Recent college graduates are facing the most challenging entry-level job market in five years, with only 30% of 2025 graduates finding full-time employment in their field of study, according to a new report from Cengage Group.
Three-quarters of employers (76%) report hiring the same number or fewer entry-level workers compared to last year—up from 69% in 2024. The shift represents a dramatic reversal from 2022, when 65% of employers struggled to find entry-level talent. Today, only 35% report such difficulties.
The contraction stems from multiple factors: a tight labor market (cited by 51% of employers), the increasing adoption of artificial intelligence (46%), and broader economic pressures (46%).
As competition intensifies, degree requirements are making a comeback. Seventy-one percent of employers now require a two- or four-year degree for entry-level positions, up sharply from 55% in 2024. This trend reverses the recent movement toward skills-based hiring, with only 22% of employers eliminating degree requirements in 2025 compared to 48% the previous year.
The employment statistics tell a stark story: 33% of 2025 graduates remain unemployed and actively seeking work, compared to 20% of 2024 graduates. Meanwhile, 26% have found jobs unrelated to their field of study.
Perhaps most troubling, 48% of recent graduates report feeling unprepared to even apply for entry-level positions in their field. Only 51% express confidence in their AI skills when job hunting—a critical gap given employers' emphasis on technological adaptation.
The report, which for the first time surveyed educators alongside employers and graduates, reveals a fundamental misalignment in skill priorities. Employers ranked job-specific technical abilities as their top concern, while educators placed these skills dead last, instead emphasizing soft skills like critical thinking and problem-solving.
This disconnect persists despite educators' confidence: 89% believe their students are workforce-ready. However, graduates tell a different story, with many reporting inadequate preparation for today's job market demands.
"While most educators believe their students are prepared to enter the workforce, graduates tell a different story," said Kimberly Russell, senior vice president of research, user experience and design at Cengage Group. "Half of educators dedicate 20% or less of their curriculum to workforce skills."
The data reveals that professional connections often matter more than coursework. Graduates report that personal referrals (25%), internships and prior work experience (22%), and interview skills (20%) prove more decisive in securing employment than their degree itself (17%).
Yet 20% of graduates say their education programs failed to help them build professional networks. Additionally, 35% wish their programs had worked more closely with employers to develop career-relevant courses and skills.
Michael Hansen, CEO of Cengage Group, framed the findings as both a crisis and an opportunity for higher education.
"The widening career readiness gap, along with the growing demand for upskilling driven by technological advancements like AI, is creating an urgent need to rethink how we equip learners for future employment," Hansen said. "Closing this skills mismatch is essential to narrowing the wealth gap."
The report arrives as higher education faces mounting pressure to demonstrate value and return on investment. With graduate debt levels remaining high and job prospects uncertain, institutions may need to fundamentally rethink their approach to workforce preparation.
The findings suggest the need for deeper collaboration between educational institutions and employers. Hansen said that addressing these gaps requires putting "employability at the center of learning" to ensure graduates are prepared not just for their first job, but for long-term career success.
