Today’s college graduates expect to receive a starting salary at their first job that is nearly double the actual average entry-level salary – and these unrealistic expectations extend to everything from their mid-career to the financial value of their degree.
These are some of the takeaways from a recent survey conducted by Real Estate Witch, which gathered responses from 1,000 undergraduate students pursuing a bachelor’s degree. Notably, the survey found that nearly half of respondents think college isn’t worth it. And if given a chance to do it again, 40% of them would make different choices about what or where they studied.
A strong labor market can distort expectations
Today’s job market is booming. Data from the Department of Labor shows job vacancies are historically high as the country continues to feel the effects of the Great Resignation.
Wages are also rising rapidly. Labor statistics show wages have risen 4.5% since December 2020, the biggest increase in 40 years. Starting salaries have increased 8% over the past five years, outpacing college cost increases. Average starting salaries are expected to rise further as employers with a multitude of job openings compete for a limited number of applicants.
Graduates know the job market is hot, but they overestimate how hot it is. According to a report by education analysts at ThinkImpact, the average college graduate salary today is $55,260. Meanwhile, undergraduates now expect to earn $103,880 in their first job after college.
These unrealistic expectations also extend to mid-career earnings. Students today believe they will earn just over $200,000 10 years after graduation — although the average mid-career salary is $132,497, according to Glassdoor. Even allowing for above-average inflation, students are now overshooting the bar.
This is largely a recent phenomenon. Real Estate Witch notes that in 2019 college graduates expected to earn around $58,000 in their first job – a figure close to the average real entry-level salary. Yet three years later, the projected salary has increased by $46,000. Clearly something has caused students’ expectations of their first salary to grow out of control – but what?
A boiling labor market has overheated expectations
Part of the explanation could be the ease with which many college graduates get jobs. As they enter a job market with many openings, recruiters have been forced to compete for candidates, often watering down offers with enhanced benefits or salary increases.
It’s probably no surprise that 44% of graduate students surveyed say their job search was much easier than expected. In fact, 15% of 2022 graduates have already accepted a job offer, and the rest expect to find employment in their field within three months of graduation.
The problem is that optimism doesn’t quite match reality, leading undergraduates to expect entry salaries that just aren’t there. Although many will adjust their expectations, some will not. The study found that one in eight college students said they would not compromise their salary expectations for any reason.
Unrealistic expectations varied wildly by major, not by gender
Students in specific fields are much more likely to overestimate their future salaries. Journalism majors seem the most misguided — the $107,040 salary they expect to earn right out of college is 139% higher than the median starting salary for a journalist.
On the other end of the spectrum, computer science majors are the most realistic. Although they still overestimate their future earning potential, their projected starting salary is only 27% higher than the actual average starting salary in the field ($95,690 vs. $75,100).
Additionally, most college students think gender affects an employee’s starting salary, with just 24% saying it doesn’t. Men are 14% more likely to think gender has no impact on starting salary, while women are 4% more likely to say yes – and think it’s a serious issue.
Interestingly, although most college students think there is a gender pay gap, men and women have similar salary expectations. The women surveyed expected to earn $103,550 in their first job, just 0.5% less than the men expected.
Not all graduates expect to thrive
Although many students have inflated expectations for their post-graduation career, some have a more sober outlook. For example, half of 2022 graduates aren’t even sure they’ll be able to find a job related to their major, and almost a third (31%) don’t think they’ll make enough money to live comfortably.
These results underscore how some students feel they are not getting a worthwhile return on their investment in education.
Are students soured at college?
Student debt has changed the equation as to whether college is worth it. US News & World Report reports that the average undergraduate has student debt of $30,000. In total, nearly 43 million Americans carry $1.57 trillion in student loans, according to EducationData.org.
Many students carry more than the average debt burden. About 43% of survey respondents expect to graduate with a debt of at least $30,000, and 29% expect to graduate with a debt of $50,000 or more.
When students factor in years of paying off their debts, many think college isn’t worth it. Nearly half of survey respondents (48%) said college wasn’t worth it, and many more have serious regrets: 40% said they’d choose another major if they could do it all over again , and 41% said they would attend. a different establishment.
For decades, going to college was seen as an unambiguous good. This study, and others, suggest that the full picture is more complicated. As disconcerting as some may find it to hear that many students believe they get nothing out of college except years of debt, it is also an opportunity for educational institutions and students to recalibrate their promises and their expectations.