Personal Finance FAQ

Parents, Your Kids’ College Degrees and Schools Matter

College Football
NOT the reason to send your kid to college (unless they’re paying him to do this).

“If the college you visit has a bookstore filled with t-shirts rather than books, find another college.”
–R. Albert Mohler, Jr.

At West Point, every graduate has a degree in engineering. While we could choose other majors and areas of academic focus to study (I was, for example, a German major), we were required to take enough math and science courses so that we all got bachelors of science in either general engineering or a specialized engineering degree such as computer science, nuclear engineering, civil engineering, etc.

That engineering degree has not been lost on me. While I have never performed a professional job as an engineer, nor am I handy, my understanding of math in particular helped me:

a) Get into a top 10 MBA program
b) Get a job in a credit card company
c) Understand the financials of running a company
d) Make wise money decisions

This impact was recently underscored by New York City venture capitalist Fred Wilson, who pointed out the great financial impact of engineering degrees.

Wilson isn’t the only one touting hard sciences.

A 2009 U.S. Census bureau study showed that engineering was the most valuable bachelor’s degree that one could attain (see Table 6). At the master’s level, engineering still had the highest median salary, but the MBA had the highest average value. That means that there were some MBAs who struck it rich. The highest salaries were higher, but for the ordinary, 50th percentile person, engineering was still better, by nearly $1,000 a month in salary. At the professional/doctorate level of education, law and medicine, unsurprisingly, had the highest salaries.

If you think that your child can waltz into some college, rack up a $100,000 student loan bill, major in northwestern Antarctic literature, and then go be a special snowflake in the world, there is a long life of disappointment ahead.

Where your child goes to school matters, as the Fred Wilson article points out, and what your child studies matters, as the Census Bureau study matters. No matter how much we’d like for the world to be an idealistic place where everyone had equal opportunities to be richly rewarded, regardless of our profession, it’s not that way.

Everyone does have roughly opportunities to be richly rewarded for their work, but it’s their choices that lead to the rewards. The numbers show that choices which lead to mathematically-based professions in life are the ones that are most likely to reap your child the highest rewards.

But What If My Kid Isn’t Good at Math?

There are people who will proclaim that they are simply not “math people.” If you’re talking about differential equations in calculus, then that may be the case, but for the basic skills – high school math – it’s not true. As the University of Michigan’s Miles Kimball explains, it’s all about preparation and hard work, not about natural born mathematics genes.

What happens is that kids go into their first math test of a year, and the ones who worked hard and prepared nail the test. Those kids realize that they did well because they prepared, understand the linkage between hard work and the results, and continue to study hard and do well throughout the year.

The kids who “wing it” and don’t prepare, trying to get by on natural talent alone, don’t do as well. They then fall victim to the attribution bias, thinking that it was greater skill (and possibly luck) that resulted in higher grades for the kids who aced the test, and their little Monkey Brains tell them that they’re just not good at math, so there’s no point in trying, plus there are some cool X-Box games that need playing.

So, what if your kids are in that latter group that didn’t put in the hard work initially and now think that they’re just doomed to think that 2 + 2 = 3?

According to Kimball, all it takes is a shift in mental attitude.

People generally have one of two beliefs about intelligence:

  1. Intelligence is fixed, and there’s not a lot you can do to change it, or
  2. You can increase your intelligence through hard work.

Fortunately, only one of those two is correct.

Two guesses. The first one doesn’t count.

Yes, it’s possible to make yourself smarter through hard work.

The brain is highly malleable and can form new paths and connections. However, Monkey Brain is lazy and doesn’t like to form new paths. That takes work and effort, and he’d rather sit on the couch and do nothing and tell you that you can’t get any smarter so that he doesn’t have to work. So, he gins up attribution bias to tell you stories about everyone else so that you’ll get off of his case and let him be lazy.

Continue to believe that, and it’ll be a difficult life. However, for you parents out there, you can convince your children that they can become smarter if they just keep working at it. Kids who work through problems and eventually come to the answers gain more confidence that work does lead to results and that they can tackle difficult obstacles.

They can become “math people” and won’t avoid the “hard” majors in college because of fear. They’ll be confident, and they’ll learn the skills that will provide them with job opportunities that can provide them and their families with great incomes and great hopes in their lives.

Let’s go back to the Census Bureau study.

Assume that a recent college graduate, age 22, earns 60% of the median salary reported by the Census Bureau ($51,163.20/year for engineering and $36,122.40 for liberal arts), gets a 3% raise every year, earns 7% on his investments annually, and sets aside SAFEMIN, 16.62%, each year, and works through age 66.

How much more will a graduate in engineering make than a graduate in liberal arts?

Net Worth at Age 66 by Degree Type by Fort Worth Financial Planner Hull Financial Planning

That’s a difference of $1.15 million dollars in the nest egg by age 66.

Isn’t that worth convincing your kids that they can learn math, they can get smarter, and that education matters?


Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

12 replies on “Parents, Your Kids’ College Degrees and Schools Matter”

Damn straight on the hard work = better math (or any subject) skill. I started college majoring in physics and taking advanced calculus. Thought I was hoy s**t since I breezed through AP Calc in high school. Well the end of the semester came and so did my wonderful C+. To those without a STEM background it might seem difficult to imagine a physics major barely passing a freshman level math course, but it was because I didn’t work at it. In fact, I started college with no study skill at all. My solution was to double down and double major in math and physics. Three and a half years later (yes, I doubled majored in math and physics and graduated in 4 years without spending one summer in class) I had a BS in both and a research assistantship to a PhD program in physics. My math grades were never very good, but I passed all those classes and ran rings around my fellow physics students that weren’t putting the effort.

Was it worth it? Well my wife and daughter who live in a nice home and share in the bounty from my good salary with almost no debt (besides the ubiquitous mortgage) seem to think so. Hard work may not get you what you want in life, since there are no guarantees, but it will never go unrewarded nor wasted.

An extra $1.5M dollars of savings? Maybe parents should invest a few thousand dollars up front for the math tutoring, Sylvan, Kumon, and AP classes…

I’m a believer in building self-confidence through learning experiences. Our daughter’s shiny new civil engineering degree includes minors in “adversity”, “persistence”, “communications skills”, “stress management”, and “recovering from failure”. She’s also had to become extremely familiar with adaptive design and incremental improvement. She can’t solve partial differential equations in her head, but she can certainly stay motivated to try different ways to solve the problem until she finds a method that works.

Those seem like useful life skills– even if she decides not to spend her career pouring concrete or fixing sewers.

It’s really easy to take things at face value, particularly what the media tries to feed us. You bring up an excellent point about needing analytical skills to not be a sheep doing the same things that everyone else does!

Its very important to consider finances and ultimate money made when it comes to college degrees. It is also important to note that some of the benefits of a liberal arts degree may not be so easily measured by money. Money is an important component to one’s ability to live a good life, but there are other factors to consider as well

True, although could you get some of those benefits outside of the traditional college route? I think it’s a lot easier to gain a non-traditional (e.g. outside of paying for college) liberal arts education nowadays than it was, say, 20 years ago.

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