Cal Poly "Starting Salary" a convenient myth?

Colleges & Universities Cal Poly San Luis Obispo
41

@cmg2024, that’s a pretty straightforward answer on a pure financial basis. CU wins hands down. If you invest the $90k at age 18 and she holds it until 62, that money alone (assuming 7% and no added money, will net out to $1,766,561. Now this will be taxable, unlike a 401k, but there are strategies to mitigate that. Plus, under our current tax structure, capital gains are taxed at a lower rate than income.

There are far too many variables to assume the Cal Poly grad will earn $10,000 per year more than a CU grad over a full career. The opportunities will be different, but the differential paid in starting salary for any name, including MIT and Stanford, which generally isn’t a lot, evaporates pretty quickly as pay becomes merit based. This is based on hearing this from engineering managers repeat this over and over on the engineering forum.

Now that doesn’t mean Cal Poly is the wrong choice. Our son didn’t choose the cheapest option, nor the most expensive one. He passed up a similar situation where we were going to split the savings with him. He just felt Cal Poly was the best fit and was looking at a bigger picture than just the finances. When he started his job, his boss did his BS at the cheap option that my son passed up. Engineering is very egalitarian.

At the end of the day, either will be fine. A fully funded 401k (currently $19,500/year) will grow to nearly $4M in 40 years if that contribution is maintained throughout a career. An engineer from either school will be able to do that if they are wise with their money.

What are your daughter’s thoughts?

42

Probably the most important question she needs to answer is whether or not she wants to be a ChemE. Cal Poly doesn’t offer that major.

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They don’t hide the change of major criteria:
https://eadvise.calpoly.edu/Changing-Majors/Within-the-College-of-Engineering

44

So if the OP’s D makes $1,766,561 with the initial investment and then saves $10,000 a year over the next 40 years at 7% interest rate, at retirement you she would have an additional $2,136,000 for a total of $3,902,561.

If the OP instead spends the $90k on Cal Poly, and ASSUMING that the starting salary of $10,000 more remains throughout her career with merit based increases, D should be able to save $20,000 a year for 40 years at 7% interest rate, which is $4,272,191.

So the Cal Poly grad would be $369,630 richer at retirement.

However, we’re talking a 10% difference here, and a lot of assumptions. I would just leave it up to D to decide where to go. These numbers are so close, it wouldn’t be “crazy” to pick one school over another. I think the biggest questions should be:

  • Where does she want to live for the next 4 years and after that?
  • Is she going to be okay with being 1000 miles away from home? (The distance is too much for my D)
45

@Gregmacd, there are a couple of flaws in your logic.

First, just because they make $10k less, doesn’t mean they have to save $10k less. The average starting salary for either will allow them to max their 401k if they are diligent savers. One will have $10k more in spending money, but it doesn’t mean it will de facto impact retirement savings.

Second, the assumption that the Cal Poly grad will automatically make more than the CU grad is an improper assumption. We are comparing median salaries. That means 50% of grads make more and 50% make less. It’s quite possible that a CU grad could make much more than a CP grad. It just depends on the job and other intangibles like the resume they amass.

Cal Poly is pretty granular with their starting salary data (although they just changed the report and I can’t see the individual breakouts on my tablet anymore; I’ll have to check it on my desktop later). Last I looked at MEs there were grads reporting starting salaries in the low 50s.

My suspicion is that for the same job at the same company with the same resume (i.e. GPA, internships, club involvement, etc.), starting salaries would be very similar between grads of each school.

It’s a single data point, but we only need to look at my son to illustrate the point of job dependency. He had two offers before he graduated. One was slightly above the median reported starting salary for CP ME grads and the other was 50% higher than that.

Again, I’m a big fan of the way Cal Poly educates engineers. I don’t think there are many schools that prep an engineer to hit the ground running as well as CP does. I think it’s a dangerous assumption though to believe a CP engineer will automatically make more than an engineer from any other good, ABET accredited program just because they went to Cal Poly. I think that’s a dangerous assumption for any school, MIT, Caltech and Stanford included.

The only fact we can know for certain is that if the OP’s student chooses CU, she’ll graduate with $90k in hand. If she chooses CP, she’ll graduate $20k in debt. That doesn’t mean CP isn’t the right choice. Several of my son’s best friends in school were from CO. If they got into ME at CP, they certainly had the stats for good money from CU, but turned it down.

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@eyemgh @Gregmacd Thanks again for all the time you took to respond. It is all great information and I plan on showing her this thread.

Really I think it will come down to which place feels like the place she wants to spend the next 4 years. I know she wants to spend (at least) a semester in an overseas program. She was interested in CU’s Engineers without Borders program. I’m not sure if Cal Poly has something similar. She’s also on the fence with Chem/BioChem (although she was admitted to that at CU). I personally think Denver/Boulder would be a great place to start a career, but the Bay area or even PacNW wouldn’t be bad either. I’m not sure if Cal Poly influence stretches that far, but I have heard of their Comp Sci/CompE grads finding opportunities up there. Other disciplines maybe not.

I think it will really come down to the visit at Cal Poly. As mentioned, we were there last in 2015. I believe a lot has changed as there was a ton of construction going on when we were there. She/we were looking at it through the eyes of an 8th grader too. This Fall she visited University of Washington, Oregon State, Montana State, CSU, CU…Cal Poly is the only lingering visit. If an acceptance comes a flight will be booked pretty quickly.

Also, I think she (and we) would like her to be > 500 miles away. I think it encourages a bit of “growing up”. CU is great but 75 miles is too close. I attended college 1000 miles away from my parents and it forced a bit of “growing up.” No familiar high school faces so finding new friends was imperative, no chance to run home on a weekend if things felt inconvenient, Mom and Dad not “popping” by, etc.

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@cmg2024 Best of luck! If you make it back to SLO, I highly recommend a rock room at the Madonna Inn

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FYI, we visited last Fall and they were building a new eating facility and have also opened some new residential complexes.

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Absolutely correct. That bogus statistic leaves out a critical element, which is purchasing power. Salaries are determined by the local market, just like real estate is. It’s like saying that my house in CA is better because it costs more than a house in Texas. In Texas, I can buy a lot more house and live a lot more comfortably than in CA. It’s the same with salary. My salary in Texas is lower, but I have a lot more purchasing power with that salary than California.

Employers receive no additional value paying a college graduate a higher salary, otherwise he could attract an experienced professional to do the job.

If you inflate/deflate each local market to one standard currency, you’ll find that salaries are strikingly similar.

50

“The cost for CU Boulder is looking to be somewhere in the 66k-80k range for four years (in-state and a few nice scholarships).” - That’s a nice deal… it would be hard to pass on that. And CU would have a parental perk too - it could increase her chances is staying in CO after graduation.