Engineering Graduates Earned a Return on Their Investment In Education of 21%

Posted on September 8, 2014  Comments (9)

A recent report from the New York Fed looks at the economic benefits of college. While there has been a great deal of talk about the “bubble” in higher education the Fed finds college is very wise economically for most people. They do find a larger portion of people that are not getting a great return on their investment in higher education.

That could well indicate students studying certain majors and perhaps some people with less stellar academic skills would be better off economically skipping college.

Do the Benefits of College Still Outweigh the Costs?

an analysis of the economic returns to college since the 1970s demonstrates that the benefits of both a bachelor”™s degree and an associate”™s degree still tend to outweigh the costs, with both degrees earning a return of about 15 percent over the past decade. The return has remained high in spite of rising tuition and falling earnings because the wages of those without a college degree have also been falling, keeping the college wage premium near an all-time high while reducing the opportunity cost of going to school.

It is hard to beat a 15% return. Of course averages hide variation within the data.

The return to engineer graduates was the greatest of all disciplines examined. Engineering graduates earned a return on their investment of 21%. The next highest were math and computers (18%); health (18%); and business (17%). Even the lowest returns are quite good: education (9%), leisure and hospitality (11%), agriculture (11%) and liberal arts (12%).

These returns look at graduates without post-graduate degrees (in order to find the value of just the undergraduate degree). As those with higher degrees benefit even more but the return on graduate degrees is not part of this study and they didn’t want to confuses the benefits of the post graduate degree with the bachelors degree.

As the article points out those fields with the top returns are more challenging and likely those students are more capable on average so a portion of the return may be due to the higher capabilities of the students (not just to the major they selected). They don’t mention it but engineering also has a higher drop out rate – not all students that would chose to major in engineering are able to do so.

This is one more study showing what we have blog about many times before: science and engineering careers are very economically rewarding. The engineering job market remains strong across many fields; many companies are turning to engineering job placement firms to find specialized staff. While the engineers do voice frustration at various aspects of their jobs the strong market provides significant advantages to an engineering career. As I have said before the reason to chose a career is because that is the work you love, but in choosing between several possible careers it may be sensible to consider the likely economic results.

The study even examines the return for graduates that are continually underemployed (I am not really sure how they get this data, but anyway…) the return for engineers in this situation is still 17% (it is 12% across all majors).

Related: Earnings by College Major, Engineers and Scientists at the Top (2013)Engineering Graduates Continue to Reign Supreme (2013)Career Prospect for Engineers Continues to Look Positive (2011)

9 Responses to “Engineering Graduates Earned a Return on Their Investment In Education of 21%”

  1. The Time to Payback the Investment in a College Education in the USA Today is Nearly as Low as Ever – Surprisingly at Curious Cat Investing and Economics Blog
    September 23rd, 2014 @ 11:46 am

    Now if you start getting to the people with the 50th to 60th percentile capability and potential there is a reasonable case that these people are less likely to thrive economically. So if the costs of college for them are just as high as those in the top tenth percentile it is reasonable to expect they may take longer to pay it back or fail to do so…

  2. This Week in CFD | Another Fine Mesh
    September 26th, 2014 @ 3:27 pm

    […] good of a deal is an undergraduate engineering education? Of all majors surveyed, engineering has the best ROI at 21% versus an average return of about […]

  3. engineering
    October 19th, 2014 @ 2:22 am

    Waoooh am so happy to hear this the future is bright for my engineering dream… Am just some months to fill the void

    Thanks for this post title
    Engineering Graduates Earned a Return on Their Investment In Education of 21%

  4. Anonymous
    November 29th, 2014 @ 4:43 pm

    That’s great news for engineers! Although I bet there is good amount of variability for individual returns. Engineering can be as much of an art as a science and if your heart’s not in it then your degree is just a worthless piece of paper. On the other hand for those of us who love this discipline there is really no ceiling for your success.
    Too bad they didn’t do a further study for graduate degrees, I’d love to see that. Anyway, thanks for sharing!

  5. Mario
    January 7th, 2015 @ 3:35 pm

    I keep reading articles like these and it makes me confident that I have chosen the right STEM based major. I don’t want to be one those people that keeps changing their major every semester so thanks for the data

  6. Singh
    January 30th, 2015 @ 5:30 am

    Hello,

    That is really good news for engineers like me.
    Thanks for such good news.

  7. Encouraging the Next Generation of STEM Professionals » Curious Cat Management Blog
    March 23rd, 2015 @ 6:45 am

    The advantages of gaining science, technology, engineering and math skills (STEM) are fairly well known…

  8. In the USA More Education is Highly Correlated with More Wealth at Curious Cat Economics Blog
    October 19th, 2015 @ 10:58 am

    For high school dropouts, fewer than 1% are millionaires; all families it is about 5%; high school graduates about 6%; 4 year college degree about 22% and graduate or professional degree about 38%…

  9. Personal Finance Considerations for Going into Debt for Education | Freelance Lifestyle, Finance and Entrepreneurship Blog
    September 7th, 2017 @ 7:24 am

    […] The huge costs also mean I think it is much more important to take into account the likely financial picture after one graduates. It is much different to go into debt for a engineering or math degree than one with much lower expected salaries (Engineering Graduates Earned a Return on Their Investment In Education of 21%). […]

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