How Much Does It Cost Colleges to Offer Majors? Should You Care?
Most college students know how much it costs to pursue a degree in their chosen field of study. But how many know – or care – about production costs? A recent report, “The Costs of and Net Returns to College Majors,” reveals how much it costs colleges and universities to offer majors.
Below are selected excerpts from the report, detailing costs by per credit hour:
|Major||Total Per Credit|
All degrees are not created equal
Engineering and architecture are two of the two highest-paying majors on the list, so schools with these programs will see the fruit of their labor in the form of graduates with the potential for lucrative earnings. Ironically, business and computer science – two other high-paying majors – are among the least expensive disciplines to produce. Art and health sciences are typically not high-paying majors, and yet, it costs a lot to offer these programs.
Among the study’s authors is Professor Seth D. Zimmerman, a faculty research fellow at the National Bureau of Economic Research and an assistant professor of Economics and Richard N. Rosett Faculty Fellow at the University of Chicago’s Booth School of Business. Although the study does not directly address the components that drive differences in costs, he believes that faculty salaries and class sizes are the two key factors.
That said, will colleges eventually pass these costs along to students? “Some institutions charge different tuition by major or by course level, although recent survey data suggests that most do not,” Zimmerman says. However, he notes that there has been an increase in the number of schools that do charge differential tuition.
“Institutions that do charge differential tuition do not always do so by raising prices for higher cost degrees– they are sometimes trying to push more students into areas of perceived labor market need,” Zimmerman explains.
Perhaps these efforts would help to shift the balance of students in certain disciplines. A recent report reveals big gaps between the degrees students earn and in-demand jobs. Another study warns that STEM graduates are not keeping pace with open jobs, leading to the prediction that America will need foreign labor to fill STEM jobs.
In fact, people have proposed that STEM majors receive larger student loan amounts because they would be less of a credit risk than students who major in fields that may not lead to well-paying jobs and are therefore “risky borrowers.”
The differential pricing effect on majors
A recent report on differential pricing by Kevin Stange reveals that when large research universities charged more for such expensive majors as engineering and business, there was a decline in the number of students enrolling in these disciplines. Women and minorities were more likely to be negatively affected, and even additional financial aid in the form of grants did not compensate for the increased tuition amounts. State funding for higher education has decreased significantly, putting more of the financial burden on schools.
But Zimmerman doesn’t think colleges will automatically start phasing out costly majors that don’t lead to high-paying jobs. “I think it depends on what students want to study, and if students want to study majors that lead to low earnings returns, I expect that many colleges will offer them,” he says. “There is a lot of evidence that students value more than just financial returns when making major choices, although they do appear to prefer higher-paying majors when the economy is doing badly.”
Zimmerman is not in favor of phasing out majors based on this criterion. “One point we make in the paper is that policymakers should think about public returns as well as earnings.” He believes that the work of such professionals as artists and philosophers is important, even though they don’t make a ton of money. “We should weight these benefits against the relatively low private returns.”