Thursday, May 23College Admissions News

Potential Recession Evokes Graduation Worries

Imagining life after graduation is understandably stressful for many college students — particularly for the 55% of undergraduates who’ll be leaving with student loan debt. Yet, amid today’s struggling economy, it’s not just student borrowers who have some apprehension about what comes next.

The latest Student Loan Hero survey of more than 1,000 U.S. undergraduate students reveals that 46% of college students are worried they’ll graduate during a recession. But despite this real worry, their optimism appears to win out: 59% think college has prepared them for a career and 74% are confident they’ll find a job in the field they’ve chosen.

Here’s what else we found.

Key findings

  • 46% of college students are worried they’ll graduate during a recession. This jumps to 57% among undergraduates in their senior year.
  • Only 23% of college students want to be fully remote for their post-graduation job. As for the benefits college students are seeking from future employers, good health care or insurance (70%), work-life balance (67%) and a good retirement plan or 401(k) match (66%) top the list.
  • 31% of undergraduates say they would go to grad school if they don’t have a job in their field after completing their degree. This is more common among women than men (37% versus 24%).
  • College students prioritize passion over pay when selecting a major. 60% say they selected their major based on their passion for the field, compared with 40% who based their decision on salary or earning potential. By gender, women are more likely to say they picked their major based on their passion, while men had money in mind.
  • Location (73%) and cost (72%) are the top factors students consider when selecting their college. That’s followed by the specific programs of study available (49%) — in fact, 74% of students say they selected a major prior to enrolling in school.

College students are worried about graduating during a recession

As inflation rises and economic concerns grow, 46% of college students are worried they’ll graduate during a recession. These fears are particularly prevalent for those who’re close to graduating, jumping from 49% for undergraduate juniors to 57% for undergraduate seniors.

According to LendingTree chief credit analyst Matt Schulz, it’s understandable that students are worried.

“We’re in such a weird economic situation right now, and nobody knows exactly what the next six months to a year will look like,” he says. “Even though unemployment is still low right now, it isn’t guaranteed that it’ll still be that way when graduation comes around next spring — or anytime after.”

To kick-start their careers in an uncertain economy, students are willing to make some concessions. Nearly half (49%) of all students say they’re willing to compromise on some aspects of their first job — including their salaries, position, industry or location — to land one they want.

The majority of students don’t appear too worried about finding a job, though. In fact, around three-quarters (74%) say they’re somewhat to very confident that they’ll secure a role in their intended field after graduation. While confidence levels are generally high across the board, students with one (72%) or more parents (80%) who attended college are more confident than those whose parents didn’t (69%).

Most say their ideal role isn’t remote — it’s hybrid

Even though remote work culture exploded during the COVID-19 pandemic, the majority of students surveyed don’t want to work in fully remote roles when they graduate. Rather, a hybrid role is the most popular preference; coming in second choice is a significant percentage eager to work in an office.

Here’s a full breakdown:

  • 44% want a hybrid job
  • 33% want an in-office job
  • 23% want a fully remote job

While it may be surprising that a fully remote role is the least popular option among students, widespread virtual burnout might explain it. During the pandemic, 59% of students took virtual classes from home, making it the most common impact the pandemic had on students by a large margin. (In comparison, the second most common impact — income loss — affected just 18% of students.)

The pandemic may have also shaped what students plan to look for from their future employers: Overall, 70% prioritize jobs with companies that offer good health care or insurance, while 67% prioritize companies that offer good work-life balance. Third on the list is a good retirement plan and 401(k) match (66%).

Still, students who can’t find a full-time salaried role after graduation say they’d be willing to take a position without any benefits if it meant they could gain experience in their field. Overall, 49% say they’d look for internships or contract roles if they can’t find a job — the most popular answer. Other common backup plans include taking more time to focus on their job search (39%) or picking up a summer job outside of their intended industry (33%).

Meanwhile, just 31% of undergraduates say they would go to grad school if they can’t find a job in their field, though women are more likely to consider grad school as a backup plan than men (37% versus 24%).

Backup plans are great, but Schulz advises students not to rush into an expensive decision (like grad school) without giving it plenty of thought — and themselves a reasonable timeline for finding a job.

“For any college graduate, it is important to temper your expectations when it comes to how long it will take to land that first job,” Schulz says. “Even in the best of economies, job searches take time, patience and persistence. In uncertain times, such as the one we find ourselves in now, that’s especially true. Of course, you hope and aim for the best, but having a plan B and plan C can be a good idea too.”

Majority of students think college has prepared them for a job

Nearly 6 in 10 undergraduate students (59%) think college has prepared them for a career. That’s particularly true among those with student loans (64%) and students with one (62%) or more (62%) parents who’ve attended college.

It’s unclear, however, how much internships — an often-valuable introductory experience — play a role in whether students feel prepared. The majority of college students (68%) haven’t had one yet, including most undergraduate juniors (69%) and seniors (59%). Of the students who have had internship experience:

  • 23% had a paid internship
  • 10% had an unpaid internship

While internships can offer some vital career insights, it isn’t necessarily a choice for many students — in fact, 43% say they’re required to complete one to graduate.

Passion vs. pay: What matters most to students

When choosing a college major, students typically pick something that they think will lead them down a career path. And yet when they were asked what mattered more to them — passion or pay — when making that decision, the answer may be surprising: Only 40% of today’s undergraduates picked their major based on salary or earning potential. Instead, most (60%) prioritize passion over potential earnings. Broken down further, a higher percentage of women (65%) than men (54%) choose to pursue a field they’re passionate about, while a significant percentage of men prioritize money (46% of men versus 35% of women).

Students didn’t just consider passion or potential pay when they selected a major, though. When asked about the different factors that went into choosing their major, 73% said their general interest in the field impacted their choice in majors. Meanwhile, 56% said they considered their future potential salaries. Other top factors include lifelong career dreams (39%) and their potential to give back or be fulfilled (32%).

But deciding on their chosen field doesn’t always come easy, as 35% of students have changed their major. Of these, 25% have switched majors once, and 8% have switched majors twice.

Unsurprisingly, students are more likely to have changed their major at least once by the time they reach their fourth year — 45% of fourth-year students have changed their major, compared to 24% of first-year students.

Students prioritize colleges’ location and costs, yet debt remains a fact

Of the factors students consider when selecting a college, location (73%) tops the list, with cost not far behind: 72% of students say what they have to pay for their education impacted their college choice.

Cost can be a particular concern for students who’ve taken out loans — yet even with the possibility of graduating in a recession, 80% of those with student loans are at least somewhat confident they’ll be able to pay them back. That doesn’t mean they’re not stressed about it, though — in fact, a recent Student Loan Hero survey on student loan repayment fears found that 55% of undergraduate borrowers are at least somewhat worried about paying their debts back.

Following location and cost, students most commonly select schools based on the specific programs of study available (49%). This comes as 74% of students say they selected a major prior to enrolling in school, with women more likely to do so than men (77% versus 70%).

How to find a first job, even amid a recession

Though looking for your first job may feel more unpredictable during a potential recession than in periods of economic stability, expert recommendations remain the same — have a plan and be realistic about it.

The top tip Schulz has for students entering the job market? Network, network, network.

“Who you know is often more important than what you know,” he says. “Leverage relationships that you have through your family and friends, college alumni associations and anywhere else you can think of. It can feel awkward and weird to reach out to folks about your job hunt, but the truth is that people you know and love are so often rooting for you and willing to help — so let them. It can be the difference between standing out or getting swallowed up in a sea of resumes.”

Those who’ve taken out federal student loans can expect some relief while they navigate the job market. In addition to the growing number of repayment assistance programs available to students with loan debt, repayment on federally held loans remains paused through the end of 2022. Meanwhile, the Biden administration’s federal student loan forgiveness plan — which was announced on Aug. 24 — may wipe up to $20,000 in student debt for those who need it most before payments resume.

While that’s good news, Schulz says it shouldn’t change anyone’s post-graduation plans.

“You’re better off planning for the worst and hoping for the best,” Schulz says. “That means that you should anticipate having to pay your student loans in full over the years and you should budget accordingly. The loan forgiveness plan doesn’t change the fact that college is insanely expensive and is going to remain so for the foreseeable future. Knowing that, you need to ask some tough questions, make some hard decisions and be prepared to make some real sacrifices in the pursuit of higher education.”