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College as an Investment: Which Majors Deliver the Best Bang for the Buck?

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A college education is likely to be one of the most expensive things any of us will ever buy. For the 2023-24 academic year, the average cost of college tuition was roughly $41,000 for private schools and $23,000 for out-of-state students at public schools, according to US News and World Report.[1] And, of course, that’s just the average. For one year. For just tuition. The actual sticker price for many, including books, housing and the rest of it, will be much, much higher.

Without federal loans, relatively few students — or parents — would be able to afford those costs. And even with financial aid and loans, there’s a dawning awareness that many students, even those who graduate, will be unable to pay off their student loans, even after decades of making payments. In light of this, it’s worth asking the question: Is college worth it?

Spoiler: yes. College is worth it — for most people. After studying this question for decades, the upshot remains straightforward and, for most economists, uncontroversial: “The return on investing in college appears to be high,” according to a 2023 study published by the Federal Reserve Bank of St. Louis,[2] and a slew of other studies undertaken over the past 10 years. So, perhaps a more interesting question to explore is whether some majors are a better investment than others.

A major investment

Turns out the answer is, again, yes. A 2024 analysis of data collected from 5.8 million high school and college graduates and published by the American Educational Research Journal suggests that the return on a college degree varies considerably by major.[3]

Though there are nuances that differentiate the data for men and women and different racial groups, the collective results are clear: Engineering and science majors have the highest rate of return on their educational investment. The next highest rates of returns are associated with degrees in business, health, math, and science. And education, humanities and arts majors have the lowest rates of return on average. These findings are directionally consistent with other studies on this topic, including a 2021 report by the Education Data Initiative,[4] which used different calculations but came to a similar conclusion.

Of course, academic studies have limitations. They can’t always accurately account for all the variables, including sex, race, marital status, and geographical location — all of which are likely to impact a graduate’s future income. What’s more, they inevitably reduce “value” to strictly financial terms, while the numerous benefits of a college education can, and often do, transcend a lifetime of earnings.

Still, this analysis is something both students and parents should be clear-eyed about. “Selecting majors with high returns is a sound financial decision, but at the same time, if a student has decided to pursue a major with a lower return, they may want to consider pursuing additional training or education to improve their labor market prospects,” according to Liang Zhang, professor of higher education at NYU Steinhardt and one of the authors of the study.

There’s more than one way to maximize the impact of a college education. Choosing a college, a major, and a career are highly personal decisions that should reflect a student’s own personal criteria and financial situation. But accounting for the different majors’ “earnings trajectories” is an additional dimension for consideration while undertaking one of the largest financial transactions of a lifetime.

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[1] U.S. News & World Report, 2024.

[2] Federal Reserve Bank of St. Louis, 2023.

[3] American Educational Research Journal, June 2024.

[4], 2024.

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