College ROI Erodes: Grads Skip Degrees, Head Straight to Work

The four-year degree is losing its shine. According to the Wall Street Journal, more high-school graduates are bypassing college entirely and heading straight into the workforce as the return on a bachelor’s degree deteriorates.

The job-finding edge has evaporated

College graduates have historically found jobs more quickly than people with only a high school degree, but that advantage is becoming a thing of the past, according to new research from the Federal Reserve Bank of Cleveland.

While job stability and compensation still tilt strongly in favor of college degree holders once they are employed, the analysis shows that the job-finding rate for young college graduates has fallen to roughly match that of high school graduates. The unemployment gap between these two groups has declined continually since the 2008 financial crisis, recently reaching its lowest level since the late 1970s.

AI is eating the entry-level rung

Traditionally, entry-level jobs have served as the training ground for young professionals, offering them a chance to learn the ropes while handling the grunt work. Today, however, many of those tasks are being automated by AI tools like ChatGPT, leaving new graduates to compete for a shrinking pool of positions.

A report from venture-capital firm SignalFire found that among the 15 largest tech firms, the share of entry-level hires relative to total new hires has fallen by 50 percent since 2019. In 2024, only seven percent of new hires were recent graduates, down from 11 percent in 2022.

Platforms like Handshake report a 15 percent drop in entry-level job postings this year, while applications per job are up 30 percent.

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Enrollment was already sliding

While college has been a popular choice, college enrollment for recent high school graduates has dropped from its peak of 70% in 2009 to 61% in 2021. Sentiment has soured in step with the numbers.

A March 2023 survey found that only 42% of Americans believe college is worth the cost because it leads to better job opportunities and higher income, while 56% believe that earning a college degree is not worth the cost.

Underemployment lingers for those who do graduate

A new study by the Burning Glass Institute and Strada Education Foundation reveals that nearly half of recent college graduates are underemployed, working in jobs that do not require a degree. Tracking over 10 million career paths from the past decade, the study highlights the long-term effects of underemployment on earnings and career progression.

For markets, that adds up to a structural challenge for higher-ed businesses and a potential tailwind for skilled-trades, staffing, and vocational names. More coverage of labor and macro trends is available in our news feed.

Options market and stocks to watch

Watch for continued pressure on for-profit and online education names as demand assumptions get repriced:

• LOPE — Grand Canyon Education. Watch for enrollment trend commentary and any softness in partner university pipelines.
• STRA — Strategic Education. Watch for guidance on adult learner demand as the ROI narrative shifts.
• CHGG — Chegg. Watch for further AI-driven disruption to its core study-services model.
• COUR — Coursera. Watch for whether skills-based certificates pick up the slack as degree demand slips.
• SLM — SLM Corp (Sallie Mae). Watch for private student loan origination trends if enrollment keeps sliding.

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