As students head back to college, many will be choosing their major. When I attended college decades ago, I gave very little thought to my major course of study. In fact, I was more guided by which was the easiest path to victory (a college diploma)! For me, that ended up being a marketing major within the school of business. Fortunately, that worked out well for me, and a marketing background proved valuable for my career.
Today, it’s much more critical to make a thoughtful, good decision around choosing your major for two big reasons:
- Starting and lifetime income. Comparing the graduates who are top earners versus the bottom earners is quite an income gap. When you think of top earners, think STEM (science, technology, engineering, math), particularly engineering. Engineers, as high earners, received median incomes of between $75,000 and $100,000…representing the most marketable degrees. At the bottom were the arts, especially visual and performing arts, where the median salary is $32,000…about $10,000 above the poverty line for a family of four.
- Employment opportunities. In a world where we are at record employment rates, there is a significant discrepancy between the top and bottom careers. For our engineers, unemployment is a meager 1.6% compared to our theater and drama arts graduates at 5.2%. If you were to add in a periodic recession, you’d see that gap widen dramatically.
Why Does This Matter?
This matters because the cost of a college education continues to rise. Tuition and fees for private colleges average about $35,000 per year. In-state public college tuition and fees average about $10,000 per year. Add to this all the other expenses such as room and board, and you are talking a serious investment over four to five years. Typical student loans total between $20,000 and $25,000, so you can imagine graduating with $25,000 or more in student loans with job prospects of $32,000 of annual income.
Students and their parents need to focus on the return-on-investment in a college education. Long gone are the days (like I had) when you can meander through college without considering the long-term results of your decisions.
Follow The Welch Group every Tuesday morning on WBRC Fox 6 for the Money Tuesday segment.
WBRC Fox6 Talking Points
“Choosing the Wrong College Major Could Cost You BIG Bucks!”
- Most valuable majors…Engineering ($75,000 – $100,000)
- Least valuable majors…Arts ($32,000 – $38,000)
- Typical students loans…($20,000 – $25,000)
Takeaway: As parents and students, understand the likely return-on-investment of your college education.
Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specialize in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books including J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group. Consult your financial advisor before acting on comments in this article.