Does your choice of college and major impact how much money you'll make? Why yes, it seems it does, but only in certain majors, and perhaps not for the reasons you think it does.
A study by Eric R. Eide, Michael J. Hilmer and Mark H. Showalter showed that among STEM graduates, the difference in institutions mattered little when it came to average salaries. If you're a business or liberal arts major the choice of school matters quite a bit.
“Specifically, for business and other liberal-arts majors, the prestige of the school has a major impact on future earnings expectations. But for fields like science, technology, engineering and math, it largely doesn’t matter whether students go to a prestigious, expensive school or a low-priced one—expected earnings turn out the same. So, families may be wasting money by chasing an expensive diploma in those fields.”
Many families spend a lot of time and energy trying to ensure that their child craft a college list that includes as many top 100 schools as possible. Most parents would assume that a prestigious school is always worth the big price-tag. But this study would suggest that their energy is very misplaced as high average earnings for graduates is not guaranteed by big-brand schools.
Supply & Demand
But the question is, why? The authors of the study speculate the reason is due to the standardized curriculum among STEM programs means that graduates all are learning essentially the same skills no matter where they go. Employers are more concerned with the hard skills of graduates and could care less about the brand name of where they graduated.
Business majors and liberal arts majors on the other hand may benefit from attending prestigious schools as they gain better alumni and peer connections, access to graduate programs and further opportunities for learning. (This may be the reason for at least some students as at least one study has found that specifically low-income and minority benefit more from attending a prestigious school.)
These explanations from the authors likely have some bearing on the findings, but they ignore completely the law of supply and demand, which is more than likely causing the imbalance in salaries.
The STEM field is currently expanding rapidly with new job titles being created every day. STEM jobs are plentiful and STEM graduates of all types are in demand. Thus employers are willing to pay a pretty penny for a STEM grad regardless of where he or she attended college, as they know they will have the skills they need to get up to speed in the workplace quickly and begin contributing to the bottom line.
Not only does brand not matter when it comes to STEM jobs, but for the most part, 4-year degree does not matter either. This is the reason that graduates of two-year programs in specific tech-oriented fields can often command wages that surpass those of four-year graduates.
In those fields where there are more applicants than jobs ("supply-driven") the case is entirely different. Employers have lots of potential choices and need ways to differentiate candidates. Sadly, one of the easiest ways (though arguably not the most effective) for them to select an applicant is to use college degrees as filters.
This is why business grads benefit from going to a more prestigious school. Business is the most popular major by far—meaning thousands of new business grads flood the market every spring. The glut of college graduates with a business degree makes it easy for the employer to be more choosy, and more likely to select a graduate with an impressive institution listed on their resume.
Where You Should go to College if You Care About Outcomes
Fortunately, College Factual rankings by major takes into account factors such as this to ensure you are attending a program where you are likely to actually get a job and make money after graduating.
Some of the outcomes-based factors we take into account include average starting salaries, mid-career salaries, graduation rates, and student loan default rates.
Browse our rankings by major to get an idea of what we’re talking about.
Advice to Employers
I can say both as a person in the field of studying data like this every day, as well as an entrepreneur leading a technology company, that the supply-demand imbalance is the single biggest driver in why brand does not matter in STEM.
As employers, the notion that there is consistent curriculum among colleges in preparing students for STEM simply ignores what we look for in new hires. The pace of change in our fields is relentless. We look for learning machines who are hungry to have their hands all over the "new new things" every day and are prepared to reinvent themselves.
When I know I have a "learning machine" in my midst, I do not even care if they went to college.
But how to discover those “learning machines”? That’s a topic for another article in itself.