Unrealistic Undergraduate Salary Expectations vs Reality.
Unrealistic Undergraduate Salary Expectations: College students have serious unrealistic expectations for their starting and mid-career salaries, according to a recent survey by Clever. Young adults are actually, exposing themselves to disappointments. Amongst the ever-increasing cost of college and the student loan debt they may be met with once they graduate, college students may find that they are making less money than they expected when they enter the workforce.
“Generation Z” undergraduates that were surveyed said they expect to make $57,964 one year out of college, but the national median salary is presently $47,000 for graduates that has a bachelor’s degree and less than five years of job experience.
The average Gen Z college student pursuing their bachelor’s degree expects $57,964 just a year out of college. The national median salary on the other hand, is nearly $11,000 lower at $47,000 for recent graduates with a zero to five years of work experience.
According to a survey, the average undergraduate also overestimates how much they’ll be making by mid-career (10 years out of college) by about $15,000.
The survey also discovered that women expected lower salaries than men with the same degree and major.
In all, college students with a four-year or graduate degree will earn about 23 percent less than they expected to in their first year out of college, according to Clever.
Expectation vs. reality
Even the graduates with the highest potential salaries may experience some disappointment since 38% of the students surveyed expected to earn over $60,000, which is probably more than is realistic in all but the highest cost of living areas. Graduates in career fields with lower salaries are even more likely to find out that compensation does not measure up to the levels that they had anticipated.
However, some students who expected to earn less or close to $40,000 may be pleasantly surprised when salaries exceed their expectations. Graduates with majors that are not perceived to be in high demand are most likely to experience the greatest surprise when they receive job offers on the higher side.
It is probably a good thing, then, that a recent University of Michigan study found young adults spending less compared to previous generations, Clever stated.
“Younger consumers sees the buying conditions for big-ticket items like homes and cars less favorably than older generations, leading to less spending overall,” the report states.
“The study points to weakened job prospects, delayed marriage and student debt as the major causes, but we also need to consider that college graduates are discouraged by their middling salaries upon their entry to the real workforce.”
Students tend to overestimate how much they will make right out of college. The average undergraduate expects to make $57,964 one year into their career, while the national median salary is $47,000 for bachelor degree holders with a zero to five years of experience. This holds true across most majors.
The average undergraduate also overestimates how much they will be making by mid-career (10 years out of college) by about $15,000 monthly.
Young adults are not spending as much as previous generations, and unrealistic salary expectations are contributing to reduced spending once students graduate.
Women expect lower salaries than men, even when they are in the same major. On average, women holding a bachelor’s or graduate degree expect $4,338 less than their men counterparts with similar degrees early on in their career, and $10,836 less than men by mid-career.
Generation Z gives different employee benefits than millennials. They rank tangible, money-based benefits– like competitive salaries and excellent insurance plans – above a fun work environment, flex time, and unlimited PTO. Going to college to earn more money throughout their career is the number one reason Gen Zers are getting a degree.
College students are really less optimistic about the value of their education than the alumni. According to a Gallup poll, 50% of graduates strongly agree that their education is worth the cost and only 36% of current undergraduates strongly believe their college education is worth the cost.
Key Insights & Analysis
The average undergraduate overestimates how much they will make after college by more than $10,000
Using PayScale’s College Salary Report, we cross-referenced undergraduate pay expectations with median early-career salaries across the 11 most popular majors. With almost all degrees, undergraduates expressed expectations for their early-career salaries that were well above the national median.
On average, students that graduate with a four-year or graduate degree will earn about 23% less than what they expect to right out of college.
Analysts found that the median expected salary after graduation was $60,000, which is also consistent with the $57,964 average our respondents expected. The students surveyed were pursuing careers in various fields, but they often overestimated the value of their degrees right out of college.
Average Salary for College Graduates
The data for 25 different jobs indicated that 2018 college graduates would earn an average salary of $50,390, up 2.8% from $49,000. When compared with other researches, it appears that about half of graduates would receive salaries less than what they had anticipated.
Salaries Based on Jobs
Based on the jobs analyzed by Korn Ferry, the top salaries on the list pay in the mid-60s:
Software Developer: $67,236
The lowest salaries are in the mid to upper-30s:
Customer Service Representative: $35,360
Claims Examiner: $39,978
The Majors That Pay the Most
The National Association of Colleges and Employers (NACE) surveyed 186 employers in the winter of 2019 on the starting salaries that they expect to offer graduates in different majors. Employers plan to pay the highest salaries to STEM (Science, Engineering, Technology, and Math) graduates:
Computer Science: $67,539
Math and Science: $61,867
Employers stated the lowest expected salaries for the following majors:
Social Sciences: $57,310
Agriculture and Natural Resources: $55,750
PayScale’s 2019-20 College Salary Report notes that “Major can have an even bigger impact on future earnings than choice of school.” PayScale reports the majors with the highest earnings for alumni early in their career (0-5 years of work experience). This list includes many STEM majors as well as the addition of healthcare-related disciplines:
Petroleum Engineering: $94,500
Physician Assistant Studies: $91,100
Electrical Engineering and Computer Science: $88,000
The Korn Ferry research saw geographic differences in pay in major cities with average salaries ranging from $49,584 in Atlanta to $60,972 in New York and $63,995 in San Francisco on the higher-end.
Graduates relocating to lower-wage cities are more likely to be disappointed by their salaries. Those moving to some higher wage metropolitan areas may be pleasantly surprised by the earning potential.
If you are in a high-demand career field, it will be easiest to earn what you are hoping for in your first salary. If not, there will be lots of opportunities to increase your earning potential over time.
Having a college degree will automatically up your chances of earning more. The average salary for someone with a four-year degree is more than double that of someone who did not graduate from high school.