Trying times: high youth unemployment and soaring college debt are a real challenge for those just entering the workforce.

• Author: Smith, Patricia
• Position: Cover story

With four months left until she graduates from New York University, Kacey Herring has already spent countless hours combing through job offerings in the school's online database. She's perfected her resume and gathered letters of recommendation. She's even enrolled in a job-search boot camp run by investment firm Morgan Stanley.

So far, nothing has led to a job offer.

"The end goal is to work in entertainment marketing, but at this time, in this economy, I just need a job," says Herring, a 21-year-old from Houston. 'Tin very anxious about this."

Times are tough for America's Generation Y, sometimes called the Facebook generation. While today's young people have some amazing advantages--including access to a global economy, unprecedented mobility, and ease with technology--it's been hard for many of them to find jobs. Almost 12 percent of Americans under age 25 are unemployed. That's substantially higher than the overall unemployment rate of 7.8 percent, and it amounts to nearly 6.5 million young people who are neither in the workforce nor in school.

"Every way you cut it--by race or gender, with or without a college degree--young people are just not getting the job opportunities they need," says Heidi Shierholz of the Economic Policy Institute in Washington, D.C.

A Slow Recovery

The U.S. economy is slowly recovering from the Great Recession. In fact, the youth unemployment rate is far below its peak of 18 percent in 2009. But more than 12 million Americans are still unemployed. With so many job seekers to choose from, employers are filling entry-level positions with more experienced workers, leaving many college graduates working at hourly jobs at the Gap or Starbucks, or in unpaid internships.

The difficult job market is coming at a time when paying for a college degree has become harder. With tuition continuing to rise at both public and private universities, the average college graduate in the U.S. left school with $26,500 in student loans in 2011, according to the Institute for College Access and Success. That's about double what it was 20 years ago.

Jillian Potter went to Anderson University in Indiana. She figured she'd have to borrow about $10,000 a year. But the tuition increased every year, and because she didn't decide on a major until she was a junior, she needed five years to graduate. Now 25, Potter is a social worker and she owes $80,000.

"The overall message was, 'It's doable and normal to go into that much debt,'" she says. "I try not to think about it."

If young people are taking on more debt to pay for college, they're also paying more themselves: 44 percent of students today say that work or personal savings helped finance their higher educations, according to a survey of recent graduates by Rutgers University in New Jersey. That makes the issue of finding a good job all the more pressing.

"Today's young people are very focused on trying to work hard and to get ahead," says Carl Van Horn, a labor economist...