At the end of every semester, college students are given a grade for their academic performance. If they were graded on their knowledge of typical starting salaries after graduation, they'd receive an F.
The actual starting salary for entry-level workers is $55,911, but college students are so out of touch with reality that the minimum amount they'd accept at their first job is $72,580 on average, according to a new study published on Clever's sister site, Real Estate Witch.
If students' compensation demands weren't enough of a head-scratcher, they also have unrealistic assumptions about college, student loans, and their job search. Here are five major misconceptions college students have about the job market after graduation.
1. Students overestimate their starting salary by $30,000
College students might be good at partying or throwing a Frisbee, but they’re flat-out bad at estimating how much they’ll make at their first job.
Undergraduates expect to make $84,855 on average one year after they graduate, according to Real Estate Witch. That’s nearly $30,000 more than the actual starting salary of $55,911.
College students might wildly overestimate their starting salaries because of a tight labor market and major wage gains over the past few years.
With inflation pushing the cost of homes, gasoline, and everyday goods higher, students may also legitimately need more money to live comfortably.
But Gen Z seems to be taking note of recent headlines about layoffs and a cooling labor market.
Students in 2023 actually expect to make $19,000 less one year after graduation than they did in 2022.
2. College students expect to make double the average mid-career salary
College students’ delusions of grandeur aren’t limited to the early stages of their career. Zoomers anticipate making an average of $204,560 a decade after graduation, according to Real Estate Witch. That’s more than twice the $99,000 salary mid-career employees earn on average.
Of course, college graduates do earn more than workers without a degree, but Gen Zers envisioning a sports car, big house, fancy vacations, and early retirement on a six-figure salary are likely to be disappointed in the next decade.
3. All students overestimate their earnings, but the most unrealistic majors may be a surprise
Although 80% of undergraduates say they're aware of the typical salary range for professionals in their field, 78% overestimate what they'll make at their first-entry level job, according to Real Estate Witch.
Some majors are more likely to overestimate their earnings than others.
Liberal arts, psychology, and journalism are all courses of study with a reputation for low pay. College students in those majors have unrealistic salary expectations, but students who are the most prone to overestimate their future earnings major in a field associated with money itself: business.
Business majors expect to make $98,113 one year after graduation — twice the average starting salary of $50,200, according to the study. A decade after graduation, business majors expect to make an average of $223,679. The actual mid-career salary for business majors is less than $90,000.
4. College students don’t think they’ll ever have to work entry-level jobs
College students’ misconceptions about entry-level jobs don't stop at salary.
About 61% of undergrads believe they won’t ever have to work entry-level jobs because employers will recognize their potential and offer them senior-level positions right away, according to Real Estate Witch.
The irony is that many entry-level jobs actually require years of experience, making it difficult for students to land their first job. Forget about being hired as a manager. Once they start applying, zoomers might appreciate the opportunity to fetch coffee for superiors.
Gen Z also expects faster-than-average promotions. More than 3 in 4 college students (76%) think they’ll be promoted within the first year at a job, which is about two years earlier than average.
5. Undergrads believe their salaries will help them repay student loans faster
The standard loan repayment plan lasts 10 years, but with sky-high salary expectations, 94% of college students don’t think they’ll need a full decade to repay their loans. They’re wrong. It takes borrowers nearly 20 years on average to pay off student loans.
In this way, overestimating starting salaries doesn’t just affect students' short-term financial future. Failing to understand a normal entry-level salary could cause them to carry student debt into middle age, which may hinder their ability to buy a house, have children, or experience other life milestones.