Prospective college students often aim high by applying to the most prestigious universities. It is nice to have a degree awarded from a big name school to signify the rigor and challenge of the higher education pursuit.
According to a study done by the American Institute of Research (AIR), a graduate’s field of study is more important than the university name when generating first-year income. This is good news for students who decided to attend lesser known campuses, but still seek the high-earning degree:
Based on earnings outcomes, some colleges and universities are producing graduates who earn far less than graduates from other schools and graduates from some institutions earn far more. But a surprising number of colleges and universities in every state produce graduates with roughly identical earnings.
But field of study appears to affect earnings more so than choice of institution. Graduates of some very popular programs (in particular, Psychology) do not earn high wages initially in the job market. Choosing a field of study should be driven by more than just the economic reward—but students should be aware of the potential earnings associated with their choices and factor those considerations into their decisions about where to go, what major to pursue, and how much to borrow.
As AIR stated, earning outcomes still vary among campuses. Those attending a more prestigious school should not be discouraged. The study examined colleges in Arkansas, Colorado, Virginia, Tennessee, and Texas. In Colorado and Arkansas, all universities had average first-year income of graduates within five to six percent of the median.
The following chart summarizes the first-year earnings for those who attain a bachelor’s degree in the five mentioned states:
There is still considerable variation between different universities. However, the disparity of first-year income is wider when comparing fields of study. The following chart shows lowest and highest earning degrees in the five states:
It is important to keep in mind that AIR’s study only examines the first year of post-graduate career earnings. However, starting pay for a certain field of study is an important indicator of the potential career earnings.
Less lucrative degrees may not lead to well-paid jobs initially, and engineering programs may have stronger connections with workforce opportunities, but AIR confirms that engineering programs tend to be more intimate and less popular than most liberal arts fields (philosophy, psychology, etc).
Entering college is daunting for many students. It may not be clear within the initial years of study that what you study and where you study are all factors in how much you can earn in your future career.
Higher education is not entirely about getting the most lucrative degree and students should not have to sacrifice what is truly desired in the pursuit of knowledge. But with the high price tags of tuition and living expenses, the cost-benefit of a college degree should be considered.