What Is a College Degree Worth?

What kind of income can I hope to earn if I graduate with a history degree? Or, would I be better off to major in business? These are questions prospective students and parents have asked me for years. And for good reason. With the rising cost of higher education and subsequent student loan debt, asking the economic return of a degree is a prudent question. What are the trade-offs between obtaining an undergraduate degree in the humanities or obtaining an undergraduate degree in one of the professions? The answer depends on whether you take a long or short-run view.

Yes, business is the most popular degree in the USA. According to the National Center for Educational Statistics, of the total 1,840,164 undergraduate degrees conferred in 2012, business represented 360,823 (13%), whereas history and social science combined represented 178,534 (9.7%). The National Association of Colleges and Employers reported the 2014 average starting salaries of all bachelor degree graduates was $48,707. For business majors the average was $57,229 (17.5% above average) and for humanities and social science it was $38,049 (21.9% below average). Clearly, if you want to beat the average for starting wages, major in business. But how do graduates fare in the long-run?

As it turns out, a study from the Association of American Colleges & Universities, revealed that liberal-arts majors (including history, humanities, and social sciences) earn over $2,000 more in their peak earning years (mid 50s) than those starting with a professional degree. Even though liberal-arts majors start out with lower paying jobs, as a group, they advance rapidly in their earnings and overpass their peers who majored in business. Why? Three reasons can be given. First, they often start out in human services oriented jobs with lower wages, but migrate to higher paying jobs later. Second, they are well prepared for graduate school, or MBA programs, which helps to advance their careers. Finally, the focus of a liberal-arts degree emphasizes those skills and intangible attributes that employers say they want: writing, communication, persuasion, problem-solving, service, creativity, and critical thinking.

For instance, Carly Fiorina was the first woman CEO at Hewlett-Packard (HP) and for any other Fortune 50 company. After college, her first job was as a receptionist. Then, she was an English teacher. This was after earning a degree in medieval history from Stanford University! Fiorina went on to earn an MBA and began advancing in a career at Lucent prior to being appointed CEO at HP. She credits her business leadership success to the analytical, critical thinking, and communication skills emphasized in her undergraduate history studies.

So what major should you consider? Here are three options and a suggestion.

1. Major in a degree in the humanities such as history, literature, arts, design, communication, the classics, or pre-law. Any of these majors will require a considerable amount of reading, writing, and performing. Each will hone reflective and listening skills and build your capability of synthesizing information. You will develop an appreciation for diverse ways of viewing the big questions in life and learn to distinguish between the meaningful and meaningless. Moreover, you will develop an appreciation for living a life worth leading. Of course, you will also develop long-term employable skills such as creativity, communication, leadership, global awareness, and critical thinking.
2. Major in a professional degree such as business, computer science, or engineering. Graduates with these majors are in high demand and the initial pay after graduation is among the highest. The focus of these degrees is to develop competencies in the technical skills required for entry-level work. For instance, being able to interpret financial reports, identifying market segments, writing code, designing circuits, or converting CAD drawings to outputs on a 3D printer. The assumption is that through general education the student has the basic language and mathematical knowledge as pre-requisites to learning the technical skills. Most programs also provide specific training or a period of mentoring as part of the on-boarding process for entry-level professions.
3. Study both. Select a school with a strong reputation of liberal-arts general education (often these are smaller, private, or faith-based) and major in a humanities degree and minor in a profession, such as business. Alternatively, major in a profession and minor in the humanities. Yes, you can do both and usually graduate within four years! Your general education courses are not just something “to get out of the way” before you take your courses in your major. Rather, the liberal arts sharpen the mind, enhance communication capabilities, build resilience, and inspire creativity. Remember, the intellectual foundations of a challenging liberal arts general education and professional education are essentially the same.

Advice from the Dean’s Office: The third choice above provides economic advantages for both the short run and long run. Courses in the liberal-arts are as important as those in a professional major for building employable competencies that last a lifetime. One of greatest areas in which new graduates fall short is lack of a balanced education. This is best represented by the statement, “I need workers with a blend of technical and soft skills gained from liberal arts.”

In a recent national survey conducted by CareerBuilder, hiring managers indicated that the complexity of their organization and markets requires a broad set of skills. This result suggests more emphasis on “real world learning.” To acquire experience in the workplace, try out an internship and gain on-the-job skills. This will give you opportunity to apply your theoretical knowledge in a more controlled, but nevertheless, professional setting.

For more information, you can download a free e-book from AAC&U describing research on how liberal-arts and science majors fair in the job market.