College Majors Are Not Created Equal

Faith & Finance

The Financial Impact of College Education

Going to college is a financial decision, second only to buying a house. More specifically, it’s an investment decision. Will it pay off? Perhaps the most important factor determining that is whether you graduate with a degree. Fail to do that, and any money you spend, or borrow, for college, will likely be money down the drain in terms of future earnings.

The good news is that data just released by the Federal Reserve Bank of New York shows that earning a college degree is still financially worthwhile—generally speaking. The data shows that recent college grads working full time earn about $25,000 a year more than those with only a high school diploma.

The catch is, they have to be working. That means majors chosen by college grads must give them skills that managers are willing to pay for.

Another study by the American Educational Research Journal shows that engineering and computer science degrees give the highest rate of return on dollars spent for education. They’re followed by business, health, math, and science majors.

So for example, those with a bachelor degree in engineering can expect to start out at around $80,000 a year, and significantly higher with a master’s degree. The highest paid engineers working on aircraft, satellites, bridges and other infrastructure can earn several hundred thousand dollars a year. One catch, though, you have to be really good at math.

Meanwhile, computer systems managers make, on average, a bit over $140,000, but can earn significantly more than that depending on the level of complexity and responsibility with the job.

Managing Student Loan Debt

The study also showed that education, humanities and arts majors ranked the lowest in return on investment. Now, to be clear, we’re not telling you to avoid those fields if that’s where your passion lies. But college is expensive, and it’s important to know the earning potential of any major you’re considering, especially if you’re borrowing to attend college.

U.S. Census Bureau data shows a median salary of around $53,000 for degrees in Family and Consumer Services and Fine Arts … and $55,000 for degrees in Elementary education and Social work. If that’s where you’re headed, you’ll need to watch your expenses like a hawk, and borrow as little as possible.

Now consider that according to the National Education Association, teachers with student loan debt owe an average of $56,000. We’ll take that with a grain of salt because the NEA exists to advocate for higher teacher salaries, but if that figure is even close to accurate, it shows the difficulty many teachers have in paying back their student loans—when they only make that much in a year.

Remember, college is an investment, so always consider how long it will take to pay back your student loans on the salary you can expect to get with your major. Obviously, the less you borrow, the faster that will be. But also, the higher the salary, the faster you’ll get out of the red and into the black.

Perhaps the ultimate example of that is the emergency room physician. That person will leave medical school with an average of $215,000 in student loan debt, according to the Education Data Initiative.

That sounds like an awful lot, and it is, but consider that the median salary of an emergency room physician is now $350,000 a year. A doctor will almost certainly pay off student loan debt before a teacher.

But again, we’re not telling you not to become a teacher or social worker if you feel that’s your Godly calling. Just do everything you can to minimize your student loan debt. That’s good advice regardless of the major you choose.

Remember Proverbs 22:7— just 15 words that you need to memorize: “The rich rules over the poor, and the borrower is the slave of the lender.”

Practical Advice for Future Students

So, take as many Advanced Placement classes as possible. Get a part time job in high school and college and put your earnings toward tuition. But perhaps the most productive use of your time will be applying for scholarships.

Set up a scholarship application assembly line and apply for dozens of them. It will pay off, but it takes time and effort. The greatest gift you can give yourself is to graduate from college with little or no debt. That way, you’ll hit the ground running when you take on the world as a new grad.

On Today’s Program, Rob Answers Listener Questions:

• I have an investment property that I’m planning to sell, but at the same time after I sell that, I was planning on paying off a mortgage at my primary residence. I was wondering if there are any tax advantages to doing that?
• I’m 71 and still working. I’m a widow and have my husband’s pension and my own social security that I’m drawing from so I’m in a good place with my income. I’m trying to play catch-up on my retirement to prepare for that and I max out my 401(k) and I’m doing fine there. Does it make sense if I take $7,000 out of savings to lump sum into an IRA before April 15th so that it counts for 2023? If I do that, I can do another $7,000 for 2024 but I’m worried about whether I will be taxed again on that since I’ve already been taxed on that money as earned income.
• My husband and I are believers and are in our mid 60’s. We’re dual citizens of the U.S. and Canada and half of our working income was gained in each country where we own and operate a farm and have for the past 40 years. There is no successor in view right now and we want to continue to farm as long as our health allows. But we have no retirement accounts or plans for retirement. However, we are completely debt-free. So we're not sure if we should start with an accountant or a lawyer or another place but we were wondering if there is a Certified Kingdom Advisor that would be familiar with agriculture, qualified to practice in both the U.S. and Canada for retirement planning?

Resources Mentioned:

• An Uncommon Guide to Retirement: Finding God's Purpose for the Next Season of Life by Jeff Haanen
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA)
• FaithFi App

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