What College Majors Are Worth the Money?

Hey hun! Whatchya doin? Oh just nailing my most valuable possession
to the wall. Jazzy Bear! No, not the dog. My college diploma. Oh, right. Yep. This little piece of paper cost me about $320 per square inch. Wow. That’s almost as much as a Manhattan apartment. It does make you wonder… I mean, would I be happier if I chose another
major? Or gone to trade school instead?? At least you’d know you can’t hammer a
screw into the wall. Huh. I just thought it was fancy nail. [MUSIC] It’s not exactly a news flash that college
is expensive. Graduates our age have an average of $37,172
in student loan debt–and they have to start thinking about their own kids’ college. If Philip and I had a baby this year, at around
4% inflation per year, his or her in-state tuition would run us about $162,000. There isn’t ONE explanation why tuitions
are inflating like a microwaved peep. But there are some strong theories. Supply and demand. Over the last 40 years, having an undergraduate
degree went from being considered an option to a necessity, and the MORE people want something,
the more the people selling it can charge. Another theory puts the blame on student loans. Wait..how does that make sense? Well, they’re scary easy to get. Colleges have no incentive to control costs
because they know the federal government and other loan agencies will keep fronting the
money. And finally, administration costs have ballooned
as much as 60% in the last 25 years. A lot of that gets blamed on perks that colleges
are adding to attract customers–I mean, students. Davidson College offers free laundry service. Michigan Tech has an on-campus ski resort! Of course, education is about more than just
dollars and cents, but there’s no denying college is a financial investment. You’re paying all this money now in the
hopes that you’ll be able to make it back later. So… will you? For most people, yes. The question is how long it will take, and
that depends on your degree. So which majors pay for themselves the fastest? Let’s RUN THE NUMBERS! We’ll start with the median income for somebody
with only a high-school diploma. Compare that to a college graduate with, say,
a Communications degree. That’s an extra $15,000 per year! Not bad, but how much did it cost? The average cost of tuition, room, and board
at an in-state university is $80,360. So our Communications major will break-even on
their investment in about 5.3 years. A Psychology Major
will take 11 years to break even, an Arts Major will
take 8.8 Years, the most popular major, Business, will break even in 3.2, and the most lucrative undergraduate major of all, Engineering, will pay for itself in just 2 years! Okay, but what about graduate school? While it’s true that some postgraduate degrees
can push your income into the next tax bracket these percentages don’t tell the whole story. Take law school. The average law student graduates with somewhere
between $85,000 and $125,000 in extra debt on top of their undergraduate loans. While the top students at the most prestigious
universities can pull down big bucks right away, they’re in the minority. Almost half of law grads earn a median starting
salary of only $65,000 a year. That’s just a $15,000 pay bump for an extra
$100,000 of debt. Okay, how about med school? That’s gotta pay off big time, right? Well, the median salary for a general practitioner
is $175,000 a year, but the average cost of medical school at a public university is around
$200,000. When you factor in your undergraduate loans,
and the interest that debt is racking up while you’re in residency, it’s very common
for doctors to end up paying almost half a million dollars for 25 years for those two letters behind their name. If all this is sounding scary or discouraging,
just remember that statistically, it does pay to go to college in the long run, whatever
your major. And there are things you can do early on that
will ease the debt burden down the road. SHOP AROUND. Most universities can supply you with information
about how much their alumni make in the workforce. They might even connect you with graduates
of your same major who can answer your specific questions. And when comparing prices, make sure you factor
in the cost of living. Some cities are so expensive to live in it
can double the amount you’ll have to borrow. Consider community college. There’s a stigma that it’s only for people
who can’t get into “real” college, but it’s actually a pretty smart decision. You can slash your undergraduate debt in half,
and not get locked into a lifelong financial commitment at the wise old age of 18. That’s what Philip did, and today we have
the exact same diploma from the same university, but mine cost more than twice as much. And lastly, look into alternative financing. There are companies and colleges that are
trying out a new-fangled approach called Income Share Agreements in which the student agrees
to pay a fixed percentage of their salary for a fixed period of time. Unlike a loan which relentlessly accrues interest
through good times and bad, ISA’s don’t punish the borrower for making less money
than they hoped. They’re basically betting on you to do well,
and sharing some of the risk if you don’t. Now, most people don’t choose their major
for purely economic reasons. People wanna do what they love and what they’re
good at, and no Powerpoint presentation is gonna change their minds. And there are benefits to college that you
can’t quantify, like broadening your horizons, or meeting your future husband. Being money smart doesn’t mean basing your
life around money. It just means taking simple precautions early
on so you can chase your dreams without weights around your ankles. And that’s our two cents. [MUSIC]

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