Why do so many college graduates regret choosing their field of study?
Part of the problem may be high student loan balances that dwarf even an entire year of income. Almost half (46%) of college graduates holding debt make less annually than they owe in student loans, according to our new survey of nearly 1,000 grads across three generations.
Given this cash flow problem, many of those surveyed reported feeling disappointed about how college prepared them for their careers. Some also expressed strong opinions about whether future students’ borrowing should be capped according to their projected earnings.
- Female college graduates (53%) were much more likely than male peers (37%) to owe more student loans than they earn in wages (Read more)
- Nearly half of grads (49%) wish they had chosen a different major. In addition, about 2 in 3 reported not using the degree they earned in their current career. (Read more)
- 55% of college grads believe that student loan borrowing should be capped, depending on expected earnings for a student’s intended career field. Support for this idea rises to 69% among those who currently have student loans. (Read more)
- More than 45% of respondents felt their school did a moderate to poor job in informing them about career prospects. (Read more)
You could pin the blame on a range of factors, from stagnating wages and a pandemic-affected economy to flawed consumer choices and underperforming schools. But this much is clear: Almost half (46%) of all college graduates are raking in less per year than they’re expected to repay in student loans.
|By the numbers: How a student loan balance increases|
|Research shows that a majority of student loan borrowers fail to pay off their balance within their assigned loan term. This is troublesome, because a longer repayment makes for a larger repayment. For instance, if you were to borrow $30,000 at a fixed interest rate of 6.00% on a 10-year repayment plan, postponing payment for four years would increase the balance to $37,204, according to our student loan deferment calculator.|
Given the persistent gender pay gap in the U.S., it’s not surprising that women are more likely than men to earn less that they owe — 53% compared to 37%. Women with bachelor’s degrees or higher earned just three-quarters of what men did in 2019, according to our April 2021 study.
Some borrowers who feel snowed under with student loan debt might be tempted to play the blame game. But most, according to our survey, blame themselves.
About 1 of every 2 grads (49%) either “somewhat” or “definitely” regret their choice of major — a proportion that rises to more than 2 out of 3 (68%) among those who currently owe student loans.
While not having studied something more lucrative can lead to these regrets, a big issue is how useful a given degree turns out to be. About 2 in 3 respondents to our survey said they’re not putting their specific degree to use in their current career.
Having second thoughts about career choices isn’t uncommon. (Note, too, that career unhappiness is especially prevalent among Black Americans, according to our August 2020 survey.)
At the same time, it’s no secret that some majors and the careers they lead to have more financial value than others. For example, it might be worth going into debt to become an engineer, since that field has bright job prospects and an above-average salary.
Federal income-driven repayment plans can restrain how much you need to repay on your student loans. Income-share agreements can also cap your repayment size.
But as for how much you borrow in the first place, the only limit is how much the lender is willing to offer. There are no restrictions based on your expected salary, so someone pursuing a career as a teacher usually faces the same federal and private loan limits as a peer aiming to be a doctor.
Our survey respondents would like to see this change: More than half (55%) of college graduates believe borrowing should be capped according to a student’s expected earnings in their desired field. Among those who currently owe student loans, nearly 7 in 10 grads (69%) think such limits are a good idea.
It should be noted: The cost of education does vary by degree and program. The aspiring teacher in the example above will typically spend far less on their degree(s) than their future-doctor classmate, even if that teacher attends a master’s program.
Still, imposing limits on borrowing could nudge more students to reconsider their career choice before they start borrowing for the necessary degree.
Do you pursue the academic path you’re most passionate about, even if the job prospects are dim? Or do you opt for the major or degree that leads to a higher-paying career, and the life it affords?
These questions often confront the families sending kids off to college, and opinions are mixed in terms of the information available to make the right choice. Our survey found that nearly half of our respondents (45%) thought their school did “moderately well” or worse in informing them about career prospects.
However, in the case of our college graduate survey respondents, the choice has already been made. What they should be asking themselves now is: How do I balance my career goals with my student loan debt obligations?
Fortunately, there are a variety of potential solutions, even for those with high balances and relatively low earnings. Some of the possibilities above include returning to campus. In fact, according to our March 2021 survey, large numbers of consumers under 40 were considering going back to school in light of the coronavirus pandemic.
Consider some of the options in the table below, both for those considering a new credential and for those keen to stick with the field they’re in:
|If you plan to stick it out in your career||If you’re considering a new career|
|● If you believe you’re underpaid, consider your options
● Choose a budgeting method to make the most of your income
● Set repayment goals to stay on track
● Learn about loan forgiveness programs and loan repayment assistance programs to end your debt ahead of schedule
|● Research whether your desired position requires additional education
● Look into shorter-term academic programs, such as tech bootcamps that defer tuition until you find a job
● Apply for financial aid for adults returning to school
● Treat additional student loan borrowing as a last resort