College is getting outlandishly expensive, with an average cost of “$35,551 per student per year, including books, supplies, and daily living expenses.” That’s $142,204 over the course of a four-year bachelor’s degree program, on average. No wonder so many families struggle to help pay for their children’s higher education!
Without sufficient contributions from parents, financial aid sources, or scholarships, many students turn to loans to fund their way through college. Alas, as dozens of news headlines attest, too many of these student borrowers get overwhelmed and face financial hardships as they try to pay their loans back. Indeed, today’s student debt crisis is virtually unprecedented, causing the federal government to intervene.
But why are students having such a hard time paying their loans?
Why College Grads Struggle To Pay Back Student Loan Debt
One reason is that many student borrowers never held jobs or gained practical experience managing their finances before taking loans. At the time of signing, they may even experience a sort of cognitive disconnect, seeing the dollar amounts on paper or a screen, but not internalizing the fact that those numbers represent real debt they’re incurring through their loans.
They also often fail to grasp the ramifications of interest and how the amounts they borrow don’t reflect the amounts they’ll owe back after interest is tacked on. Indeed, with subsidized federal loans, interest doesn’t even start accruing until they’ve left college. So during those college years, the debt and interest are out of sight, out of mind.
Other students might understand the financial consequences of what they’re taking on through student loans, but they view the loans as an investment. There’s nothing inherently wrong with that. They assume that if they earn a degree, they’ll land a good-paying job after graduation and it’ll be easy to pay off their debts. And in many cases, that’s true.
But often, students major in a field with a relatively low employment rate or which lacks clear paths to good-paying career prospects.
College Majors Are a BIG Part of the Problem!
For their part, some colleges do try to list information on their websites about the types of jobs (and salaries) students can get if they major in a particular subject. However, that information is often relatively vague and doesn’t feature updated statistics on how those job markets are faring in the current economic climate.
Meanwhile, as we discussed in our previous article How AI Just Disrupted Dozens of Career Fields, many jobs have suddenly become imperiled by the advent of generative artificial intelligence. Does that mean colleges will stop offering majors in affected majors? Of course not! They make too much money selling those expensive courses.
Does it mean college itself is becoming a waste of money? Not necessarily…but certain majors might be. So for students considering college—and especially for those about to take out loans and go into debt—we strongly advise taking a close look at the desired major and the probable post-graduate outcomes (i.e., current salaries, job outlooks, the potential for the field to shrink due to AI or other industry changes, etc.).
Hypothetical Case Study: Mary is a California resident. In her state, the average cost of living is ~$53,000 per year. She attends UC Santa Cruz. Her annual, undergraduate in-state tuition and fees are ~$15,000. Her off-campus living expenses are ~$16,700. Combined with books, materials, supplies, equipment, transportation costs, health insurance, and various personal expenses, Mary’s projected budget is ~$40,000 per year. She borrows $20,000 in student loans to earn a B.A. in Art. After graduation, she lands a job as an art instructor, which pays $18 an hour. At 40 hours a week, Mary makes $720 a week before taxes. That’s $580 a week after taxes. Her pre-tax income is thus $37,440 a year. After taxes, it’s $30,160. Santa Cruz has a 9.25% sales tax rate which digs deep into the income’s actual spending power. At this point, Mary earns ~$23,000 less than the average cost of living in the state, so she’s barely making ends meet, as-is. Meanwhile, now that she’s graduated, she’s required to start paying back the $20,000 in student loans, which are now rapidly accruing interest. Alas, she has a hard time making even the minimum payments, most of which go toward the loan interest, not the principal. Thus, her balance barely goes down year after year.
The above is just a hypothetical example of real-world situations in which hundreds of thousands of college grads get stuck in. And we’re not trying to pick on art as a major that might not pay off after graduation. Many creative majors can pay quite well!
But, based on the outcomes we’ve noticed in recent times, completing a degree in one of the following majors may not earn graduates enough to pay off five-, six-, or seven-figure student loans easily…
Department of Education's College Scorecard
As The Brookings Institution notes, “One factor differentiating those who struggle with those who thrive is the program in which they studied.” Brookings relies on data from the DOE’s College Scorecard, and some of the findings suggest that student borrowers accumulate the most debt in the following majors:
Accounting
Allied Health Diagnostics
Biology
Business Administration
Communications
Criminal Justice
Dentistry
Law
Liberal Arts and Sciences
Medicine
Nursing
Osteopathic Medicine
Pharmacy
Psychology/Clinical Psychology
Social Work
Teacher Education
Students in the above majors accumulate the most debt…but many of those students “graduate with student loan debts that are modest and commensurate with their earnings.” In other words, many of those majors—such as nursing, pharmacy, dentistry, law, etc.—lead to such high-paying jobs that graduates tend to have fewer problems paying back their loans.
But how about graduates from programs in business admin, communications, liberal arts, psychology, social work, or teacher education? In some cases, graduates with such majors can earn solid incomes, especially if they go on to graduate programs. But for those at the undergrad level, many “rarely earn more than a typical high school graduate,” per Brookings’ findings.
Meanwhile, other sites note that graduate programs can make matters worse. Lending Tree cites that “majors with the lowest earnings-to-debt ratio included law, pharmacy, and education, in part because of the postgraduate degrees that these fields often require. Plus, the early career wage in these occupations was measured as middling at best.” In other words, grads from some master’s and PhD-level programs might have to wait years before they start truly earning enough to dig their way out of debt.
So what should students major in? Lending Tree suggests that STEM majors pay off the most and fastest. The top ten spots on their “Majors with the highest early career earning potential” are all related to either science, tech, engineering, or math:
Chemical Engineering
Computer Engineering
Electrical and Electronics Engineering
Industrial Engineering
Aerospace Engineering
Mechanical Engineering
Computer Science
Engineering
Civil Engineering
Economics
At Gladeo, we know not every student has an interest in or aptitude for STEM subjects. Universities.com’s 10 Useless Degrees of 2023 And What To Major In Instead offers several insightful, and often surprising, tips for liberal arts-related majors. While we won’t go so far as to say any degree is “useless,” certainly some are inherently more valuable than others when it comes to high-paying career opportunities.
