When I first went to UC-Berkeley, I really had no idea what college major I was going to decide upon. I was not set on anything other then experiencing all that college is about. That meant exploring San Francisco, hanging out, partying, and occasionally studying. If I were to do it all over again, I would not recommend my strategy. Today’s economy and job situation have made it quite different. Although I was in college not that long ago, times have certainly changed. When I was nearing graduation, many friends of mine had already landed jobs. Today college graduates face a much bleaker job market. If you do not believe me, take a look around. Millions of college graduates are without jobs.
College is no game, and just picking a major out of a hat is not recommended. One point to consider is, what is the ROI of your major? What does ROI stand for anyway? ROI is slang for Return On Investment. In the business world, everyone talks about ROI. How about in the education world? Not so much, but let’s try to change that. The formula involves basic math. In our situation, “gain from investment” could be defined as a future yearly salary and “cost of investment” will be the cost of the 4 year tuition. Picture it as:
Below I have included a chart that shows the ROI of various college majors (from CitiBank’s website studentloan.com, click on the image and enlarge). The truth, as they say, is in the numbers.
Wait…Numbers Don’t Lie – Or Do They?
I found this great chart online to share with you. If you look at the last column titled “Years To Break Even” you will see that many degrees only require 3-4 years of employment in order to break even. Please do not be fooled by that number. Those numbers would be accurate if you did not have rent/mortgage, car payment, food expenses, cell phone bill, utility bills, etc. Sure if you have all of your expenses paid for, it might only take you 3 years to pay back a college tuition cost totaling $110,000 with a teacher salary of $35k a year. But go ask most of your teachers how long it took them to “break even” and I bet you’ll get a much higher number than a measly 3 years.
Take a good look at the chart. Are these numbers what you imagined them to be? Have you considered what the ROI on your college major is and its impact on your financial future? Please comment below if you have any thoughts about what you discover, I’m interested in what you have to say.