Success is easy, right? Work hard, stay in school, get your degree, and you’ll be set.
Not quite. In fact, we can think of quite a few flaws in this narrative—1.3 trillion of them, actually. That’s the size of U.S. student debt in 2017: $1.3 trillion. And those trillions of dollars are weighing down 44 million borrowers.
Sure, The College Board says you’ll make your money back within 12 years…but their study also assumes you’ll graduate within four years, have an interest rate of 4.3 percent, and manage lifestyle costs well enough to pay your entire student loan off in a decade.
Oh, and that’s also assuming you don’t get sick, injured, swamped by mood disorders, or any of the other literally countless things that can (and often do) derail even the best-laid financial plans. So we’re not 100-percent sold on The College Board’s analysis.
Anyway, debt crisis or no debt crisis, a new series of studies suggests that college seniors aren’t prepared for what awaits them on the other side of graduation. Their expectations, these studies suggest, are dangerously high. Nothing remains but to reset—or plummet.
Expectation: The Perfect Job // Reality: Any Job—Hopefully
Most college graduates do find work. The Economic Policy Institute (EPI) reports that among young college grads aged 21-24, the unemployment rate is only about 5.6 percent. That’s actually pretty good, considering that in 2011 this rate was about 10 percent.
But while graduates do tend to find work, it might not be the work they have in mind, and it might not arrive when they hope.
Only about half of students have a job lined up before they graduate. According to the National Association of Colleges and Employers (NACE), “just over 46 percent of 2016 graduates received a job offer before graduation, down from 51 percent from the Class of 2015.” That could leave a disheartening gap between graduating and finding a fulfilling job.
Even worse, though, is that there are some frustrating disparities about who gets these post-college jobs. Even with a college degree, people of color still face a greater chance of unemployment.
For Hispanic graduates, EPI places the unemployment rate at 6.5 percent. For black grads, the rate is 9.4 percent. Their white peers, however, face just a 4.7 percent unemployment rate.
Then there’s the issue of underemployment. This means, as the EPI puts it, “a large number of these young, highly educated workers either have a job but cannot attain the hours they need, or want a job but have recently given up looking for work.”
Even though more than 90 percent of recent grads do get jobs, 12.6 percent are considered underemployed. Too many of them can only find part-time or freelance work.
While the EPI analyzed formal economic data, consulting company Accenture went straight to the source for their College Graduate Employment Study. The company asked recent graduates if they felt underemployed. Fifty-one percent of them said yes.
So while an academic reading of the numbers says we’re in an okay economy for grads, more than half of recent graduates definitely feel like it could be better.
Expectation: Building Experience // Reality: Just Getting By
Once graduates are finally in those jobs, Accenture says the reality recent grads face isn’t as rosy as they anticipated.
Of students in the class of 2016, 77 percent said they “believe their education prepared them well” for the working world. On the other hand, after a year or two in the world place, only 68 percent graduates from the classes of 2014 and 2015 believed their education prepared them for the workplace—a drop of nearly 10 percent.
Similarly, when it comes to on-the-job training, Accenture reports there was a 26 percent difference between expectations and reality.
For 2016 college seniors, 80 percent “expected their first employer to provide formal training,” but only 54 percent of 2014 and 2015 grads actually received training from their first employer.
It looks like many employers are expecting students to get their training from school and internships, not learning on the job. Maybe employers are hoping the Khan Academy will take care of everything. Preferably on weekends.
Expectation: Stacking That Paper // Reality: Don’t Get Cable Quite Yet
Professional careers don’t pay what you think—especially not when you’re the new kid in town.
Software design firm iCIMS usually develops human resources applications, but once a year they pause to do research for their Job Outlook Report. According to the latest of these studies, “on average, entry-level employees can expect to earn approximately $45,361,” which is some “$8,000 less than what this year’s college seniors are expecting.”
That’s right. These researchers are telling us that “[on] average, college seniors expect to earn approximately $53,483 at their first job after college.” But, also on average, they will not.
Come pay day, the most disappointed graduates will be men, the study suggests. iCIMS reports that “62 percent of males expect they will earn $50,000 or more,” but “only 49 percent of women expect to earn that wage.” Given the persistent reality of the gender pay gap in the U.S., this could be a simple case of managed expectations (not that that’s an excuse to give up the struggle for wage equality.)
Anyway, not everything is all doom and gloom. The iCIMS report also tells us that, “While 46 percent of women think it’s possible to negotiate salary for an entry-level job, only 34 percent of men feel the same way.”
This could suggest that a comparatively high number of graduated women are prepared to assert their value in the workplace. If that doesn’t seal the gender pay gap once at for all, what will?
Expectation: Internships Are Really Good // Reality: Totally, But…
For ambitious graduates, the degree is just a ticket to an internship, the real currency of the realm. Human resource managers do love an internship. However, overvaluing these often-unpaid programs can help perpetuate generational wealth disparities, effectively locking lower-income graduates out of the running for top jobs.
We’ll get to that. First, though, the good news.
The software design firm we previously mentioned, iCIMS, reports that college seniors found a lot of value in participating in internships, with most (65 percent) saying they “learned better organization skills such as time or project management” while participating in hands-on job training.
While only about a quarter of iCIMS respondents said they “received a full-time job offer with the company” where they interned, most (62 percent) at least got “a positive recommendation or reference for a job” out of their internships.
It’s good that students are finding value in internships, because employers place a whole lot of value in those hands-on experiences. This trend does have its drawbacks, though, and they run very deep.
Remember that whole income inequality thing?
Nick Morrison, an education reporter for Forbes, explains the potential problem with an internship-based hiring structure very clearly:
[pullquote]The rise of internships threatens to put students from less affluent backgrounds at even more of a disadvantage in the jobs market. With many internships unpaid or attracting only modest rewards, students who need to earn money during vacations will increasingly find themselves shut out of the most desirable graduate jobs.[/pullquote]
Despite this troubling scenario, as iCIMS writes, “70% of recruiters and college seniors agree that internship experience is more valuable than your college GPA (30%) when applying for a job.” That’s terrific for people who get internships. It’s not so great for lower-class students who financially can’t afford to stop working for a semester.
Anyway, when you get to your first job interview, whenever it arrives, don’t say we didn’t warn you. Life after graduation can be wonderful. It sure beats the Sturm und Drang of the college experience, with all that uncertainty, the weight of those decisions, a dizzying refrain: Who will you be?
We’re just warning you to be careful with your expectations. Virtually everyone has to pay their dues. Those who don’t—well, we hear enough about them. You will have to pay your dues, which might mean a crappy job or two on your way to fulfillment, the thing you’ll eventually call your career. You must believe that is okay.