Wednesday, January 05, 2011

How Your Degree Affects Your Income Potential

When in school you are told to explore different areas and find things you like to do. You are taught to use this information to help you decide what area to major in when you go to college. Unfortunately, you were not told that if you attend college and get $100,000 in student loans you have to get a job making $100,000 to even come close to paying back your student loan debt.

Getting a bachelor’s degree allows you to earn on average $1,000,000 over the life of a career versus just having a high school diploma. However, a college education can come with a price. According to, the top 10 majors with the highest salaries are: electrical engineering, computer engineering, petroleum engineering, biomedical engineering, aerospace engineering, chemical engineering, nuclear engineering, applied mathematics, economics and physics. Art, literature, foreign languages, history and social work majors tend to make the least amount of money per year.

The cost of college tuition increases faster than the rate of inflation. It is difficult to decide what to major in at college but now college students have to consider the earning potential before deciding a major. If you have $100,000 in student loan debt and earn $30,000 a year you may never be able to pay off your student loans and probably won’t have enough money to pay for anything else.

Deciding to get an advanced degree depends on the major and the job market. For those with an undergraduate degree who decide to go to law, dental or medical school, the education pays off. However, if you major in English and get a graduate degree in history you may not increase your earning potential by a large amount. Advanced degrees provide more income potential when starting a job or if you have several years’ experience in a particular field. Here are some tips if you decide what you should major at college.

1. Living. Stay home at least 2 – 3 years after you graduate from college. This will help you save money and you can get a handle on paying down your student loans. During this time try to work a part-time job plus your full-time job to double or triple your student loan payments. The most interest on the student loans accrues during the first 2-3 years of the loan so if you are able to pay more than the minimum monthly loan payment you will be able to pay your balance down faster.
2. Major. Major in a field that has income potential. If not, you can get a minor or take classes in areas that you love or enroll in a dual major program.
3. Volunteer. You can do volunteer work in the field that you love. Try getting internships in the field you love where you can apply skills learned in your major. When looking for a job after college this will make you more appealing as a candidate for employment.
4. Interest. Figure out what subjects you are interested in or like, what classes you received “A’s” or “B’s” in and explore what industries use that knowledge.
5. Get feedback. Ask your school counselors, teachers, parents, friends or family members what skills they think you have or what areas they think you would do go good in and explore those as a major.

If you decide to live a modest lifestyle you can major in a field you truly love. However if you want to live a certain lifestyle, go on yearly vacations, plan for retirement, own a home and have a family you may need to think hard about what to major in college and how you will pay for college.

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