ST. LOUIS–The new generations of college graduates might be in for a “rude awakening,” according to a new survey, which found the “average college student has seriously unrealistic expectations for both their early and mid-career salaries.”
According to the survey, the average Generation Z undergraduate expects to make $57,964 one year out of college, while the national median salary is $47,000 for recent grads with bachelor’s degrees who have between zero and five years of on-the-job experience. The survey of 1,000 undergraduates was conducted by Clever Real Estate.
Key Findings
Among the key findings:
- The overestimate of first-year earnings generally holds true across most majors.
- The average undergraduate also overestimates how much they’ll be making by mid-career (10 years out of college) by about $15,000.
- Young adults aren’t 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 have the same major. On average, women holding a bachelor’s or graduate degree expect $4,338 less than men with similar degrees early on in their career, and $10,836 less than men by mid-career.
- Generation Z prioritizes different employee benefits than Millennials. They rank tangible, money-based incentives – 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 Z'ers are getting degrees.
- College students are less optimistic about the value of their education than alumni. According to a Gallup poll, 50% of graduates strongly agree that their education is worth the cost. Only 36% of current undergraduates strongly believe their college education is worth the cost.
The Most ‘Delusional’ Major
Using PayScale’s College Salary Report, Clever said it was able to cross-reference undergraduate pay expectations with median early-career salaries across the 11 most popular majors.
“With almost every degree, undergraduates expressed expectations for their early-career salaries that were well above the national median,” the company said. “On average, students that graduate with a four-year or graduate degree will earn about 23% less than they expect to right out of college.”
Students with engineering and humanities degrees tended to have realistic expectations about their salaries, while nursing and computer science majors actually underestimated the value of their degrees.
The most “delusional” majors? Those earning a business degree, whose estimates of their early-career salaries was 31% above the national median.
Other Findings
Among the other findings:
- Younger consumers view the buying conditions for big-ticket items like homes and cars less favorably than older generations, leading to less spending overall. “The study points to weakened job prospects, delayed marriage, and student debt as the primary causes, but we also need to consider that college graduates are discouraged by their middling salaries upon their entry to the workforce.”
- The average undergraduate overestimates how much they’ll be making by mid-career – 10 years out of college – by about $15,000.
For more info, go here.