You don’t need to earn a business degree to work in business. It might even be the case that a non-business degree could improve your odds of earning more over your career.
That was one finding from PayScale’s annual College ROI (Return on Investment) Report. The April report was based on data from over 1.4 million college-educated professionals who use PayScale data to find industry and regional salary information. Unlike PayScale’s 2016 Best ROI by Major Report, this report examined returns by chosen career. When it comes to working in business, if you’re looking to maximize your earnings over the first 20 years of your career, your best bet is Trinity College.
TRINITY GRADS EARN MORE THAN WHARTON GRADS
Never heard of it? Well, here’s the rundown. The Hartford, Connecticut-based liberal arts college — alma mater to acclaimed columnist George Will — boasts over 2,100 students. It is also considered a “feeder school,” with over 65% of graduates earning an advanced degree within a decade of graduation. Trinity doesn’t offer a business major, though students can minor in “Formal Organizations.” The school is also quite pricey, with a four-year tag of $244,000 — roughly the same cost as Stanford or Cornell.
If you’re entering business, that cost is worth it! After paying tuition and loans, Trinity business professionals snag a $1 million return on their bachelor’s degree over 20 years. Compare that to business majors at the vaunted Wharton School, who pull down a $951,000 return, or Notre Dame, whose business grads earn $255,000 less over two decades (that’s $10,000 less per year). If you factor in financial aid, which 43% of all Trinity students receive, their earnings jump to $1.15 million.
How much more do Trinity graduates pursuing business make? Consider this: The average 20-year ROI for a Trinity grad who doesn’t pursue an advanced degree is $340,000, an average return of 4.6% per year. That’s 34% of what a Trinity business professional without a postgraduate degree earns (and nearly half the 8.7% return). This includes the $203,473 that three Trinity grads net as CEOs.
SALARY DATA COVERS GRADS WHO DON’T PURSUE POSTGRADUATE DEGREE
The survey results were derived from data submitted by professionals over a three-year period beginning in February 2013. Based on 962 postsecondary schools that included, on average, 392 alumni profiles, the salary information covers professionals who are paid either an annual salary or an hourly wage, thus removing freelancers whose incomes are subject to greater fluctuation. PayScale’s formula also accounts for wage inflation in median pay.
To calculate ROI, PayScale weighs earnings against costs. Along with pay, it factors in total cash compensation (i.e. salary or hourly pay, profit sharing, commissions, and other forms of cash earnings), but excludes variables like stocks, retirement benefits, or healthcare. From there, earnings are run against four-year campus costs (tuition, room and board, books, and fees), with users able to include average loan amounts over four years to better measure the return.
One caveat: The salary data only includes graduates who only hold a bachelor’s degree. As a result, graduates who earned post-graduate degrees, such as an MBA, JD, or Ph.D. after completing their undergraduate degrees, were removed from the sample. As a plus, this provides a more even comparison, as graduate degrees can raise incomes by a third or more. The drawback, of course, is that it underestimates the true earning potential of graduates.
STANFORD AND CORNELL GRADS TRANSITION WELL INTO BUSINESS
Like Trinity College, Stanford University doesn’t offer an undergraduate business major. The closest Stanford comes are its Communications and Economics majors (though the School of Engineering provides majors in both Product Design and Management Science and Engineering). Despite this, Stanford undergrads who pursue business make a $936,000 return over 20 years (which rises to $1,090,000 with financial aid). That should come as little surprise to alumni of the Palo Alto school, which is nestled in the shadow of Silicon Valley. The Valley’s can-do spirit is reflected in the 22 Stanford graduates on PayScale who described themselves as CEOs with a median salary of $233,294. Stanford’s engineering and tech culture also creates business opportunities for graduates. For example, PayScale’s Stanford roster features 25 software product managers ($101,736 median) and 26 senior product managers ($141,311 median). Stanford graduate ROI is also boosted by the school’s generous financial aid, with 51% of students receiving aid that comes out to $29,100 on average.
Rounding out the top three for ROI (sans financial aid) is Cornell University. Here, students who enter business pull down a $932,000 return over 20 years. That can’t sit well with Cornell business majors, who earned $564,000 over that same period. Why? That’s hard to tell, but some of it can be traced to PayScale’s methodology. Notably, business major earnings in the survey were comprised of all concentrations (i.e. operations, finance, marketing, etc.). However, the return for undergraduates who entered business were separated into two categories: business and marketing (which includes sales). As a result, the removal of “marketing” earnings, which trended lower than “business,” artificially inflates the returns for non-business majors (while dragging down business major earnings).