This is an article that was originally posted by me on another one of my blogs. I am reposting it here so that I can link to it in another article.
The study’s four conclusions:
- Debt burdens vary a lot across majors. In the sixth year of repayment, typical drama, music, religion and anthropology majors are still devoting more than 10 percent of their earnings to loan repayment. Other majors with fairly high early repayment burdens include philosophy, psychology and education. By contrast, engineering, computer science, economics and nursing majors are paying 6 percent or less of earnings in their sixth year.
- In the first five years after earning a bachelor’s degree, the typical student receives a 65 percent raise. (This rise for an individual person, as she ages and becomes more experienced, is occurring even as pay growth across the economy is weak. Today’s 30-year-old is making more than he did at 25, but not much more than a 30-year-old was five years ago.) Unfortunately in recent years, wage increases have become de minimis, suggesting that this may no longer be uniformly true.
- Many of the majors that pay the least directly out of college also have the biggest raises in the first few years. Graduates who major in therapy professions, nutrition or fine arts, for instance, all make less than $20,000 coming out of college, but all see their pay more than double in the first five years. A typical nurse, by contrast, makes almost $45,000 in the first year but receives about a 20 percent raise over the next five years.
- The growth of earnings for most college graduates means that some of the discussion about student debt has the wrong focus. The overall amount of debt isn’t a problem for most graduates: the typical debt, for someone who has debt, is about $26,500, a manageable sum in most college-graduate careers. The problem for many, instead, is when they must repay their loans: early in their careers, when they’re making the least. In some majors, including health education and drama, the typical graduate with debt must devote an imposing 25 percent of her earnings in the first year out of college to loan repayment. “Repayment issues for the bulk of students,” Mr. Hershbein says, “are a matter of timing, not the amount of student debt.”
The moral of the story: don’t major in the social sciences or the performing arts. Instead, major in subjects that require hard work and quantitative (i.e., math) skills or that will lead to employment in the health care field. Think engineering, medicine, or nursing.
At the bottom of the ZeroHedge column, there is a student loan repayment calculator that can be used to figure out exactly how much your monthly payment will be.
Below is the student loan repayment calculator that shows the share of earnings necessary to service traditional loan repayment for 80 majors. Readers can choose or search from each of these majors, as well as change the size and features of the student loan using the selection boxes above. By default, loan features reflect the experience of a typical graduate borrower, and earnings include part-time workers and those who experience unemployment throughout the year (but exclude those with graduate degrees, as these individuals often accumulate additional debt).