Value of college education tested as Gen Z grads face rising unemployment

The traditional advantage of higher education is being put into question as unemployment continues to rise among recent college graduates, challenging the value of degrees Asian American families have long prioritized.

By the numbers: The unemployment rate among recent graduates has risen to 5.8%, while that of the broader group of workers aged 22 to 27 has risen to 6.9%, according to the latest Federal Reserve figures. The situation is equally challenging for those with advanced credentials: Gen Z graduates with master’s degrees or higher reportedly faced a 5.8% unemployment rate in the first half of 2025, up from 3% in the same period last year. Meanwhile, 41.2% of recent graduates are underemployed, working jobs that typically do not require bachelor’s degrees, up from 38.9% last December.

Why this matters: These employment difficulties especially affect Asian Americans given their educational priorities. Among those aged 18 to 24, Asian Americans have the highest college enrollment at 61%, followed by white students at 41%, those with two or more races at 36%, Black students at 36%, Hispanic students at 33%, Pacific Islander students at 27% and American Indian/Alaska Native students at 26%, according to most recent figures from the National Center for Education Statistics. For those 25 and older, 56% of Asian Americans hold bachelor’s degrees or higher, well above the 36% rate for all U.S.-born people, as per the Pew Research Center.

As it appears, degrees no longer guarantee job security. At Harvard’s MBA program, for example, 23% of job-seeking graduates from spring 2024 were still unemployed three months later, the Wall Street Journal reported in January. Financial pressures also increase as 43% of workers have turned down job offers because pay was too low to handle educational debt.

What’s behind this: Various factors have transformed the employment landscape. Federal hiring freezes reduced government positions, while employers increasingly prioritize skills over degrees. Even internships are tough; listings on college job platform Handshake, for one, reportedly dropped more than 15% from early 2023 to early 2025.

For now, some students are pursuing alternative routes. Male college enrollment declined by about 1 million between 2011 and 2022, while vocational school enrollment has increased 20% since 2020. Economic recovery may hinge on healthcare and other service sectors as the population ages, plus entirely new careers that integrate artificial intelligence technology.