US college grads face muted job market, struggle to pay debt: Here’s what it means for the upcoming job seekers

Recent college graduates in the United States are dealing with the toughest job landscape as unemployment among young adults is higher than it has ever been in over a decade.

This unusual trend, excluding the pandemic time, is leaving students fresh out of US universities burdened with student debt, struggling to secure their first full-time job.

“Extremely unusual” situation

Official data reveals that unemployment for young, recent graduates from US universities currently stands at 5.8%, which is the highest since November 2013 (excluding 15 months in the Covid pandemic).

Notably, this figure remained stubbornly higher than the overall unemployment rate, which has stabilized between around 3.5 and 4% post-pandemic. The analysts call it “an extremely unusual situation.”

Weakening job market and hiring freeze

The labor market for new grads has weakened consistently since 2022, with new hiring down 16% in 2025, year-over-year, reported AFP.

Analysts attribute this downturn to the following factors:

• Cyclical post-pandemic hiring slowdowns- Sectors that particularly hire a large number of new grads, like technology, finance, and business information are experiencing a slowdown.
• Economic Uncertainty- The “tumultuous early days” of the Trump administration contributed to overall economic uncertainty, causing firms to freeze hiring.
• Decline in openings for professional and business services – Job openings fell in these fields by more than 40% since 2021, with tech sector jobs disproportionately impacted.

The Artificial Intelligence factor

While a slower pace in hiring due to companies “right-sizing” after previous high recruitment rates is a factor, the potential impact of AI on jobs is also being discussed.

“The sheer volume of decline also points to the impact of AI,”Matthew Martin, senior US economist at Oxford Economicstold AFP, signaling the potential of artificial intelligence technology to eliminate some entry-level roles.

However Gregory Daco, chief economist at EY-Parthenon, cautions against jumping to the conclusion that AI had already begun to eliminate entry-level roles, emphasizing that most companies are still in the early stages of adopting these technologies.

Mounting student debt

The U.S. is perhaps the most expensive country for a university education, with an average cost of $27,673 per year for an undergraduate degree, according to official data.

In 2020, 36.3% of US undergraduates took on federal student loans, the data shows, with the Education Data Initiative putting average student loan debt for graduating students at $29,550.

Even without student loan debt, however, the weakening job market can leave some recent graduates feeling like they are stretched thin.

In a similar instance, 25-year old Katie Bremer, who graduated from American University with a dual-degree in Environmental Science and Public Health in 2021 could not find a full-time job in over a year.

She gradually found one but not in her field and even then, she had to supplement her income by babysitting. “I felt like I was constantly working,” she told AFP.

Future outlook of the job market

Martin warned that “It’s likely to get worse before it gets better”.

Analysts mirrored a similar outlook, saying that there is little hope on the immediate horizon as it will likely take some time for the labor market to correct itself. A part of that adjustment will likely be students picking different majors.

The ongoing challenges are raising concerns among recent graduates about their long-term financial stability and ability to achieve young adult milestones, the news agency reported.