Do college students have realistic starting salary expectations?

College is often seen as a clear path to higher earnings and professional success. But what happens when your four-year degree doesn’t live up to your expectations? This seems to be the case for many Gen Zers heading into the job market.

College students expect to earn $84,855 one year after graduation, according to a recent survey by Real Estate Witch, a research and review site that focuses on the U.S. housing market. This is a far cry from the average starting salary of $55,911.

Having realistic salary expectations is key to negotiating a fair salary after graduation when navigating the job market. It’s also especially important to know what you are likely going to make if you are borrowing money for college.

College students salary predictions: Expectation vs. reality

Gen Z students expect to earn roughly $30,000 more than the average starting salary of $55,911, according to the 2023 Real Estate Witch survey. Their midcareer earning expectations seem to be even more off from current averages. According to the survey, students anticipate earnings of $204,560 a decade after graduation — a difference of over $105,000 from the average midcareer salary of $98,647.

Salary expectations by major

Salary expectations among college students vary greatly by major. Business and psychology majors by far overestimate their salary more than their peers.

On average, business majors anticipate earnings of $98,113 one year after graduation, while the average starting salary sits at $50,200. Psychology majors, on the other hand, expect to earn $88,265, with an actual starting salary of $44,700. In both cases, salary estimates are just under twice the actual average.

Liberal arts and journalism students also tend to overestimate their salaries more than other majors. According to the survey, these majors overestimate their salaries by over $43,000 and  over $35,000, respectively.

However, not all students have completely unrealistic salary expectations. Computer science majors only overestimate their salaries by less than $10,000, whereas engineering majors expect to earn roughly $11,000 more than average starting salaries.

Salary expectations by gender

Salary expectations not only vary by major but also by gender. A study by the National Association of Colleges and Employers (NACE) found that female graduating seniors expect to earn 16 percent less than their male counterparts — and they typically do earn less.

There are several reasons as to why this happens. First, most high-paying fields, like engineering and computer science are male dominated.

Bankrate research shows that 78 percent of graduates in the 20 highest-paying degree programs at the bachelor’s level are men. Female students, on the other hand, tend to graduate with degrees from fields that have a greater social impact but lower salaries, like social work and childhood education.

But beyond the field of study, systematic barriers like inequities in promotions and positions also contribute to the existing gender pay gap, according to NACE’s findings.

Salary expectations by race

Both Asian men and women have higher salary expectations than their peers, followed by white men and hispanic men. Out of all groups, Black women have the lowest salary expectations at $47,500.

If we compare this information to the latest data on median annual earnings at the bachelor’s degree level from the National Center for Education Statistics (NCES), we see that across all groups, women underestimate their salaries.

Black men also significantly underestimate their salaries, whereas Hispanic men overestimate their salaries by a small amount. Asian men have the most accurate salary expectations of all groups, only underestimating their actual earnings by less than $2,000.

Source: NCES

Why having realistic salary expectations matters

Researching your major’s expected earning potential is important to avoid choices that could hinder your future. For instance, Bankrate’s 2022 Financial Milestones survey found that nearly 6 in 10 (59 percent) of U.S. adults who currently have or had student loans delayed milestones, like buying a home, saving for retirement or starting a family, due to their debt.

Having realistic earning expectations can help you make better decisions about your school of choice, as well as how much you can spend on your education, without tilting the bank once you graduate. This is especially true if you’re planning on taking out private student loans. These tend to have higher interest rates and stricter repayment options than federal student loans.

Likewise, knowing how much you should be earning is key to negotiating a fair salary for yourself. It will prepare you to have productive discussions with recruiters about how much you should get paid — regardless of race or gender — based on your education, field of study and what others with similar experiences are earning.

Tips for college students and recent grads to navigate the job market

Liverman from MIT recommends the following to avoid selling yourself short and secure a good job offer when it’s time to head into the workforce:

Research the offer

“Any field you go into at any level, you should know what your expected pay should be,” Liverman says. “Will it be different by geographic areas? Absolutely. But you have to get into the practice of finding out this information and not just accepting a job offer because it’s the only opportunity you think you’ll get.”

You can find important information regarding job compensation in your field and area by checking out sites, like PayScale and the U.S. Bureau of Labor Statistics.

Ask about specifics

“I encourage our students to know what the compensation being offered is,” Liverman says.

“What does that include? What are the benefits? All of these are things that you should know. How is compensation looked at at the company you’re going to? Meaning what do yearly raises look like? What do bonuses look like? How are they decided? Does it change when you go into another role?”

To know more about the compensation and job benefits rights in your state, you can visit MIT’s pay equity resource page. This tool is free to use and is open to any students or graduates.

Negotiate like you’re advocating for someone you care

“Act like you’re asking for your best friend – not for yourself, okay? Because we will stand up for other people, but we don’t stand up enough for ourselves,” Liverman says.

While you may not be able to get the starting salary current students are hoping for, you can do better for yourself than you would by simply accepting an offer. Advocating for yourself like you would for someone else you care about is an amazing tool to help the process along and get you closer to financial security.