Be smart about your college major

Steve Merrell |

High school graduation season is upon us. In the coming weeks, valedictorians across the country will exhort their fellow graduates to follow their dreams. For many high school graduates those dreams include heading off to college. However, for the unwary the high price of college can turn an academic dream into a financial nightmare. If you are one of the college-bound, take some time to think it through. Here are some things every college freshman (and their parents) should consider before they head off to the ivory tower.

First, count the all-in cost of a university education. College has become an enormous investment. In 1985, undergraduates in the University of California system paid around $1,324 per year for in-state tuition. In contrast, freshmen entering the UC system last year paid an average of $12,570 for tuition and fees.

But tuition is just the beginning. In addition, you need to factor in the cost of housing, food, transportation, books, a computer, medical insurance, and entertainment. After you fully load in all the costs, a year of college can easily be triple what you pay in tuition. Add in the opportunity cost of being in school instead of working full-time and the cost of a year at college increases to $60,500. With only a modest amount of inflation, the all-in cost of your four-year degree could easily swell to over $250,000. Using similar math, the four-year cost at a private university could easily top $335,000.

Second, since college so expensive, it pays to be financially savvy about your choice of major. A few years ago, my son’s friend was heading off for her freshman year at UC Davis. Her goal? Study English and eventually earn a Master’s degree in poetry.

Please don’t get me wrong. I love poetry and the humanities. However, spending $250,000 to study poetry full-time is simply not a sound financial decision. Unless you are independently wealthy, you need to choose a major that will provide a good return for the cost of your education. 

In 2015, Georgetown University published a study called “The Economic Value of College Majors.” Their shocking conclusion was that all Bachelor’s degrees are not created equal. Workers between the ages of 25 and 59 with degrees in science, technology, engineering and math—the so-called STEM majors—earned on average $76,000 per year, the highest of any group in the study. On the other hand, workers in education, arts and social work earned the lowest—about $46,000 per year.

There is nothing wrong with majoring in education, arts or social work, but be aware of what it will likely mean for your earnings potential. If you decide to go that route, you would be wise to look for ways to reduce the cost of your education.

One way to reduce the cost is to choose a Cal-State school instead of something in the UC system. CSU Monterey Bay is a great local school that is doing some very innovative things. Tuition at CSUMB is a little more than half of a UC school and by living at home you can reduce your costs even further. Community colleges, including our very own Monterey Peninsula College, provide another excellent educational option at a fraction of the cost of a four-year school. After two years, you can transfer to a four-year university well on your way to your desired degree.

Third, working while going to college is highly desirable—within limits. In addition to helping defray the cost of college, a study by the non-profit Forum for Youth Investment identified several real life benefits for students who work while enrolled in college. These include greater engagement in learning, greater success in the job search, better work skills, and better college persistence.  These benefits were highest for students who worked in jobs related to their majors. However, the benefits were offset by lower grades for students working more than 20 hours per week.

Finally, be very careful about student loans. While they may seem like an easy way to plug a college funding gap, the long-term financial cost of student loans can be devastating.



Steven C. Merrell MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to