New study: what you study in college matters more than where you go to college

What you study matters more
What you study matters more (click for larger image)

This study was reported by the leftist The Economist.

They write:

A new report from PayScale, a research firm, calculates the returns to a college degree. Its authors compare the career earnings of graduates with the present-day cost of a degree at their alma maters, net of financial aid. College is usually worth it, but not always, it transpires. And what you study matters far more than where you study it.

Engineers and computer scientists do best, earning an impressive 20-year annualised return of 12% on their college fees (the S&P 500 yielded just 7.8%). Engineering graduates from run-of-the-mill colleges do only slightly worse than those from highly selective ones. Business and economics degrees also pay well, delivering a solid 8.7% average return. Courses in the arts or the humanities offer vast spiritual rewards, of course, but less impressive material ones. Some yield negative returns. An arts degree from the Maryland Institute College of Art had a hefty 20-year net negative return of $92,000, for example.

I think if you are looking for a great way to be out of debt before you are 30, it’s a great idea to do your first few years at community college, get rid of all your generic prerequisite courses, then move on to college/university to do your computer science/engineering courses, and then graduate.

Here is the nightmare scenario: you go study a non-stem major at an expensive university, come out with a ton of debt and NO JOB in your field. A much better solution is to go to a less-expensive, less-presitigious school that has a good STEM program in the area you want, and then get in and get out as quickly as possible. Make sure that you either do internships or work in the summer in your field. At this point, you should be willing to pay your employer for letting you work for them, or volunteer – you want to get a company name on your resume, and a name added to your references before you graduate and start looking for a real full-time job. Any pay they give you should be considered a bonus – that’s how important it is to work in your field before graduating. The before-graduation work experience will help you to know what skills are in demand, too – which will improve your course selection. You might even be able to get a mentor from the company you work for to advise you.

The longer you go without working related to your field, the harder it is to be competitive in the job market.  It’s very important to get debt paid off – especially now, because interest rates are going to be rising soon. You definitely want to start investing as soon as possible, so you can use that interest rate in your favor as you head towards retirement. It’s a rocky road ahead with an $18.5 trillion debt, a demographic challenge from the large number of retirees, and the decline of marriage and family. It makes sense to focus on financial issues as early as possible, and have a good plan.

6 thoughts on “New study: what you study in college matters more than where you go to college”

  1. Going to community college for all the pre reqs is great advice. That’s what our two oldest kids did and it’s cost effective. I’d like to see more trade schools too, more apprenticeship programs.

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  2. And choose your community college professors carefully. The lower division classes I taught at the CC where I was employed for 17 years were identical in depth and rigor to the ones I taught at UC Irvine. Loved comments on Rate My Professor such as “Says he’s the toughest professor on this campus. BELIEVE HIM.” Do your homework and choose the best, not the easiest.

    I will take exception to Wintery’s obsession with STEM. Not everyone is cut out for STEM work (I would rather poke sharp sticks in my eyes). Find any field that will train you to be useful to others and then be the best at it. I studied Communication for all three degrees, and it has served me well — and not just in the education field. I walked away from a tenured position about 10 years ago (left while I still enjoyed students) and have worked quite successfully in the private sector ever since. People hate public speaking, and so will pay me to do it for them or to train them to do it well.

    But he is dead right about internships. Unfortunately, in California, my son had an internship with a company, then they had to let him go. You see, the internship was not connected to a “sanctioned” internship program through a local college, and California law prohibited my unskilled son from learning a trade skill without the tradesman paying my unskilled son to learn from him. He was fit to be tied. Me too.

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