When a person graduates from college, although they have a degree they may not be able to get a job because they don’t have experience. But, they can’t get experience unless they get a job.
The term was first coined by Dain Lewis on his blog the smart college grad.
Jack graduated from college with a degree in business. But, Jack didn't work at any businesses while in college. Jack then couldn't get a job after college because he didn't have experience. But, he couldn't gain any experience because no one would hire him. Jack found himself in the college graduate dichotomy.