Personal Finance

New college graduates are overestimating their starting salaries by $30,000, report finds

Key Points
  • Overall, job prospects look good for the class of 2023.
  • The average starting salary for recent graduates is now nearly $56,000.
  • However, current college students expect to earn much more — almost $85,000 — in their first job, according to one report.
How a New York school disrupts education to prepare Black, Latino students for six-figure tech jobs
How a New York school disrupts education to prepare Black, Latino students for six-figure tech jobs

New college graduates negotiating their first salary may be in for a rude awakening.

In the midst of a historically strong job market, characterized by low unemployment, rising wages and a high degree of job-seeker confidence, those armed with a degree are feeling relatively good about their earning potential.

In fact, today's undergraduates expect to make about $84,855 one year after graduation, according to a survey of college students by Real Estate Witch, part of real estate site Clever, in March.

More from Personal Finance:
How new grads can better their odds of landing a job
A pilot program aims to get students into accounting
This strategy could shave thousands off the cost of college

Yet, the average starting salary for recent graduates is just shy of $56,000, Real Estate Witch found, a difference of nearly $30,000.

College grads won't take less than $72,000

Although the vast majority — or about 97% — of students would consider lowering their salary expectations, they wouldn't work for less than $72,580, on average, at their first job, Real Estate Witch found.

The disconnect between perception and reality only worsens over time. A decade into their careers, students anticipate making more than $204,560. That's well over the average midcareer salary of $98,647, according to Glassdoor.

Hiring outlook for the class of 2023

A City College of New York graduate takes a selfie during the commencement ceremony.
Mike Segar | Reuters

On the upside, employers plan to hire about 4% more new college graduates from this year's class than they hired from the class of 2022, according to a report from the National Association of Colleges and Employers.

Although that's down significantly from earlier projections, "the overall picture is still positive for the class of 2023," said Kevin Grubb, associate vice provost of professional development and executive director of the career center at Villanova University.

"A lot of our students have a job heading into graduation," Grubb said.

They just won't necessarily be paid more than last year's graduating class.

The average starting salary for this year's crop of graduates is projected to level off, according to a separate survey by NACE. Typically high-paying disciplines, such as engineering, math or computer science, will pay nearly the same or lower than last year, NACE found.

As of April, businesses paid new workers 6.6% less than new hires last year, although the salary declines were more pronounced in finance, insurance and other professional services, according to data from payroll provider Gusto.

But for recent or soon-to-be grads entering the job market, getting experience is even more important than a good salary, said Luke Pardue, an economist at Gusto.

"If they can gain the skills, they can parlay that into a better job later on."

Subscribe to CNBC on YouTube.