For many people, college is a rite of passage into adulthood. Leaving home for the first time, making your own decisions, and deciding how to spend your time without parental oversight are all part of the growth experience. For both kids and their parents, college is major milestone decision.
When we work with clients to put together a financial plan, college expenses are major area of concern for parents, with the education of their kids sometimes crowding out their own retirement considerations.
Some want their children to go to school anywhere they wish and major in whatever field of study that interests them. They encourage their kids to attend schools farther from home to experience an environment that is different from what they’ve known all their lives and participate in study-abroad opportunities when they’re available.
On the other end of the spectrum, there are parents who paid their own way through college with jobs, scholarships and student debt, and believe the college choice should be primarily influenced by practical cost considerations including out-of-state tuition vs. in-state tuition, travel expenses, and the total debt the student will have to pay off after graduation.
Whatever your family’s philosophy about college might be, sorting through the costs and trade-offs is difficult, with most families visiting numerous schools and trying to base decisions on how the campus feels to them, what friends and family think, and what they can learn online.
COVID-19 has made the process even more difficult, with schools still in flux about welcoming students and student visitors back to campus in the fall. Given all the possible changes to the college experience in the near term, getting good information to be able to compare schools is even more important.
While college helps us all to be more well-rounded individuals, the end goal is to be able to graduate with an education that allows us to support ourselves for the rest of our lives.
In 2015 the U.S. Department of Education established an on-line resource, the College Scorecard, that allowed prospective students to see the average starting salary and total student debt for all graduates of each school.
Since there can be a wide range in starting salaries for various degrees, the average summary was too general to be helpful. But detailed information added to the database now allows you to gather much more practical information and make relevant comparisons, and the differences can be surprising.
Using the college search portion of the website, I selected all schools who offered a degree in computer engineering, with a graduation rate above 75%, and an average annual cost of $40,000 or less. Duke University and the University of Pennsylvania were tied for the highest graduation rate of 96%, but the University of Pennsylvania stood out with a much higher median starting salary of $135,200. Duke graduates made less after graduation with starting salaries at $99,600, but their median student debt of $7,890 compared favorably to the $19,500 owed by University of Pennsylvania graduates.
Attending a prestigious private school with higher tuition doesn’t necessarily guarantee a better outcome either. Computer engineering students at Lehigh University incurred a cost of $30,832 per year for their educations but had a median salary after graduation of $72,900, while Ohio State University graduates with the same degree earned a comparable $69,000 after graduation but spent only $17,700 a year.
I chose a degree, cost and graduation rate for my analysis, but you can compare 5,835 colleges using both quantitative and qualitative criteria for your search, including acceptance rates, size of school, whether it is in a city, suburban, town or rural location, its stated mission and religious affiliation. After obtaining your results, you can compare up to 10 schools side-by-side to analyze differences as I did above.
Where you go to school is important, but so is your major. While not everyone wants a degree in one of the STEM fields, business and liberal arts degrees span a wide spectrum of costs and starting salaries.
In our region, a graduate with a degree in Business Administration – Management & Operations from Miami University had a median starting salary of $61,800, while a Northern Kentucky University graduate’s starting salary for the same major was $20,000 less. But NKU has a strong business program in Industrial Production Technology, and graduates of that program earned $64,300 and had less student debt at graduation.
While most people realize it’s difficult to get a job after graduating with a degree in Russian literature or other liberal arts degree, it’s even more sobering to see the numbers in black and white. A graduate with a master’s degree in drama and theatre arts from the difficult-to-get-into University of Southern California owed an average $100,800 at graduation but earned only $30,800 a year in their first job. While a theatre major from the University of Alabama graduated with $25,000 in student debt and had a starting salary of just $14,000.
The information provided by the website isn’t perfect, because it represents only students who received federal financial aid, and those students can be a small number at Ivy League and other wealthy schools. But it’s a welcome window into the reality of what students can expect to earn after graduation and how much of their new paycheck might go toward paying off their student debt each month.
As you and your kids begin to sort out the college question, and decide what schools to visit over the coming months, I’d recommend spending a little family time around the computer to put together a list of optimal choices for everyone involved. It’s much better to face reality today then be a disappointed graduate with a burden of debt in the future.