Student Loan Debt and Starting Salary as Factors in Choosing Colleges

Last updated on March 23, 2019

An article, “Transparency Concerns” in Inside Higher Ed caught my attention. The article focuses on the surprising bipartisan agreement around the “Student Right to Know Before you Go Act.” This bill was introduced a year ago and would enlarge state-level data collection efforts to link graduates’ salaries back to their colleges and majors.

The larger focus of this and related articles is that this data would be instructive to students and families as they make their choice for college and major. While I find this to be valid argument I think it also misses a larger point. Is it important to know how much money a student can make out of college? Yes. Should that be the only consideration? No.

The trouble with this line of thinking is that it implies that students should only go to schools pursuing majors in which higher salaries are offered. Not every student has the temperament or talent for the higher earnings majors. Nor are the higher earnings majors the only purpose of a higher education. Many important fields require a college degree though graduates in those majors may initially have lower earnings power.

An important question to consider in light of this data is how it informs students’ ability to borrow, and more important repay, their student loans. Horror stories abound in the news that students are spending 30% or more of their income paying off their student loan debt. If we look at the starting salaries along with average student loan payment the data becomes much more useful.

The best data available today if from an online tool created by College Measures, a nonprofit group supported by the American Institutes for Research to view graduates’ salaries by academic program in Virginia. Taking a few pieces of date from that study presents us with an informed view of reasonable student loan debt as presented in the table below. The table below looks at 4 year public and private universities in Virginia. Colleges were selected based on High, Median and Low Student Loan Debt by Sector as reported by The Institute for College Access & Success, College Insight. Only average debt by school was available. The Salary information comes from AIR and Loan calculations were made using the calculators at finaid.org.

School

Major

Starting Monthly Salary

Average Student Loan Payment

Student Loan Payment as % of income

Hampton University Nursing

$3083

$424

11%

Average Graduate

$2886

$424

15%

Legal Assistant

$2431

$424

17%

Shenandoah University Nursing

$3921

$311

8%

Average Graduate

$3122

$311

10%

Env. Studies

$2025

$311

15%

Ferrum College Accounting

$2667

$93

3%

Average Graduate

$2317

$93

4%

Env. Studies

$2248

$93

4%

Virginia State University Interdisciplinary Studies

$2978

$247

8%

Average Graduate

$2402

$247

10%

Media Studies

$2065

$247

12%

Radford University Nursing

$3696

$212

6%

Average Graduate

$2652

$212

8%

philosophy/Religious Studies

$1746

$212

12%

Old Dominion University Engineering Technology

$4548

$189

4%

Average Graduate

$3043

$189

6%

Art Studies

$2203

$189

9%

By reviewing the data this way, we have a picture that not only provides insights into average starting salaries but how affordable each program is by school and major of study. Students interested in majoring in Nursing will find the program far more affordable at Radford University (Loan Payment 6% of starting salary) than at Hampton (Loan Payment 11% of starting salary) or Shenandoah (Loan Payment 8% of starting salary) even though their starting salary may be less. Even looking at the average starting salaries proves insightful to families. Graduates of Shenandoah have the highest starting monthly salary of $3122 but 10% of their income will go to their loan payment. Graduates of Old Dominion have the second highest starting salary of $3043 but only 6% of their monthly income will go to their student loan payment. On the lower end of the starting salary scale, Environment Studies majors would be financially better off attending Ferrum College (Loan Payment 4% of starting salary) as opposed to Shenandoah University (Loan Payment 10% of starting salary.

As parents and students gain increased access to data on starting salaries it is instructive to also know how much debt the student may accrue. The combination of those 2 factors is far more instructive than any single factor.

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