College Students Overestimate Their Future Salaries

by: Nathan Allen on June 20, 2019 | 679 Views

When it comes to salary expectations immediately after graduation, current college students have some inflated expectations. According to a study released earlier this month from real estate startup, Clever, college students expect to make $10,000 more during their first year after graduation than the national median. According to the survey of 1,000 undergrads in the U.S., current students expect to make $57,964 during their first year. The national median for college graduates with zero to five years of experience is $47,000, the study says. By the time students reach mid-career, their salary expectations have a $15K difference from the national median.

However, not all majors have the same unrealistic expectations. And business majors seem to have the most inflated. According to the study, business majors expect an average of $61,085 in their first year after graduation. In reality, they will earn a median of $46,500. The only other major with a similar gap between reality and expectations was physical or life sciences majors, which had an average expectation of $64,428 and actual median of $50,900. Out of the 11 majors that were tracked, only three under-estimated their average salaries. Those were nursing ($62,417 expectation versus $66,600 in reality), computer science ($59,303 expectation versus $68,800 in reality), and humanities, liberal arts, history, and English majors ($43,843 expectation versus $43,860 in reality).

By mid-career, the expectations don’t get any closer to reality — in large part because of business majors having increasingly delusional expectations, the study says. By mid-career — defined as more than 10 years of work experience — current college students expect to be making $95,400 when in reality mid-career college grads currently make about $80,450. But once again, this differs drastically across majors and business majors have the most inflated expectations. Current biz majors expect to be making $127,470 in their mid-careers but currently, business majors make $80,400 at mid-career. That’s a massive $47,000 difference in expectation.

The next largest gap comes from finance and accounting majors, who expect an average of $117,235 by mid-career and in reality make a median of $92,500. On the other end, computer science and engineering majors are the only ones that underestimate their mid-career earnings. Computer science majors expect an average of $97,165 by mid-career and in reality could be making a median of $113,900. Likewise, engineering students have an expectation of $96,161 while mid-career engineering majors are making a median of $112,500.

This data should be taken with a grain of salt. Clever does not include anything about the schools in which the survey respondents attend. And as data reported to us from schools over the past few years shows, salaries are drastically dependent on where business graduated and where they go to work in terms of industry and geography. Simply put, this is a very simple report for a data point that takes in many factors. For example, the average 2018 graduate from The Wharton School at the University of Pennsylvania earned more than $80K in their first year out of college. Meanwhile, students from Akron University earned just under $43,000. Either way, business students that attend a top-ranked school will very likely earn more than the $47,000 national average reported by Clever.

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