Lifetime college returns differ significantly by major, research finds

Dive Brief:

• The lifetime rate of return for a college education differs significantly by major, but it also varies by a student’s gender and race or ethnicity, according to new peer-reviewed research published in the American Educational Research Journal.
• A bachelor’s degree in general provides a roughly 9% rate of return for men, and nearly 10% for women, researchers concluded. The majors with the best returns were computer science and engineering. 
• Black, Hispanic and Asian college graduates had slightly higher rates of return than their White counterparts, the study found. 

Dive Insight:

The analysis looked at 5.8 million Americans ages 18 to 65, using data from the U.S. Census Bureau’s American Community Survey between 2009 and 2021. Half of the individuals’ highest degree was a bachelor’s. The other half had only a high school diploma.

“Our cost-benefit analysis finds that on average a college degree offers better returns than the stock market,” co-author Liang Zhang, a professor of higher education at New York University, said in a news release. 

Engineering saw the best rate of return of the 10 majors examined, with a nearly 19% return for women and almost 14% for men. Computer science followed, with rates of nearly 15% for women and 13% for men. 

In some cases, the return differed notably between men and women. Women had a 13.7% rate of return for health-related majors, compared to a lower return of 11% for math-related ones.. For men, math saw slightly better returns, at 9.3% versus 8.8% for health. 

Researchers observed the lowest rates of return in education, humanities and arts majors. 

Zhang suggested that students choosing low-return majors consider pursuing more training or education to help their job prospects. 

“From a public policy perspective, if certain majors are deemed essential to society but have low returns, policymakers may consider increasing financial aid for students in those majors or increasing pay levels for workers in related occupations,” Zhang said. “This can help ensure that the social benefits of these majors are recognized, even if their individual returns are lower.”

The higher rates of return for women, as well as those for Black, Hispanic and Asian students, don’t mean that those groups see higher earnings than White or male students over the course of their careers. 

On the contrary, women made significantly less than men in the sample, especially for the high school degree-only group. 

Because women see lower opportunity costs from attending college — since they would have lower potential earnings during those years, they are more likely to see an earnings bump initially. 

Researchers suggested that the decision to look at students who have only a bachelor’s degree could have undervalued the payoff from majors where many graduates pursue advanced degrees. For example, biology and life science majors are the most likely to attain higher degrees.