Everything depends upon your budget. This is the first thing that you have to be clear about. Then, you can decide how many people you are inviting. As for food, you can have them prepared at home or you could get the help of caterers. If your home has a large amount of space that can be spared, for instance, a garden or a terrace, then it is better to arrange the party at home. Otherwise, you could check with the local restaurants. You could hire a DJ for the music or you could make do with your home stereo. Themes add fun to the party although they are not necessary. Choose one that suits their course of study or common hobbies. Apart from this expenditure, you also have to account for napkins and materials for decoration.
Though food and music are the most vital ingredients of any party, you could make your graduation dinner special by adding a few things. You could get some personalized gifts for the graduates. Such a gesture will put a stamp of happy remembrance on your gifts. It could be T-shirts, photo frames or plaques. You could engrave their names, their designation, a poem, a logo or some thoughtful words on the gifts. This will be the icing on the cake.