Student Debt By Major: What Not To Study To Avoid A Lifetime Of Debt Slavery

Tyler Durden's picture

As recently reported by the Project On Student Debt, 7 in 10 seniors who graduated from public and nonprofit colleges in 2013 had student loans, with an average debt load of $28,400 per borrower. This represents a two percent increase from the average debt of 2012 public and nonprofit graduates. It is also a new record high.

Those curious about the geographic breakdown of the student debt burden by state, can do so at the following interactive map:

 

It goes without saying that while student debt is bad, record student debt - which at the Federal level amounts to over $1.2 trillion and rising exponentially - is worse.

In fact, as shown previously, the unprecedented debt burden on the Millennial generation has been used to explain why the largest generational cohort in US history is unable to carry the weight of the economy on its shoulders, why the Millennials are perhaps the most financially disenfranchised generation, and why the labor force participation rate has collapsed in the past five years, as older workers rush back into the work force (thanks to ZIRP crushing the value of their savings) while young Americans chose to remain in university (where they can take remedial high school classes among other things) and out of the labor force in hopes of holding out a better job market (for the 6th year in a row).

However, since all college educations are most certainly not created equal, one outstanding item has been the debt breakdown by field of study, or major.

This is where the latest project and research paper from the Hamilton Project, which comes in handy. It examined earnings for approximately 80 different majors and as the NYT summarizes, allows people to look up typical debt burdens by major, over the first decade after college – which is when people tend to repay their loans.

The project authors note that for the graduate with typical debt level and earnings, payments under the standard 10-year repayment plan take up 14.1% of earnings in the first year, but gradually fall to only 6.5% of earnings in the tenth and final year. This repayment strategy, however, can place a particularly heavy burden on graduates from majors whose earnings start low before rising later in the career. For these students, college may not provide the cash flow needed to easily pay off loans in years immediately following graduation.

The study's four conclusions:

  • Debt burdens vary a lot across majors. In the sixth year of repayment, typical drama, music, religion and anthropology majors are still devoting more than 10 percent of their earnings to loan repayment. Other majors with fairly high early repayment burdens include philosophy, psychology and education. By contrast, engineering, computer science, economics and nursing majors are paying 6 percent or less of earnings in their sixth year.
  • In the first five years after earning a bachelor’s degree, the typical student receives a 65 percent raise. (This rise for an individual person, as she ages and becomes more experienced, is occurring even as pay growth across the economy is weak. Today’s 30-year-old is making more than he did at 25, but not much more than a 30-year-old was five years ago.) Unfortunately in recent years, wage increases have become deminimis, suggesting that this may no longer be uniformly true.
  • Many of the majors that pay the least directly out of college also have the biggest raises in the first few years. Graduates who major in therapy professions, nutrition or fine arts, for instance, all make less than $20,000 coming out of college, but all see their pay more than double in the first five years. A typical nurse, by contrast, makes almost $45,000 in the first year but receives about a 20 percent raise over the next five years.
  • The growth of earnings for most college graduates means that some of the discussion about student debt has the wrong focus. The overall amount of debt isn’t a problem for most graduates: The typical debt, for someone who has debt, is about $26,500, a manageable sum in most college-graduate careers. The problem for many, instead, is when they must repay their loans: early in their careers, when they’re making the least. In some majors, including health education and drama, the typical graduate with debt must devote an imposing 25 percent of her earnings in the first year out of college to loan repayment. “Repayment issues for the bulk of students,” Mr. Hershbein says, “are a matter of timing, not the amount of student debt.”

And since more and more students seek the safety of college to avoid the "hardship" of a job that pays less than your average Millennial expected, or though they were worth, and thus are forced to dilute their field of study and pick increasingly less monetizable majors, it becomes a Catch 22 whereby students increasingly find it impossible to overcome a staggering debt burden early on in their career, which in turn hinders normal career formation, and skews the economy adversely leading to such unintended consequences as the Fed looking at a sub-6% unemployment rate, while the slack-filled economy has rarely if ever been weaker and real wages are at same level as during the Lehman collapse.

Below is the student loan repayment calculator that shows the share of earnings necessary to service traditional loan repayment for 80 majors. Readers can choose or search from each of these majors, as well as change the size and features of the student loan using the selection boxes above. By default, loan features reflect the experience of a typical graduate borrower, and earnings include part-time workers and those who experience unemployment throughout the year (but exclude those with graduate degrees, as these individuals often accumulate additional debt).

Feel free to play around with the interest rate selector: it shows yet another reason why the regime simply can not afford to send interest rates levitating higher despite the optical effect it would have on expectations for an "economic recovery."

 

In retrospect it is clear why 24% of Millennials  (and rising) "Expect" student loan forgiveness, and why increasingly more private (and soon public) lenders are starting to grant it.

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Bangalore Equity Trader's picture

Listen Undergrad and Postgrad Zero's.

The most important topic to study:

Dreams 101, the worst way to live a grounded life.

ACP's picture

Listen.

LISTEN.

LISTEN!

L-I-S-T-E-N

L---I---S---T---E---N!

LLLLLLLLLLIIIIIIIIIISSSSSSSSSSTTTTTTTTTTEEEEEEEEEENNNNNNNNNN!

Shocker's picture

In the end, your still fighting to find a good paying job

Layoff / Closing List: http://www.dailyjobcuts.com

-

RobD's picture

Look for Scientific Games on the list before the end of the year. They just finalized a merger with Bally Tech and will be laying off at least 20%. I may be one of them. Good times.

Four chan's picture

the federal reserve's"system", enslave a fee people/nation to debt,

capture all assets through boom and busts using money it controls and

prints out of thin air. create principle, never interest and devalue all

savings through inflation aka printing.

 

well folks its been 100 years how did the owner's of the fed inc do? happy slaves?

Dakota Kid's picture

If you like your education, you can keep your education and your debt.

Latina Lover's picture

What about gender and LGBT studies? Where do they lead, LOL?

Pool Shark's picture

 

 

The author should have studied English...

 

 

Eeyores Enigma's picture

The only thing to study is how to make money PERIOD! 

or perhaps How to make somebody elses money make you money.

balolalo's picture

THIS IS NOT A LIST OF MAJORS IT IS A LIST OF OUR PRIORITIES AS A CIVILIZATION. 

FreedomGuy's picture

There is some merit to that. In a free economy the price signal as reflected in salary is a measure of the overall value of that occupation.

Handful of Dust's picture

In the end, your still fighting ... Raj, Abdul, Wang and Perdro ... for that job."

 

Clinton, Bush and Barry have globalized your borders so might as well just buy more Vaseline, lay back and enjoy it 'cause Barry just added 6 million more competitors for your jobs with his 'Executive Order.'

FreedomGuy's picture

Supply and demand rule, too, LOl! This is the problem of unlimited immigration, legal or illegal. The other problem is the problem of social welfare costs.

jimmytorpedo's picture

A Philosophy degree might not pay well but it sure helps to understand how badlly you're getting fucked.

Fortuately it can help you get paid well and understand that.

--someone who learned to think and made a few bucks (and quickly converted them to PM's, lead and beef on the hoof)

Bangalore Equity Trader's picture

Listen ACP.

Yes I agree, as do your other greenies. Those are excellent alternatives.

But Listen, our overlords only allowed "SUDDEN DEBT" the privilege of cap locks.

Philo Beddoe's picture

You are a good shit disturber, Ganesha. Fonestar would be proud. 

Listen. This is not an echo chamber. Well. maybe a bit....a bit....a bit......a bit. 

Bangalore Equity Trader's picture

Listen.

I only speak the truth. Those are excellent alternatives, they "SOUND" good dooood.

malek's picture

Listen.

You only speak out of your ass.

Bangalore Equity Trader's picture

Listen now,

that's just mean spirited.

The9thDoctor's picture

Read.

Because no one is listening.

ThirteenthFloor's picture

p < p+i

No one can pay interest unless the physical economy is growing or banks are printing. Bottom line this system will fail. Take cover. If you wondering the elite will remain and start it all over again. History repeats itself.

Creepy A. Cracker's picture

Listen.  Beyonce.  Columbia Records 2006.

TurdOnTheRun's picture

Listen ! Why do you not listen to what I am typing. Listen to my typing and you may learn sumtin.

ersatz007's picture

....to the flower people.

holdbuysell's picture

Blood squeezing, meet stone.

Bagbalm's picture

Add Marine Biology. Thanks to Jacques Cousteau TV specials we probably have one wanna be Marine biologist for each whale.

wee-weed up's picture

Add Marine Biology. Thanks to Jacques Cousteau TV specials we probably have one wanna be Marine biologist for each whale.
--------------------------------------------------
Yep, ditto astronomy and Neil deGrasse Tyson. The number of available astronomy jobs is almost nil.

wee-weed up's picture

 

 

Astrology?

Yep, with the increasing numbers of dumb sheeple...

In the last 6 years, that will definitely be a growing field.

KnuckleDragger-X's picture

Astrologer and economist are the same thing, the astrologer doesn't get to go to the big banker parties though.....

Pool Shark's picture

 

 

But, you'd think astrologers would be able to predict they'll never be able to repay their student loans.

 

Me, I want to be a cosmologist and ride around in a wheelchair talking through a machine like Stephen Hawking...

 

847328_3527's picture

Modern Body Painting with lots of Hands-on lab work ... that has to be worth at least 25 grand as long as the school is has a fair number of nubile female art majors ... or desperate young girls needing supplemental income to pay for sundries.

Wilcox1's picture

Asstrology and sheeple, prolly fill the class on that one

post turtle saver's picture

heavens no, we have enough economists as is

PoliticalRefugeefromCalif.'s picture

.."Try astrology instead?"..

Astrology Tatoo parlor, where science meets art.

benb's picture

I think you just about covered the whole enchilada.

 Just one other thing crosses my mind.... what if the citizens of this country got the free education the illegals are being offered? Help me out here. Would that affect the student loan debt burden?

MachoMan's picture

what if the citizens of this country got the free education the illegals are being offered? Help me out here. Would that affect the student loan debt burden?

Probably wouldn't change much.  First, many states (mine included) essentially offer to pay for undergrad for people who can maintain some semblance of a decent GPA in college (here I believe it is a C average - most of it from state lottery money).  The problem of course is that they get started with school, get hooked on the pot and pussy, and you can't blow them out with dynamite.  They were drawn to it, at least in part, by the tuition tab being on the state.  Once they shit the bed, the next semester is on them.  The real education then becomes: how long can I stay here before getting kicked in the balls by the real world?  Those who are good at the game get to stay out of mom's basement...  those who aren't get to do the same, but have to at least hide it a little from the parental unit.

Second, student loans only partly go to educational expenses.  Many, if not the majority, of students use student loans as a means of living.  This at least makes a little sense because anyone who is actually balls deep in school would probably have an incredibly difficult time juggling a job (I know I did at various times).  However, once you start handing out money for non educational expenses, people will draw whatever they can to keep in the lifestyle they desire.

Third, your question is a bit near sighted...  I guess we could focus solely on the student loan debt burden, but I think the question should be more fundamental than that: why do people make terrible decisions, ignoring objective indicators?  In short, if it's not student loan debt, then it will be car loans, house loans, credit card bills, payday lending, advances from the most reliable tax return preparers (holy shit at the people lined up recently), etc.  The net effect being the same...

Fourth, no one can get a free education because that money is stolen from the rest of us.  If you really want to reform things, then you have to bring down the cost of a degree without subsidizing it.  This means much gnashing of the teeth for academics and, especially, administrators.

847328_3527's picture

Outrageous Pensions Turning Ill. Teachers into Millionaires

 

http://www.chicagonow.com/publius-forum/2010/08/outrageous-pensions-turn...

 

Fascinating article. I note my former anthropology teacher, who always complained how little he was paid, has a $1 million house near the Uni and a second 2,800 sf house in Colorado, I guess to "get away and relax." Both of them paid off another prof tells me.

I'm not begrudging him but I wish those types of people would not go around complaing how poor they are or how poorly they are paid.

logicalman's picture

Education used to be encouraged, now it's just another way of producing debt.

Cars used to be about the freedom of travel, now they are just another way of procucing debt.....

Houses used to be what kept the rain off and the cold out.

Look around, you will see a pattern.

 

Creepy A. Cracker's picture

Agreed about the education and debt. 

If you look behind the curtain of the student loan system you'll see it's a HUGE money transfer scheme to government and teacher's unions.  The salaries and pensions of state college teachers are enormous and the instruction hours tiny compared to a "normal" 40 hour work week.  It didn't used to be this way.  Today the government unions control the politicians who pay the government unions.

TBT or not TBT's picture

Student loans fund the government party.   That's why Obama and  company nationalized that business, to keep the money flowing despite the unsound economics.  The tuition growth was unsustainable otherwise.    Eventually, this sucker's goin' down.  

Creepy A. Cracker's picture

"That's why Obama and  company nationalized that business, to keep the money flowing despite the unsound economics."

Exactly.  It's a shame that our education system is so poor that more people don't understand this.  Economics (Austrian, not the fake, Keynesian economics), and basic business cash flow, should be mandatory in all grades along with reading, writing, and arithmetic.  But one can't expect government schools to teach about the fraud embedded in government school tuition...

FreedomGuy's picture

The problem with so many college students is that they look at college as sort of entertainment. Besides the college experience itself they look at their degree as something they find interesting or fun. That is okay if you or your family are wealthy and the degree is not important to your future. It is not okay if your living depends on it.

I have a lot of Asian friends. One thing they almost universally do is look at a degree as a ticket to making a real living, especially if they are from the middle class. They tend toward concrete things like engineering, accounting, medicine, pharmacist, etc. I doubt you will see the Sports Psychology or Central American Lesbian Basket Weaving courses with many Asians in them.

ZippyBananaPants's picture

We studied some folks