College Students’ Paycheck Hopes Don’t Match Reality

NOTD - $48,620

That’s how much college students, inspired by the robust job market and reports of rising wages, are overestimating the starting salary for their first job.

After they ditch the cap-and-gown for the business suit, undergraduates are expecting to step into a six-figure salary, a  survey of 1,000 students taken March 23-26 by online real estate information provider Real Estate Witch showed. But the $103,880 a year they think is waiting for them is 88% higher than the actual average starting salary for recent graduates, $55,260. And many of them will also be facing significant debt: 29% said they racked up more than $50,000 in student loans, while 43% will carry at least $30,000 of student debt into postgraduate life.

U.S. student loan debt reached $1.747 trillion and the average federal student loan balance was $37,113 as of April 10, according to the Education Data Initiative. Yet only 48% of the students surveyed by Real Estate Witch said the debt they took on was worth it, and 40% said they regretted even attending college.

“One of the most common regrets students have is accumulating too much student debt, especially for a degree that doesn’t translate into a well-paying job,” the report said.

President Joe Biden signaled this week that he was considering forgiving some student loan debt, following several pandemic-inspired freezes on student loan repayment obligations and his campaign promise to forgive up to $10,000 in student debt.

College students haven’t always had such optimistic expectations about their first paycheck. Just three years ago, students said they anticipated a $57,964 starting salary, about 23% more than the actual $47,000 median starting salary in 2019. 

“The strength of the economy has likely inspired unrealistic salary expectations that will leave students disappointed,” the report said. 

Have a question, comment, or story to share? You can reach Terry at tlane@thebalance.com.

Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!

Article Sources