Yahoo Finance English degrees are paying for engineering majors
While Liberal arts degrees have become the butt of many jokes in recent years as being worthless pieces of paper, those papers may, in fact, be good for something – subsidizing the costs of pricier majors.
According to a new working paper, the price of expensive degrees in STEM fields – such as engineering, physical science, health sciences and biology – which cost universities much more per graduate, are being offset by cheaper majors, such as English, library science, social sciences and philosophy.
“Our results highlight how policies that fix tuition across majors create systems of cross-field cross-subsidies,” write authors Joseph Altonji, professor of economics at Yale University, and Seth Zimmerman, professor of economics at the University of Chicago.
The research analyzed data about student and administrative expenditures from public universities in Florida.
Overall, the study found that engineer degrees were the priciest, with a total cost of US$62,297.
That figure dwarfs the median degree cost of $36,369.
Other degrees to place in the top five were architecture ($58,764), physical science ($53,716), health sciences ($49,335) and biology ($46,735).
Meanwhile, the cheapest degrees were library science ($28,223), business ($31,482), protective services ($31,689) and communications ($33,070).
Other common Liberal arts degrees, such as English and philosophy, came in at $34,656 and $36,899.
The cost of engineering degrees is about 40 per cent more than the lowest-cost majors, which can predominantly be attributed to higher personnel expenditures.
However, other engineer majors also required more resources in areas such as administration, advising, financial aid, plant maintenance, library costs and student services.
While it costs universities more to educate an engineer, it pays off for students down the road.
The paper found that by age 45, graduates had netted $111,500 after the cost of their degree.
The next most successful majors were computer science and business, taking home $104,000 and $78,200 respectively.
Despite the varying costs, at most universities students pay the same amount of tuition regardless of what major they study.
But the authors argue that institutions spend different amounts of money on different degrees, with lower-cost majors subsidizing pricier ones, like engineering.
The researchers note that there two approaches to balance out the discrepancies.
The first is to create degree-specific tuition while maintaining current levels of spending.
The authors say that some universities have enacted policies that equalize the instructional costs in majors like nursing and engineering.
Others have taken the same approach to encourage students to enroll in “high-need” majors, which are often those in STEM fields with increased costs.
The paper said that these assessments of need based on future labour outcomes should also account for differences in degree costs.
But there’s also the concern that high tuition, as well as their increased dropout rates, could discourage low-income students from pursuing degrees in STEM fields.
The authors also stress that this method could also overlook returns for the greater public.
Charging based on degree could further incentivize students to pick majors based on lowest cost and earning potential, rather than expanding their knowledge or pursuing a passion.
The researchers suggest that a second approach merits consideration: reallocating spending across majors while tuition remains fixed.
The study also found that university funding per credit fell by 16 per cent between 1999 and 2013.
This drop was particularly severe for high-return majors like engineering and health sciences, which saw decreases of more than 40 per cent.
