap has narrowed to a record low, taking some of the shine off the traditional benefits of a bachelor’s degree.

Meanwhile, the Trump administration is restarting the “involuntary” repayment of federal student loans in default, a move that could sap money from paychecks, tax refunds, Social Security payments and disability and retirement benefits from millions of borrowers.

Repayments were paused during President Donald Trump’s first term in 2020 in response to Covid-19. The pandemic-era reprieve from forced collections ends Monday, just as a new TransUnion report finds a record share of federal student loan borrowers are 90 days or more past due and at risk of default — at 20.5% as of February, up 10 percentage points from five years earlier.