In 1999, the central government of China made a decision to enlarge the scale of higher education. By 2006, the number of new college students quintupled that of 1998. This study tries to find out how the expansion policy affects the incidence and wage effects of overeducation for young entrants in the labor market. We find that the probability that young entrants are overeducated increases. Compared with men, the effect of the policy on women is larger. There is evidence that the policy has a negative effect on undereducation bonuses for young entrants.