Economic Value of College Majors

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The combination of states reducing spending on postsecondary education and rising tuition costs has led to a shift in economic burden from the states and institutions to students. As a result, a growing number of students are pursuing degree programs that yield higher annual salaries following graduation.

During the Great Recession, virtually all states reduced their spending on postsecondary education. Even as states’ economies recover, average spending per student is below pre-recession levels in the vast majority of states. These spending cuts over time have had significant impacts for colleges and universities—and the students attending them.

  • After adjusting for inflation, spending per student remains below pre-recession levels in 47 states. Per student funding in Alabama, Arizona, Louisiana, Pennsylvania and South Carolina is down by more than 35 percent since the start of the Great Recession.1
  • Between 2008 and 2015, per student spending increased in only three states, rising 35.5 percent in North Dakota, 5.4 percent in Wyoming and 3.9 percent in Alaska.2
  • Governors in Arizona, Connecticut, Illinois, Kansas, Louisiana, Wisconsin and West Virginia have proposed reductions in higher education funding for 2015.3
  • States have provided an estimated 51 to 61 percent of total college revenues over the past 10 years, with state spending trends generally declining during this timeframe.4
  • When state postsecondary education funding is cut, colleges and universities have to make up the difference in lost revenue either by raising tuition, reducing campus services and programs or a combination of both.5
  • After adjusting for inflation, annual tuition at four-year, public colleges has increased by 29 percent—or $2,068—since the 2007-08 school year. Since the recession hit, tuition is up more than 80 percent in Arizona, making it the highest rate of increase in the nation and tuition has increased by more than 60 percent in California, Florida, Georgia, Hawaii and Louisiana.6
  • Public institutions such as the University of North Carolina at Greensboro and universities within the Pennsylvania State System of Higher Education have eliminated numerous academic courses and programs to counteract their states’ budget cuts.7

With this shift in cost-bearing from the states to students has come an increased focus on the comparative return on investment of various majors following graduation. Researchers at the Center on Education and the Workforce at Georgetown University have produced the most comprehensive study on the economic value of college majors to date.

  • While the difference in lifetime earnings between high school and college graduates is about $1 million, the difference between the highest- and lowest-earning majors is an estimated $3.4 million.8
  • Architecture and engineering majors are paid the most among the 15 major groups identified by “The Economic Value of College Majors,” while education majors are paid the least following graduation, with respective average salaries of $83,000 and $45,000 per year.9
  • The wages of individuals with business degrees vary the most ($43,000 to $98,000 for the 25th and 75th percentiles), while the wages of individuals with education degrees vary the least ($35,000 to $59,000 for the 25th and 75th percentiles).10 
  • Among the 15 major groups included in the study, business was the most common major among college-educated workers, while agriculture was the least common area of study (26 percent and 2 percent of college-educated workers, respectively). 
  • The highest-paying majors were not necessarily the most common among college-educated workers.11
  • Completing a graduate degree also results in general wage increases, but the variation is broad as well. For biology and life science majors, students with graduate degrees earned 63 percent more than students with a bachelor’s degree, whereas graduate degrees in art history earn only 23 percent more than those with only a bachelor’s degree. 12

REFERENCES

1 Michael Mitchell and Michael Leachman. "Years of Cuts Threaten to Put College Out of Reach for More Students." Center on Budget and Policy Priorities. May 13, 2015.
2 Niraj Chokshi. "The economy’s bouncing back. But higher education funding isn’t." The Washington Post.  May 13, 2015.
3 Ibid.
4 State Higher Education Executive Officers Association. "State Higher Education Finance: FY 2014." 
5 Mitchell and Leachman.
6 Ibid.
7 John Newsome. Chancellor’s focus on UNCG’s future.”  Greensboro News & Record; Stephen Herzenberg, et. al. Pennsylvania Budget and Policy Center. “A Must-Have for Pennsylvania Part Two: Investment in Higher Education for Growth and Opportunity.” October 2014.
8 Anthony Carnevale, et al. “The Economic Value of College Majors.” The Center on Education and the Workforce, Georgetown University. 2015. 
9 Ibid.
10 Ibid.
11 Ibid.
12 Ibid.