By: Reyna Gobel
Data crunchers at FreeOpp analyzed potential earnings for nearly 30,000 bachelor’s degrees estimates that the average college degree has a net return on investment (ROI) of $300,000. Calculations are based on the difference in lifetime earnings for graduates versus not having a degree at all minus the cost of attending college.
What does your student need to do to boost ROI?
Students who completed their degrees had a net ROI of $306,000 versus an average of $129,000 when considering those who drop out. Students should meet with an academic counselor in their department each semester to make sure they are on track for graduation.
Research Earning Potential for Their Major
While students should never pick a major solely based on earning potential, it may help determine how much is a reasonable amount to spend on college. For instance, let’s say a student wants to be a counselor with an average starting salary of $50,000. The net cost of college for the first year alone is $25,000 at one school and $7,000 at another. With the starting salary being at that level, they shouldn’t go into $100,000 in debt for a bachelor’s degree.
Differences in prices among colleges likely explains why one quarter of programs have a negative ROI. Expensive schools are thrown in the mix. Students get a good gauge of ROI at a school by chatting with career counselors at that school about starting salaries. Then think about the net cost of the college, too, when making decisions.
Solidify Major Choices as Early as Possible
Now, let’s say a student decides to be an engineer. Four in five engineering programs have ROI above $500,000. However, if your student just chose the major because of earning potential, they may change to a lower earning profession but still be stuck with expensive tuition bills. Instead, encourage career exploration as early as possible. High school and college counselors can set your student up with shadow days and internships. Shadow days are two-hour time periods where the student meets with and learns about a profession from someone in their potential field.
Know but Don’t Count on the Outliers
Many CEOS major in philosophy or psychology as an undergrad because these majors teach critical thinking and communication skills. However, just 1% of psychology programs exceeded the same $500,000 threshold as engineers. These are average numbers. Your student may do better or worse.
Thinking about return on investment of college is a good reminder that college is a place to make money and work towards a career path. Choosing a major should have little to do with cost but choosing a college and program should. Carefulyl manage college selection based on cost and the students long-term career interests that were solidified with career exploration.
Others, including art, music, religion, and psychology, often have a zero or even negative net financial value.