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  • Hey hun!

  • Whatchya doin?

  • Oh just nailing my most valuable possession to the wall.

  • Jazzy Bear!

  • No, not the dog.

  • My college diploma.

  • Oh, right.

  • Yep.

  • This little piece of paper cost me about $320 per square inch.

  • Wow.

  • That's almost as much as a Manhattan apartment.

  • It does make you wonder...

  • I mean, would I be happier if I chose another major?

  • Or gone to trade school instead??

  • At least you'd know you can't hammer a screw into the wall.

  • Huh.

  • I just thought it was fancy nail.

  • [MUSIC]

  • It's not exactly a news flash that college is expensive.

  • Graduates our age have an average of $37,172 in student loan debt--and they have to start

  • thinking about their own kids' college.

  • If Philip and I had a baby this year, at around 4% inflation per year, his or her in-state

  • tuition would run us about $162,000.

  • There isn't ONE explanation why tuitions are inflating like a microwaved peep.

  • But there are some strong theories.

  • Supply and demand.

  • Over the last 40 years, having an undergraduate degree went from being considered an option

  • to a necessity, and the MORE people want something, the more the people selling it can charge.

  • Another theory puts the blame on student loans.

  • Wait..how does that make sense?

  • Well, they're scary easy to get.

  • Colleges have no incentive to control costs because they know the federal government and

  • other loan agencies will keep fronting the money.

  • And finally, administration costs have ballooned as much as 60% in the last 25 years.

  • A lot of that gets blamed on perks that colleges are adding to attract customers--I mean, students.

  • Davidson College offers free laundry service.

  • Michigan Tech has an on-campus ski resort!

  • Of course, education is about more than just dollars and cents, but there's no denying

  • college is a financial investment.

  • You're paying all this money now in the hopes that you'll be able to make it back

  • later.

  • Sowill you?

  • For most people, yes.

  • The question is how long it will take, and that depends on your degree.

  • So which majors pay for themselves the fastest?

  • Let's RUN THE NUMBERS!

  • We'll start with the median income for somebody with only a high-school diploma.

  • Compare that to a college graduate with, say, a Communications degree.

  • That's an extra $15,000 per year!

  • Not bad, but how much did it cost?

  • The average cost of tuition, room, and board at an in-state university is $80,360.

  • So our Communications major will break-even on their investment in about 5.3 years.

  • A Psychology Major will take 11 years to break even,

  • an Arts Major will take 8.8 Years, the most popular major, Business,

  • will break even in 3.2, and the most lucrative undergraduate

  • major of all, Engineering, will pay for itself in just 2 years!

  • Okay, but what about graduate school?

  • While it's true that some postgraduate degrees can push your income into the next tax bracket

  • these percentages don't tell the whole story.

  • Take law school.

  • The average law student graduates with somewhere between $85,000 and $125,000 in extra debt

  • on top of their undergraduate loans.

  • While the top students at the most prestigious universities can pull down big bucks right

  • away, they're in the minority.

  • Almost half of law grads earn a median starting salary of only $65,000 a year.

  • That's just a $15,000 pay bump for an extra $100,000 of debt.

  • Okay, how about med school?

  • That's gotta pay off big time, right?

  • Well, the median salary for a general practitioner is $175,000 a year, but the average cost of

  • medical school at a public university is around $200,000.

  • When you factor in your undergraduate loans, and the interest that debt is racking up while

  • you're in residency, it's very common for doctors to end up paying almost half a

  • million dollars for 25 years for those two letters behind their name.

  • If all this is sounding scary or discouraging, just remember that statistically, it does

  • pay to go to college in the long run, whatever your major.

  • And there are things you can do early on that will ease the debt burden down the road.

  • SHOP AROUND.

  • Most universities can supply you with information about how much their alumni make in the workforce.

  • They might even connect you with graduates of your same major who can answer your specific

  • questions.

  • And when comparing prices, make sure you factor in the cost of living.

  • Some cities are so expensive to live in it can double the amount you'll have to borrow.

  • Consider community college.

  • There's a stigma that it's only for people who can't get intorealcollege, but

  • it's actually a pretty smart decision.

  • You can slash your undergraduate debt in half, and not get locked into a lifelong financial

  • commitment at the wise old age of 18.

  • That's what Philip did, and today we have the exact same diploma from the same university,

  • but mine cost more than twice as much.

  • And lastly, look into alternative financing.

  • There are companies and colleges that are trying out a new-fangled approach called Income

  • Share Agreements in which the student agrees to pay a fixed percentage of their salary

  • for a fixed period of time.

  • Unlike a loan which relentlessly accrues interest through good times and bad, ISA's don't

  • punish the borrower for making less money than they hoped.

  • They're basically betting on you to do well, and sharing some of the risk if you don't.

  • Now, most people don't choose their major for purely economic reasons.

  • People wanna do what they love and what they're good at, and no Powerpoint presentation is

  • gonna change their minds.

  • And there are benefits to college that you can't quantify, like broadening your horizons,

  • or meeting your future husband.

  • Being money smart doesn't mean basing your life around money.

  • It just means taking simple precautions early on so you can chase your dreams without weights

  • around your ankles.

  • And that's our two cents.

  • [MUSIC]

Hey hun!

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B1 US college undergraduate major debt cost diploma

What College Majors Are Worth the Money?

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    Capalu Yang posted on 2020/05/16
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