Why do some degrees cost so much more?

[Frugal Vegan Mom]

Why is it so much more expensive to go to medical or law school than it is to get other types of advanced degrees?
I went to graduate school for engineering at UW-Madison and paid $11K something for two years, slightly above the undergrad in-state rate. (and holy sh*t, tuition has gone from $5600/yr. in 2005 to $9,000/yr. in 2010, I just checked.)
My husband went to law school at University of MN and paid over $100K for three years, also as an in-state resident.
Why? I really would like to know. It can't cost more to hold a class on law than on engineering?
Is it because law is considered a more prestigious position and they are expected to make more? (Although that is false on both assumptions...)
What choices does someone have who would like to become a doctor and work for an org. like Doctors Without Borders? Or become a legal advocate in a non-profit?
Is it like this in other countries?
Just a rant for thought...
K

http://www.frugalveganmom.wordpress.com

[jacob]

Supply and demand.
In a free market, things aren't priced according to what they are worth, but what people are willing to pay for them. (Of course some believe that price and value are the same thing. Endless controversies there ... .)
Some degrees are probably in a bubble. It may be that lawyers or medical doctors don't make as much as commonly believed [by students and their parents]---what's important is that it is believed [by students and their parents] though. It's kinda how real estate is believed to go up forever or stocks are believed to return 10% per year as long as one is in it for the long run.
If you put in time with a nonprofit, the Peace Corps or similar, ... student loans can be forgiven under certain conditions.

[photoguy]

There are a couple factor's in play. First of all, it is more expensive to teach a class on law / medicine than engineering. Medical faculty (and I assume law faculty as well) as certainly paid more than engineering professors. It would not be unusual for a starting professor in a medical faculty to make several hundred thousand per year -- a level not reached by most engineering professors until they are at the end of their careers if at all. (As Jacob mentions this is due to supply and demand -- doctors could easily make more in private practice than at a university, so universities have to pay them more).
Another difference is in the nature of the applicants. There are no shortages of students applying to medical school / law school whereas by comparison it is harder to recruit students for graduate engineering (especially native US students). Foreign students often are not wealthy by US standards and cannot pay much in tuition. US students realize that their earning potential is greater in medicine/law and hence the universities can charge more (especially since the students are willing to take on debt).
A final difference is that graduate school in engineering / science is generally geared toward producing research and is totally different than medicine/law. In fact, graduate students on the Ph.D. track (and some master's students) are generally seen as worker bees by their professors, given tuition waivers, and are paid a small stipend (maybe $20k/year).

[Matthew]

@frugal vegan mom
I may have forgotten everything I learned in micro/macro economics from my communtiy college before I went to get an engineering degree, but one thing I have noticed since I graduated is this: College degrees in general now cost almost twice as much as they did ten years ago. Regardless of the degree I think you will find this to be true. Just like you found out with out own schooling 5600 is now more than 9k.
Another note. I think more prestigous degrees require more schooling. More money in the system. I could be wrong, but this says you are more well off (since you can afford the schooling) which "entitles" you to higher wages.

[Muji]

I'm curious to know what everyone considers worthwhile studying at uni in terms of maximum versatility/employability/value. I know the social sciences aren't particularly highly regarded around here, but if you had children to guide, what would you recommend?

Jacob I know you studied Physics. What is your opinion regarding the viability of Physics graduates heading into investment banking/quant. analysis?

Paul Graham suggests studying the most challenging subject you are able to in order to stay upwind and keep options open. What do you think?

[Matthew]

@Muji
Despite this post, I still think the health industry is great right now. Until it bursts and depending on how long a person wants to go to school. I recommend Physical therapy. Usually/used to be? a five year masters program but you have to do well in school.

[jacob]

@Muji - Physics to Wall Street? Not as great as it used to be. (Especially not in these economically trying times... let's just say that hiring turned bad after the CDO crash. It was after all engineered by quants. The flash crash some months ago was also due to quants---this time algorithmic trading.).
The reason that Wall Street initially attracted physicists was that it is easier to teach a physicist finance than it is to teach an economist/MBA higher math. Now, however, you have universities, like UCB, offering master degrees in quantitative finance. In other words, quantitative finance as a field is maturing. The heydays are over.
In my opinion, Wall Street should continue to prefer physicists over engineers or specialists, because the former [should] understand [more of] the theory behind the model and the limits thereof. Physicists seem used to the idea that models are an imperfect image of reality. Mathematicians and engineers often seem to think that equations = reality---they mistake precision for accuracy.
As a physics guy, you should expect to spend 1+ years of serious self-study after your PhD. It helps if you are in any way associated with Ivy League degrees. Above the undergraduate level nobody cares about your alma mater compared to who your grad school adviser is, but the business world still does (because they are mostly undergrads?).
I disagree with Paul Graham... the most challenging thing you are capable off may be so esoteric as to paint you into a corner. There's something to say for picking something which you can do so easily that you'll always be better than your peers.
It's hard to recommend particular university directions without being biased by my personal preferences. If I had to go to uni again, I would pick electrical or mechanical engineering. I would also consider accounting or actuarial studies. But I'm really good with numbers.
Currently, though, I'm semi-seriously considering an apprenticeship in a trade. I don't think I can learn anything at a university that I couldn't teach myself --- this being because I have already gone through the full university process (everything except professor); I have learned how to learn [intellectual subjects].

[firefighter]

@Muji-
A theory I heard once related to what you are asking

was to get a bachelors in chemical engineering if you

don't know exactly what field you want to go into.
It is one of the hardest majors and also, arguably, the most versatile allowing one to go to law, medical, graduate, or

business school.

[Matthew]

Mechanical Engineering (at least in my field) is already starting to compete with global wages (India & China). Engineering degrees have always been lucrative but I don't thinks so much in the future. I am only making what career books said before I was looking to go in the field. However, I live in a very low cost region that pays 20k below market average.

[Muji]

Many thanks for the replies. Very useful information. I'm not interested for myself, but for my children. Like many 18 year olds, neither of them are particularly driven towards any particular career path. With the cost of university so high I would like them to study something that offers the most versatility in the future - such as what firefighter referred to.

They're both very good at maths and are considering maths/physics/actuary science, however, the 150-200k (each)it will cost makes me question whether it is worthwhile. What do you think?

[Mo]

IMO, much of the higher education in the US is priced according to what students can borrow, and supply and demand, rather than by the cost to provide such education. In short, I think it's a racket.
When I was a student in medical school I was told that it cost about $45k per year to teach one medical student. I figured that it must be that getting doctors who earn $200k per year to give lectures must add up.
Then I became a faculty and found out that the university often doesn't pay the doctors to teach the medical students. Also, the doctor who takes home $200k per year, might collect $500k+ in payments from patients during the year, most of which goes to the university. A good portion of medical education consists of standing a medical student next to the doctor who is earning money for the uni. The only reason I can see as to why the medical student pays for that is because he must, or someone else will.

[aquadump]

@ Muji & firefighter -- As a relatively recent chemical engineering graduate, I would warn any incoming students that many of their classmates are going to be stereotypes only interested in the degree for the above reasons that firefighter mentioned. This leaves a small minority group that are actually interested in the field itself. When professors would form groups for projects, the group dynamics were often draining -- the get-it-done crowd versus the learn-the-concepts crowd. Maybe these types of personalities are in all majors, but I often heard my classmates focusing on the luster of the end salary to come.
While you do consider the positives, the drawbacks are that most jobs are with big corporations [who actually have the capital to finance large chemical processes] in set secluded rural areas [where chemical risk to a population is lower].
I think electrical engineering is a more versatile degree, both in terms of job opportunities and location independence. It also continues to grow in demand. The additional classes to remain viable for medical and law school, relative to chemical engineering, are roughly the same.

[aquadump]

If I had to do it all over again, I would consider the ROTC scholarship program. From my observation, most ROTC students go to school before doing the required duty. I was in class with a few that did their required military duty before getting the 4 year degree.
These students always seemed more mature and in-tuned to learning how to win the game, that is learn what the teacher is going to test.
I think these students also felt like they deserved as well as craved for their education, after those 4 years of duty.
Another beneficial reason I see is "real world experience" before choosing a degree and more appreciation for the relative quiet setting at a university.
I should note that I value my [free] formal education. That is to say I think I would rather continue education after high school versus the time loss to achieving ERE. I might be the odd duck out on that here, too. On the other hand, I might not have as much value if I started out with $$$ in debt after the formal education.

[photoguy]

@Muji -- it's possible for a student to get an engineering/math/science degree for far less than $150-$200k and even self fund their education. But you have to make careful choices such as:
(1) Attend state schools where the tuition is much less than private schools (i.e. only around 10k/year).
(2) Win as many scholarships as possible. My nephew applied for everything he could (including a Dr Seuss scholarship!) and won 10-15 of them. Granted some of these are small, but it adds up.
(3) Attend a school that has coop program that alternates study and work (this is more common for engineering). During coop terms the students can make substantial amounts of money to help pay for their education.
(4) Take a heavier course load than normal and finish earlier. If you can finish in 3 years instead of 4, you've saved an extra year of tuition and gained an extra year of working time
Personally, I don't think taking on $200k of debt is worth an engineering education. If instead you invested that money, your child would be set for life and wouldn't need to save anything for retirement.

[akratic]

One reason engineering degrees are cheaper is that engineering students sometimes provide real value while in school.
For example, NASA paid for my Master's degree, and by doing so got to influence my thesis topic. If they'd wanted to hire me at market rates to do that research, they would have had to pay a lot more than the tuition cost them. Win, win!
In contrast, I get the impression that law school students, etc., aren't providing much value during school.

[jacob]

Same thing in science. It works somewhat like an apprentice system after leaving the undergraduate level. An undergraduate degree roughly corresponds to the journeyman level; the person can do routine research like repeating a known method. Once repeated a sufficient number of times, he graduates with a master's degree and knows pretty much everything there is to know about applying the procedures of the research project. In grad school masters then modify or add to their mastery to come up with new stuff, which results in the PhD degree, which corresponds to Gladwell's Expert level, the 10,000 hours. I think it is fair to say that without grad students, university research efforts would collapse---they are the employees, while professors are like management.
Hence, they get paid.
Again, though, I think it comes down to supply and demand. There's an oversupply of scientists and engineers despite, at least for scientists, not being paid nearly as well as JDs and MDs. If you asked for $50,000 per semester for grad students in science instead of paying them $20,000 (less than half of the average salary of an undergraduate with a degree), I guarantee there wouldn't be any left.

[Muji]

Many thanks for the feedback. It's difficult to know what the best choice is, but as a parent, I think I'm veering towards the traditional path of paying for their education. We are expats living in the UK. With housing, I think US state schools are about $25,000 year/4 years and we will be paying about $40,000/3 years if they attend school in the UK. I round up to $200,000 because I assume they'll continue past a BS degree.

It is tempting to consider banking the money for their retirement, or investing in a multifamily dwelling for them, but somehow, I can't quite envision their not attending university. It's as if I'm wasting the money and yet, feel compelled to do so.

[jacob]

Just for comparison.
Recently, I was looking into what it would take to become a carpenter(*) apprentice. The math requirement corresponds to 8th grade + some sines and cosines as demonstrated by a 5 minute test. That's about it. The starting wage as an apprentice is $17.50. After 4 years, you become a journeyman at $37.50. As a journeyman, you can work for contractors. With more experience and classes, you can become a master carpenter.
At this level of income, I figure one will be financially ahead of 90% of all 4-year degree college graduates and pretty much stay that way forever.
(*) I'd like to learn a trade to fell more useful. I'm still trying to figure out which one though. Don't worry --- I can run ERE on the side.

[Kevin M]

@jacob - hasn't the construction industry been decimated by the housing bubble collapse? I wonder if those numbers would even apply with so many out of work. It's something I'm interested in as well, where did you find that info?

[jacob]

@Kevin M - http://www.dir.ca.gov/databases/das/res ... rOccId=693