Friday, May 8, 2015

College Majors, Grades and Expenses ... Choose Carefully

Yesterday we wrote about the value of 'Getting That Valuable College Degree While Avoiding Student Loans....' Today we'll add the rest of the important things to consider for our students and their families when preparing for and entering the college years.

For those interested in reviewing a comprehensive assessment of the benefits of graduating from college, majors of study, and getting good grades, A college degree is worth $1 million contains a link to the 'study' published by the Georgetown University Center on Education and the Workforce:

"College graduates earn $1 million more than high school graduates over their lifetime, and the income gap between the highest-paid college majors and the lowest-paid is more than $3 million dollars. This is all according to a study released Thursday by the Georgetown University Center on Education and the Workforce. The study analyzed wages for 137 college majors to discover the economic benefit of earning an advanced degree by undergraduate major.

“Not all bachelor’s degrees are created equal,” the report concluded. Among the 15 groups of college majors studied, architecture and engineering majors are paid the most and education majors are paid the least. Graduates with degrees in top-paying college majors earn $3.4 million more than those with the lowest-paying majors over a lifetime. Not surprisingly, STEM (science, technology, engineering, and mathematics) and health and business majors are the highest paid, leading to average annual wages of $37,000 or more at the entry level and an average of $65,000.

Others don’t fare as well, however. The 10 majors with the lowest median earnings include childhood education (with an annual median salary over their lifetime of $39,000 a year), human services and community organization ($41,000 a year), studio arts, social work, teacher education, and visual and performing arts ($42,000 a year), theology and religious vocations, and elementary education ($43,000 a year), drama and theater arts and family and community service ($45,000 a year). . . .

Student debt is still a heavy burden for the average college graduate. As of May 2015, the average student loan amount was $32,956 per borrower, and it remains the largest source of household indebtedness next to mortgages, according to Federal Reserve and U.S. Census data crunched by personal finance site College graduates were carrying a total of $1.3 trillion in student loans as of December 2014, up $912 million from five years earlier, Federal Reserve data found."
{NOTE: With that summary background and reference to the detailed study, now let's look a little closer at the issue of college and its importance to future earnings.}
As we remarked yesterday, a college education is a good start to adulthood, and graduating without debt is an absolutely great beginning.

That said, that's not all there is to the story. What we learn about showing up, acting right and developing the habit of improvement are each and all important as well.  And what major we select for study and our class ranking upon graduation (how good our grades are) will prove to be critical to getting off to a good start for our young graduate and his future success in adulthood.

College Majors Figure Big in Earnings has this to say about all that, and you are encouraged to click on the link to view the article's various tables comparing compensation for the different majors and how the student's class ranking affects that compensation:

"Want to make a good living? Go to college. Just be careful what you major in.

On average, college graduates earn about $1 million more in their lifetimes than do adults who only completed high school. But long-term earnings prospects vary widely by subject, and the income differentials across certain majors dwarf those between graduates and non-graduates, according to a new report from Georgetown . . . .

The findings . . . add fuel to an already heated debate over the value of a college education amid skyrocketing student-loan debt and a still-tepid job market for fresh graduates. . . .

The latest Georgetown report shows that sweeping statements about college graduates’ earnings—whether based on first-year outcomes for an entire school or even averages within fields of study—say little about prospects for individual graduates. . . .

The top 25% of earners who majored in finance can expect annual earnings of more than $100,000, while the bottom quartile may bring in just about $50,000 a year.

“When people see a median, they think it’s destiny,” Mr. Carnevale (of Georgetown) said. “It’s not. There are people above and people below.”

Similarly, the Brookings Institution’s Hamilton Project found last fall that lifetime earnings for economics majors at the 90th percentile are nearly triple those at the 10th, reflecting the range of destinations for such experts in government and the private sector. . . .

Melissa Kearney, an economics professor at the University of Maryland and director of the Hamilton Project, said salaries should factor into, but not necessarily dominate, decisions on majors.

“People have to think very carefully about what they’re good at,” she said. “Yes, engineering pays very well. But that’s not going to serve someone who really struggles with quantitative skills.”. . .

Ms. Davis, 21 years old, hopes to land a full-time job working as a community organizer at an environmental nonprofit, where she expects to earn $35,000 to $40,000.

“I’ve found my calling,” she said. “I know the money’s not lucrative, but I couldn’t see myself doing anything else.”"

Summing Up

College degrees are definitely a nice thing to have.

Getting one takes both considerable time and money, however, and it's perhaps the biggest and most worthwhile investment many of us will make in life.

Sadly, too many young people don't treat it as the life changing experience it is and should be for the better.

Where we go, how much we spend, whether we borrow, work part-time, graduate on time or take another year or two to get that degree, what we major in, how solid our grades are, what extracurricular activities we pursue, the lifetime friendships we develop and lots of other factors enter into the value of the college education we earn.

It's up to us, in other words.

Let's encourage our young friends to make the most of their time and opportunities. They'll be the better for it.

That's my take.

Thanks. Bob.

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