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SPOTLIGHT

When deciding how much to borrow, have you considered your major?


What’s a reasonable amount for you to borrow when you’re financing a college degree? Given your likely career path, what loan repayment amount would be affordable? As you’re moving closer to beginning your college career, these kinds of questions may be on your mind. One answer is that how much you should borrow might depend partly on your major.

In August 2012, TG published Balancing Passion and Practicality: The Role of Debt and Major on Students' Financial Outcomes. The central idea is that a student's ability to repay debt is closely related to his or her educational and occupational choices. College graduates typically earn more than high school graduates. However, not all college graduates earn the same. Students pursuing a degree in engineering or natural science can usually find a job more easily and earn more than other majors. By contrast, humanities majors have higher unemployment rates and typically earn less.

Does that mean that all students should automatically switch to a discipline with higher earning potential? Of course not!

However, decisions about selecting a major and taking on debt shouldn't take place in a vacuum. It's a good idea for students to think about how they will repay their debts, given their likely salaries. Armed with this knowledge, students can make financial and academic decisions that allow them to pursue their passions without ignoring practical concerns.

The report provides food for thought, and is available online at www.TG.org/research.