What You Need to Know Before You Pick a Major or a University

“Is College Worth It?” The answer is yes only if you chose wisely. College graduates had, on average, over $32,000 of debt upon graduation in the spring of 2013. The major on their degree had a lot to do with their ability to earn an attractive living and manage that debt.

Buzz TodaySource: American Institutes for Research. An analysis of the earnings of recent college graduates in five states finds that those who went to elite institutions do not necessarily earn higher salaries than their peers, that some certificates and associate degrees are far more lucrative than four year degrees, and that when it comes to science, technology, engineering and math (STEM), students who study biology or chemistry will earn far less than those in the other three fields.

The traditional sequence for individuals going to a college or university has been University – Major – Degree – Career. The reality is that for over half of those receiving a bachelor degree in America the sequence is actually more like: College – Major 1 – Major 2 – Major 3 – College 2 – Major 4 – Degree (finally) and then look for a job.

Has this been your experience? There a couple of things to observe about this typical sequence. The first thing is how much emphasis is placed on the reputation of the college or university. It is as though getting into a prestigious university is all one needs to do to have the golden ticket to a successful life. What we see in the BUZZ Today here is that this is not true.  The research shows that the major/career you select is far more important to your earnings future.

So if being accepted by an elite (highly selective university) does not assure you of economic success, what does it tell you?  Being accepted by a highly selective university tells you that you are among the smartest people in the country. That is nice to know this and does tend to make one feel good about ones self. But in the end, you are smart whether you go to university A or a less prestigious school B. Your smartness goes with you, it doesn’t stay with the university you decide to attend. The bottom line is that you do not have to pay the high tuition costs of the elite university when it comes to having the best chances of making a decent living. Conversely, you are not destined to a substandard living standard if you do not get to go to Harvard or Yale. What is far more important than where you go is what you study – your major.

The major you select is closely tied to the career you are targeting for yourself. To pick the right career you first must know “who you are” – something I discuss in detail in my book “Your Future is Calling.” I will defer a more detailed discussion of the “who you are” challenge for a later post. For now lets return to the career/major discussion.

The amount of earning power related to specific majors/degrees is truly amazing. Data from the very valuable web site CollegeMeasures is loaded with very important information about what specific majors and careers are actually worth in the real world. For now let me leave you with one direct comparison for bachelor graduates in the state of Virginia. On average, such graduates with a psychology degree (one of the most popular majors in American universities) had first year earnings of $29,040 compared to first year average earnings of $51,378 with an engineering degree.

In conclusion for this post:

1. You need to learn to prosper

2. What you study is far more important to your income than where you study.

3. You can save a lot of your education expenses by avoiding Major – Major – Major in combination with selecting your career/major before enrolling in any specific program or any university.

Controlling Student Debt – First Make Sure Tuition Cost Is Right

College debt is a topic we have been exploring in the last several posts.  The idea that the amount of debt you have when you get your degree is very dependent on the costs you take on at the beginning of your schooling.  Tuition is by far your biggest cost.  Buzz TodaySource:   Jobs.aol.com The annual tuition (Harvard University MBA) is $51,200 and it is severely discounted for at least half the students. In fact, Harvard’s average fellowship support per MBA student was $29,843 last year, essentially a 58.3 percent discount on that annual tuition.

The question you have to be asking is, “how do you control the tuition cost in the first place?”   For every college or university you are considering you must know what the true cost of tuition is.  In BUZZ Today here, we can see what the tuition costs truly are at one of the most prestigious programs in American higher education.  The degree is an MBA from Harvard University.

What the BUZZ data tells us, is that the “list” price of the degree is $51,200 per year.  By list price we mean the price published on the university web site for a year of enrollment in the program.  Every university has a published list price for their tuition.  It is this list tuition that is quoted when referring to the degrees being offered.  If you do nothing, this list price is what you will pay when you enroll.  This is true for every degree from every university.  The point is that what you actually end up paying is entirely dependent on what you do or don’t do.

The debt control comes in with the second half of the BUZZ data.  The actual (discounted) tuition cost for the students enrolled in the Harvard MBA in 2012 is shown to have been, on average $29,843.  This results in $29,843 less debt a student would have to repay after graduation.

The bottom line is that even in the hugely prestigious Harvard University MBA the average actual tuition price paid is 58.3% less than the list tuition price.

No matter where you decide to go to school it is very important that you take full advantage of the discounted versus list tuition cost at every university you are considering.  For detailed information on the list versus discounted tuition for every American higher education institution see Chapter 9 in my book Your Future Is Calling.

Managing Student Loan Debt

One of the best ways to keep debt from student loans under control is to not incur them in the first place.   Sounds simple.  In many ways it is, but you have to know what is actually going on in college pricing.    Buzz TodaySource:  Wall Street Journal  Almost 88% of first-time, full time freshmen at private nonprofit colleges and universities received some type of grant in 2011, according to the National Association of College and University Business Officers. .

To understand how to reduce the amount of debt you incur, you have to know how the college pricing actually works.   Every college and university lists tuition costs, typically per semester credit hour, someplace in their materials.  If you search the web site hard enough you should be able to find the cost of tuition.  If you cannot find it online, you will need to ask when you talk to the university on the phone or in person.

It is important to ask the price of tuition per credit hour.  The reason this is important is because individual courses and programs are different numbers of credit hours in length.  It is also important to ask about credit hours instead of cost per course when comparing costs between two different colleges.  Semester credit hour is the standard unit of measure in higher education.

Beware of the difference between quarter credit hours and semester credit hours.  If you are quoted quarter hours you will need to convert the price to semester credit hours by dividing the price by .67 to get the equivalent semester hour cost.

Now here is where the reduction in debt comes in.  The college or university will not offer a grant.  You have to ask.  When you ask, the place to start is with the question:

“What was the average value of the grants your institution awarded to incoming students last year?”   They have the number but you have to ask.

For more information about grants, scholarships and other forms of financial aid go to www.futureiscalling.com where chapters in “Your Future is Calling” make information from each college and university available to you.

In the end, the goal has to be for you to reduce your college debt.  The best place to do that is at the beginning of the process, not at the end.

It’s Not Always What It Seems

We have talked a lot about the need to chose degrees and careers that create value for you.  My book “Your Future is Calling” guides you through the 950+ careers listed on the Department of Labor WEB site.  Buzz Today Source:  The New York Times. In 2007, the Veterinary Medical Association contended that the United States needed more veterinarians.  In 2012, a National Academy of Sciences found no evidence of vet shortages.  It also concluded that the “cost of veterinary education is at a crisis point”.  .

I always believed that veterinarians were in demand and earned a good income. Upon reflection, that belief was probably because it takes a lot of education to become a vet and in the end they are sort of like a human medical doctor.

I was shocked to read of a 30 year old veterinarian graduate who recently graduated with $312,000 of student debt.  The problem is that the average starting salary for veterinary graduates is $45,575 per year.  This ratio of debt far exceeds the debt to starting salary ratio of 3 to 1 recommended.

The prospect is that the young woman grad will be repaying her student loans for about 25 years for a total of over $650,000 with taxes.  One of the reasons this grad’s bill is so high is because she failed to be accepted to the reasonably priced University of California – Davis Vet school and instead went to a high tuition cost off shore for-profit school.

But as bad as the young graduate’s situation is, it is not as bad as a student who went to a for-profit vet school, lasted 6 semesters than failed out racking up $160,000 of debt and no degree.  High debt and no degree is about as bad a situation you can wind up in.

This post is the first in a series that looks at how critical it is to make sure that you fully understand your career prospects that fit “who you are”.  It also introduces the subject of how important it is fully understand everything about the college you are considering attending.

By the way, the 30 year old veterinarian went into the career because it is something she wanted to do since childhood.  The intrinsic value of what she is doing (to do) is a powerful motivator for her.  Her decision fits “who she is” very well.  Now she has to manage the economics of her decision.

One final note on this post:  O*Net lists the average veterinarian salary as $82,900, clearly including many veterinarians with many years of experience.