Jack Freeman, Ben Affleck, is a 22-year-old about-to-graduate artist at the University of California, Santa Cruz, nursing a fresh heartbreak from his ex-girlfriend Dina. He shares a house named El Rancho with four friends who are all standing on the cusp of adulthood in their own ways. Rob, Sam Rockwell, is also finishing up and plans to move to Los Angeles with his girlfriend Joanie, Megan Ward, though he worries about settling down and living so close to Joanie's mother, Mary Woronov. Dennis, French Stewart, is a perpetual student with three degrees, who after six years at UCSC is set to begin an MBA program in Michigan. Mickey, Vinnie DeRamus, is a cartoonist with one year of college left; he harbors feelings for his friend Chelsea, Alyssa Milano, but hesitates to admit them. Josh, nicknamed “Slosh,” Vien Hong had a bright academic future but chose a looser path of drinking and menial jobs.
Their art world gets a nudge when professor Luther, John Rhys-Davies, critiques Jack’s final sculpture as revealing a safe, suburban middle-class outlook. Luther does praise Dennis’s thesis—a photo-essay of Slosh getting drunk and stuck in dead-end work—and hints at his own motives, which Jack suggests might involve a homosexual interest in Dennis; Dennis dismisses that idea, but the seed of doubt stays.
Rather than part with their college life, Jack convinces the group to stay at El Rancho for one more year. They celebrate with a party where Chelsea makes a bold move toward Jack, who gently turns her down; she leaves humiliated, and Rob and Joanie’s tensions flare, ending with Joanie walking out.
After the ceremony the next day, Rob and Joanie reconcile and meet Joanie’s mother, with whom they get along surprisingly well. Jack’s parents arrive and depart abruptly after a heated exchange about his future. In a hopeful moment, Jack encourages Mickey to pursue a relationship with Chelsea, who seems to respond to the possibility.
Luther then exposes his flirtatious side by making a pass at Dennis during a faculty lunch, confirming Jack’s suspicion about his motives. Dennis and Jack vent their frustrations by cutting down a totem pole that Luther’s students spent two semesters creating, a symbolic moment that underscores the fragility of their art-filled world.
That night on a beach bonfire, Slosh tells Jack that his carefree approach to life helped him decide to leave college behind, and he doesn’t regret the choice or fear the unknown ahead. Inspired by Slosh, Jack attempts to win back Dina, but she rebuffs him.
Back at El Rancho, Mickey admits his true feelings to Chelsea, and the two share a quiet kiss, adding a glimmer of romance to their already tightly-knit circle. The friends realize it’s time to move on with their lives, not to cling to the house or to the past. They smash their furniture and even destroy the bar counter they built together, a cathartic farewell to the memories they’ve forged there.
The next morning, the five friends take separate paths: Rob leaves for Los Angeles with Joanie, Dennis heads to Michigan for his MBA, Mickey and Chelsea begin dating, and Slosh takes up residence with a new group of students, proudly hanging the El Rancho sign on their house. As Jack drives away, he stops at a restaurant where Dina eats with her new boyfriend, Michael Stephen Ferrari, and writes “angst for the memories” on the window as a final, bittersweet farewell.
