Apr 22, 2019

QoD: What college major has the highest earnings premium when comparing recent college grads to high school grads?

Answer: STEM majors (Science, Technology, Engineering, Math)

Questions:

  • Why do you think college graduates with STEM majors earn more than other majors? 
  • Should you choose a college major based on information like this? What other factors might you consider in deciding what you want to study?
  • This data shows the annual earnings premium for a college grad in their early 20s relative to a high school grad at the same age. If a high school grad is earning about $25,000 in their early 20's, how much would the college grad with a STEM major be earning based on this chart?  

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (from Bloomberg): 

The strengthening labor market might also be pulling a few young Americans away from college, though so far that trend seems to be very slight.

Another possible factor is that prospective college students may be learning to distinguish between the economic opportunities afforded by various college majors. Overall, the earnings premium for a bachelor’s degree has remained constant or continued to rise, depending on how it’s measured. 

This may be why college students are avoiding humanities majors. But it could also mean that some prospective college students who don’t want to major in fields like science, technology, engineering, math, health or business might avoid college entirely, or be unwilling to attend more expensive schools.

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Looking for more graphs and charts for your students to analyze about the value of education? Here's a link to the other Paying for College Data Crunches

 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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