Return on College InvestmentSubmitted by Kaizen Financial Advisors, LLC on March 13th, 2015
Let’s say you’re giving your niece or grandson some advice on which major to select in college. Do you tell them to get an art degree, or take courses in social sciences? Or should they focus on business and finance?
The decision should not ignore their natural abilities and interests, of course. But if they’re looking for the best return on their tuition dollar, then they might consider spending their time in computer sciences and math.
This information comes from a report published by PayScale.com, which helps people manage their careers and figure out what they’re worth on the job market. PayScale’s research team tracked the median salary for people who completed its salary survey online. They then compared the 20-year earnings of people following different careers with what competing workers with a high school diploma but no college degree earned, on average. Then they subtracted the cost of 4 years of college tuition from those earnings, to arrive at a return on investment figure—the monetary value provided by the degree. (Advanced degrees like law and medicine were excluded; the survey focused on bachelors degrees.)
The highest ranking majors, by this metric, were computer science and math, whose degree-holders saw a net return on their tuition investment of $584,339 over the 20 years after graduation. Coming in a close second were architecture and engineering graduates, whose average ROI came to $561,475. Third were business and finance majors, with a respectable $331,345 average ROI over 20 years, just ahead of people in sales, marketing, and public relations ($318,212).
Majors in life sciences, physical sciences, and social sciences fared somewhat less well, earning almost exactly $250,000 more than their high school diploma competition. Graduates with arts, design, entertainment, or related degrees came in last in the survey; they are expected to make a little over $125,000 as a result of their college training.
Interestingly, the PayScale website also tracks the average return on tuition investment for different colleges. As the figure below shows, graduates of Harvey-Mudd College in Claremont, California can expect to earn nearly $1 million over the 20 years after graduation, with a typical starting salary north of $75,000—with a 4-year college investment of $237,700.
As you can see, institutions ranked two through 10 include the California Institute of Technology ($901,400 earnings; $221,600 cost); The Stevens Institute of Technology in Hoboken, NJ ($841,000; $232,000), the Colorado School of Mines in Golden, CO ($831,000; $112,000); Babson College in Wellesley, MA ($812,800; $230,200); Stanford University ($809,000; $233,300); the Massachusetts Institute of Technology ($798,500; $224,500); Georgia Institute of Technology ($796,300; $86,700); Princeton University ($795,700; $217,300); and the Virginia Military Institute ($767,300; $95,700).
You can look up your own alma mater here: http://www.payscale.com/college-roi/