Research says a college’s return-on-investment depends on this offering

A college’s return-on-investment (ROI) depends on the STEM majors offered

college-investment-stemIn what seems like a no-brainer, the relationship between college majors and salary potential is becoming ever stronger in the wake of staggering student debt. Thanks to recent research, students and colleges now have a better idea on what majors offer the best ROI in today’s complex market.

To put the research’s importance into perspective, new findings from a Pew Research Center study show that college graduates earn $17,500 more annually than their peers with high school diplomas aged 25 to 32. However, those who collect student debt have a lower return on investment over time.

While salary levels have stagnated for the past ten years, the cost of a college has risen over five times the rate of inflation since the 1980s.

A recent article by the Economist claims that some college graduates might be better off financially if they had never earned a degree, since  just one year of higher education can equal $60,000.

Students accept these costs believing they will pay their debts within a reasonable time. However, that’s not a guarantee in today’s job market.

(Next page: The 10 majors by salary potential)

PayScale, a research company that provides salary information, ranked majors based on salary potential as the relationship between college majors and salary potential has risen in importance.

“During a time of both spiraling student debt and tuition rising faster than inflation, post-graduate earnings are a necessary piece of the college decision-making process,” said PayScale’s Lead Economist, Katie Bardaro.

“Although post-graduate earnings shouldn’t be the only consideration when choosing a school, they should certainly play a part, especially when making choices about how much to borrow to fund your education,” she continued. “Students need to know whether they’ll be able to pay off their loans effectively in the context of their chosen field.”

Some majors result in a higher ROI dependent on the institution, as school choice can have a significant impact on earning potential. This is especially true for humanities degrees.

A 2013 PayScale report found that Education majors can expect the lowest average 20 year net ROI, ($-45,109). Computer Science majors earn the highest return over 20 years ($671,081).

STEM (science, technology, engineering and math) subjects lead the majors with the highest earning potential. Eight out of ten top earning majors are engineering-based, with starting salaries ranging from about $103,00 for #1, Petroleum Engineering, to $61,000 for #10, Mechanical Engineering.

According to the 2013-2014 Pay Scale College Salary Report, the top STEM majors earn about three times more than the average for non-STEM graduates.

Another PayScale report ranks schools in terms of overall return on investment. Institutions with more STEM degrees were calculated to have higher return on invests in general. 46 schools are listed as having a negative return on investment, including 23 public state schools and 23 private, for-profit colleges.

Jaccii Barmer is an editorial intern at eCampus News.

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