AI Is Undermining University Degrees

Why Employers Must Rethink Graduate Hiring

Since 2020, an entire generation of graduates has completed much of their education from home. They sat exams online. Many also used AI tools for large parts of their coursework.

This reality raises an uncomfortable question: if the credentialing process itself has weakened, what value does a degree now hold?

The Scale of the Problem

AI use in education is already widespread. In Australia, reporting by the Sydney Morning Herald found that around 40% of university students admitted using generative AI on assessments when it wasn’t allowed.

In the US, OpenAI research shows more than one-third of college-age young adults have used ChatGPT, often for homework and writing tasks.

Universities have tried to respond with AI detection tools. These systems fall short. Critics repeatedly call them unreliable, and research shows they disproportionately flag non-native English speakers while missing more sophisticated misuse.

Why This Matters for Employers

This credential crisis carries real consequences.

Employers increasingly question whether AI-assisted degrees reflect genuine capability. Public trust in higher education has already declined over the past decade. Widespread AI use now accelerates that scepticism.

Today’s AI-reliant students become tomorrow’s employees. Many will enter the workforce without strong foundations in independent thinking, judgement, or basic literacy.

Organisations do not need to abandon graduates. They need to change how they assess them.

Move from Credentials to Capability

Psychometric assessment offers a more reliable alternative.

Cognitive ability tests measure verbal reasoning, numerical reasoning, and logical thinking in real time. Candidates cannot outsource these tasks to AI in a proctored setting. These assessments strongly predict workplace performance and provide objective data that transcripts no longer guarantee.

Personality assessment adds another layer. Tools like Hogan show how candidates perform at their best, how they behave under pressure, and what drives them. Built-in validity scales also flag rushed, careless, or overly managed responses, which makes gaming the system difficult.

Rethinking the Graduate Pipeline

For some roles, organisations may choose to bypass traditional graduate recruitment altogether.

The data is instructive. In Australia, VET graduates earn more on average than university graduates and secure full-time work at higher rates: 78% versus 69%. That figure rises to 82% for apprentices and trainees.

Trainees learn in real workplace settings. Employers shape skills to real needs. This approach removes the costly uncertainty around whether a credential reflects true competence.

A Practical Hiring Framework

Organisations ready to act can start with a simple four-stage process:

1. Cognitive ability screening

2. Personality profiling

3. A practical task completed under observation

4. Structured behavioural interviews

Where appropriate, build traineeship pipelines as an alternative to graduate programs.

The Bottom Line

The traditional model, which treats university credentials as a proxy for capability, no longer works.

Organisations that adapt their recruitment practices now will gain a clear advantage. They will identify people who can actually do the work, not just present the credentials.

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Justin Miles

Manager Partner, Melbourne at Generator Talent

Justin is the Managing Partner of our Melbourne office, an outcome focused leader with a track record of driving business performance through proven talent and organisation development practices. Justin’s methods and skills have been shaped by working with performance oriented leaders in great companies including PepsiCo, The Campbell Soup Company, Diageo, Rip Curl, Fonterra and Wesfarmers, in Australia, the USA and Latin America.