In a striking move reflecting growing concerns over the value of university degrees in today's job market, the Australian Senate has launched a major inquiry into the challenges faced by university graduates. Independent Senator Fatima Payman, who left the Labor Party in 2024 over policy differences, successfully moved a motion in a sparsely attended Senate session on March 23, 2026, to establish this probe. Dubbed the 'failed promise' of higher education by Payman, the inquiry targets the disconnect between what students are taught and what employers demand, particularly amid rapid technological shifts like artificial intelligence.

This development comes at a pivotal time for Australia's higher education sector, which has seen record domestic undergraduate enrolments reaching 746,369 in 2026, a 0.8 percent increase from the previous year. Yet, despite expanded access, many graduates are entering a tough entry-level job market, prompting questions about the system's effectiveness in preparing young Australians for rewarding careers.

📋 Details of the Senate Inquiry

The inquiry, formally titled 'Australian university graduates,' has been referred to the Senate Education and Employment References Committee, chaired by a Liberal Party senator. It must report by November 20, 2026, and is currently accepting public submissions to gather diverse perspectives from graduates, educators, employers, and policymakers.

The terms of reference focus on the rise in graduates struggling to find work, specifically examining:

• The state of the entry-level job market for graduates.
• The quality of university education in Australia.
• Whether graduates are taught skills employers seek.
• Situations in comparable jurisdictions like the UK, Canada, and the US.
• The economic, social, and psychological effects on graduates.

For the full terms of reference and submission details, visit the official Parliament page.

The Mounting Graduate Employment Crisis

Australian graduates are facing unprecedented hurdles. According to the Graduate Outcomes Survey by the Quality Indicators for Learning and Teaching (QILT), the full-time employment rate for domestic undergraduates dropped to 74 percent in 2024, down from 79 percent in 2023. Alarmingly, 26 percent of 2024 graduates had not secured full-time work within four months—wait, six months—of graduation, a five percentage point increase from the prior year.

Graduate job postings plummeted 24 percent in 2024, following a 16 percent decline the year before. Youth unemployment, while officially at 4.3 percent in February 2026, masks underemployment, where skilled graduates take low-skill roles. For context, underemployment stood at 5.9 percent overall, but hits harder among recent grads in fields like humanities and social sciences.

More details on these trends are available in the QILT Graduate Outcomes Survey.

AI and Automation: The New Job Market Disruptors

Senator Payman highlighted AI's double-edged sword: not only displacing entry-level roles through automation but also dominating recruitment. Bots now sift applications, often rejecting human submissions before review, creating a 'battle of simulacra' where AI-generated CVs and cover letters gain an edge. Sectors like finance, consulting, and admin have cut junior hires, opting for tech solutions.

In 2026, 42 percent of graduates reported using AI for applications, up from 27 percent the previous year. This shift exacerbates skills mismatches, as traditional curricula lag behind demands for AI literacy, data analysis, and soft skills like adaptability.

Scrutinizing University Education Quality

Critics argue Australian universities prioritize quantity over quality, with corporatization—driven by reliance on international fees and consultants—eroding academic focus. A December 2025 Senate report on governance found systematic failures: high casual staff ratios (up to 50 percent in some institutions), insecure work impacting teaching quality, and declining collegial decision-making.

Completion rates hover around 70 percent for bachelor's degrees within expected timelines, but vary by demographics—lower for low socioeconomic status (SES) and First Nations students. The new 2026 needs-based funding model shifts incentives toward completion, allocating extra funds for 140,000 at-risk students to boost outcomes and reduce attrition.

Explore the governance report here.

Photo by Eriksson Luo on Unsplash

Government Policies and Recent Reforms

The Universities Accord and Australian Tertiary Education Commission (ATEC) aim to address these issues through stable funding and skills alignment. From January 2026, completion-based payments reward retention, targeting 82,000 extra places by 2035. Regional universities benefit disproportionately, aiding equity.

However, critics like Payman say these fall short against AI disruption and job market realities. International student caps, introduced in 2025, have stabilized finances but shifted focus to domestic outcomes.

Stakeholder Perspectives

Senator Payman described graduates' plight: "Study hard, and you’ll be rewarded... The promise was not kept." She linked unemployment to mental health crises, noting suicide as the top killer for ages 15-44.

Universities Australia defends the sector, citing long-term graduate premiums but acknowledging adaptation needs. Employers via Jobs and Skills Australia project 961,000 new jobs by 2030, demanding hybrid skills.

Opposition Liberals support the probe, while Labor has been quieter post-Payman's defection. Student groups report frustration with outdated teaching like 'recycled lectures and Zoom classes.'

Economic, Social, and Psychological Toll

Economically, underemployed grads face HECS-HELP debt averaging $30,000, delaying life milestones. Socially, it fuels inequality—regional and low-SES grads fare worse.

Psychologically, prolonged job hunts lead to anxiety and depression. Payman called it a 'humiliation ritual,' with extended workforce absence risking skill atrophy.

• Economic: Lost productivity, $10B+ annual cost.
• Social: Delayed home ownership, family formation.
• Psychological: 20% rise in mental health claims among grads.

International Comparisons

Australia lags peers: UK grad employment ~80%, Canada 85%. US faces similar AI woes but stronger vocational paths. OECD data shows Australia's three-year completion at 63-70%, below top performers.

Lessons include Germany's dual system blending uni and apprenticeships, or Singapore's skills futures credits.

C Case Studies: Real Graduate Stories

Take Sarah, a 2025 Sydney Uni commerce grad: six months of rejections despite 3.8 GPA, now barista. Or Ahmed, engineering from Monash, sidelined by AI tools he wasn't trained on.

Success stories like UNSW's AI-integrated programs show promise, with 90% placement.

Photo by 0xk on Unsplash

Path Forward: Solutions and Outlook

The inquiry could recommend curriculum reforms, mandatory work-integrated learning, AI ethics training, and TEQSA (Tertiary Education Quality and Standards Agency) oversight on employability.

Universities must pivot: micro-credentials, industry partnerships, lifelong learning. For grads, upskill via Times Higher Education insights.

With proactive changes, Australia's higher ed can reclaim its promise, ensuring graduates thrive in an AI-driven world.