Every investment comes with a risk profile. Stocks come with prospectuses, bonds with credit ratings, funds with bold-print warnings about past performance. College comes with no warning label. The data say it should.
A college investment is the opposite of a diversified portfolio. An 18-year-old makes a single, undiversifiable bet on one school and one major at a time, often with borrowed money. They cannot enroll in three majors at three schools and take the average. The credential cannot be sold, and a student who leaves in year three cannot get back the tuition or the wages they gave up. The portfolio is the credential.
The selection risk is real at every stage. In 2024 the country graduated about 137,000 psychology majors. The Bureau of Labor Statistics projected, for 2024 to 2034, only about 12,900 psychologist openings a year, and those jobs typically require a master’s or doctorate. Among recent psychology graduates, about 48 percent work in jobs that typically do not require a degree. Across all majors, four in ten recent graduates are in the same position. In every state, the typical recent cosmetology graduate earns less than a typical high school graduate.
None of this means college is a bad bet for everyone. It means it is a bet, and in my experience most families are never shown the odds.
Engineering and computing pay a premium. The humanities pay an underemployment penalty.
The two are linked: where underemployment runs high, pay runs low.
Seventy-three undergraduate majors. Move right: underemployment rises. Move down: early-career pay falls.
Source · Federal Reserve Bank of New York, The Labor Market for Recent College Graduates, outcomes by major, February 4, 2026 release (2024 data).
This piece is adapted from Chapter 8 of the book. Read the full risk breakdown in the book, or run your own numbers in the model.
Companion Pieces
- College Is a Bet, and No One Shows You Your Odds
- How to tell useful ratings from misleading rankings in this breakdown.
- Is College Worth It? The argument in full