Why Are College Students Dropping Their Business Majors? We Give You the Stats.

By Theresa Donahue
February 8th, 2010

Ironically, while the economy is in the tank, statistics reveal that the percentage of college freshmen who plan to major in business is at its lowest level since the mid-1970s. According to the Higher Education Research Institute (HERI) at the University of California at Los Angeles, the number of freshmen who plan to major in business fell from 16.8 percent in 2008 to 14.4 percent in 2009, the lowest percentage since 1974, when 14 percent of college freshmen focused on business majors. Why are students dropping business majors?

College choice in general, according to the HERI survey, continues to be influenced by the economy. Last year saw all-time highs in the importance of cost and financial aid, and those trends continue this year, breaking all such records. According to the survey:

  • 41.6 percent: The cost of attending a particular college was a very important factor in determining where to attend. This is the highest percentage for this question since it was added to the survey.
  • 44.7 percent: An offer of financial aid was a very important determining factor for these students, up from 43 percent in 2008 and 39.4 percent in 2007.
  • 8.9 percent: Not being offered aid by the first choice of college was a “very important” reason for choosing a current college, the highest this figure has been since the question was first asked in 1984.
  • 56.5 percent: The number of incoming freshmen who chose a college based upon the possibility of getting a good job upon graduation increased in importance. This is the highest level seen since this question was first asked in 1983.

Additionally, the rising amount of debt burden for college students and their parents and the diminishing job outlook for recent graduates are pushing students to look at degrees other than business. Accordingly, colleges that offer business degrees may look to the ability to offer more financial incentives for enrollment. These same business colleges and degree programs may begin to look at retention rates and degree attainments, based upon the numbers of incoming freshmen who may change their majors based upon these figures, and offer financial rewards and incentives to retain numbers.

The economic downturn has created an impact on characteristics, attitudes and beliefs of incoming first-time students at four-year institutions as well. These factors include:

  • Concern more about finances: Incoming first-year freshmen this year likely will graduate with higher debts, producing the desire to find a high-paying major such as engineering.
  • Ability to obtain loans and grants: This concern may lead more freshmen to think about high-paying careers that do not require college degrees, such as a court reporter, network administrator, police force, and clinical lab technicians.
  • Raising a family is an important goal: Although being well-off financially is the most important goal (78.1 percent compared to 73.6 percent in 2004), raising a family comes next in desires for incoming freshmen (74.7 percent compared to 75.1 percent in 2004). After the current volatile atmosphere surrounding business news (ie: Bernie Madoff, bank issues, etc.), incoming freshmen may see business as a sour investment in future goals.
  • Family resources are important: The largest percentages of incoming freshmen are from families that bring in $60,000 to $149,000 annually. The breakdown is 10.8 percent ($60,000 to $74,999); 14 percent ($75,000 to $99,999); 17.6 percent — the highest percentage on the list ($100,000 to $149,999). These statistics show that teens from wealthier families still retain the highest ability to attend college. Teens from lower-income families may choose a vocational major rather than a business major, as the former degrees may be less expensive to obtain.

Despite the figures shown above, the percentages show that 14.4 percent of incoming freshmen still look to obtaining a professional degree, and the same percentage still desire a business degree:

  1. Arts and Humanities: 13.3 percent
  2. Social Sciences: 11.7 percent
  3. Biological Sciences: 9.7 percent
  4. Engineering: 9.7 percent
  5. Education: 8.1 percent
  6. Physical Sciences: 3.4 percent
  7. Technical Fields: 1.1 percent
  8. Other Fields: 7.5 percent
  9. Undecided: 6.8 percent

Possibilities exist for business colleges and colleges that carry business courses to look at those percentages and determine how they might lure students into more business majors. But, that development might also depend upon seeking students from other sources, such as the military and ethnic minorities. Also, colleges may look at the ability of a student to carry a business course load. It should be noted, however, that colleges with well-regarded and highly competitive business offerings, such as the University of Southern California or NYU, aren’t experiencing significant declines in student enrollment.

There is a renewed influx of veterans into colleges, and the survey introduced a new item on veteran status. of the 297 schools surveyed in the report, 202 has at least one first-year student who was a military veteran and a total of 595 first-year students who reported veteran status. But, there is a factor involved in choosing veterans, as the survey reported that the veterans who participated received significantly lower grades in high school than non-veteran students entering the same colleges. According to the report:

For example, while 11.5 percent of veterans reported receiving A or A+ grades in high school, non-veteran students were more than twice as likely (23.1 percent) to report such grades. While only 4.6 percent of non-veterans reported a C+ average or lower, 19.8 percent of veterans did so. Veterans were also more likely than non-veterans to report a need for special tutoring or remedial work in mathematics (35.8 percent vs. 24.3 percent) and writing (20.7 percent vs. 11.6 percent).

In particular, veterans were more likely to rate themselves higher in leadership ability than other freshmen entering the same colleges. This concept of leadership abilities may prove the key in luring veterans into business degrees. But, some students may not feel that leadership potential nor have the ability to train for college courses.

The lure to attend a business college may also depend AP classes and exams as well as grades. While the percentage of students taking at least one AP exam has increased by nearly ten percentage points over the last five years (from 50.9 percent to 60.3 percent), the differences between racial and ethnic groups in AP experiences continues to exist. Opportunities in high school often determine whether or not students can gain access to AP courses.

Only 5.4 percent of entering students at four-year institutions reported attending a high school where no AP courses were offered, and those percentages ranked as follows:

  1. American Indian students (9.1 percent)
  2. African American students (6.8 percent)
  3. Asian American students (5.8 percent)
  4. White students (5.3 percent)
  5. Hispanic students (3.6 percent)

Among those who reported having taken between one and four AP classes in high school, Hispanic students, at 54.3 percent, compared very favorably with other groups, including:

  1. White students (49.9 percent)
  2. Multiracial students (50.0 percent)
  3. African American students (45.3 percent)
  4. American Indian students (a low of 39.1 percent)

Asian American students, however, were more than twice as likely to take between five and nine AP courses (33.8 percent) as white students (15.4 percent). The pattern was similar for students taking AP exams.

Finally, considering just the 2009 data, gaps remain between the percentage of those who receive remedial work in high school and those who need remedial work in college. There has been an increase in the percentage of students who feel they will need special tutoring or remedial work. In fact, remedial work in high school by these students is at the highest levels ever reported in the survey (with the exception social studies, which reached a high in 1980): English (7.2 percent), reading (6.5 percent), mathematics (14.5 percent), social studies (4.5 percent), science (6.1 percent), foreign language (5.9 percent) and writing (5.8 percent).

These gaps alone present an issue for anyone who wants a career, no matter if it is in business, engineering, technology or working in a fast food restaurant.

The 2009 freshman norms in the HERI survey are based on the responses of 219,864 first-time, full-time, first-year students at 297 of the nation’s baccalaureate colleges and universities. The data have been statistically adjusted to reflect the responses of the 1.4 million first-time, full-time students entering four-year colleges and universities as first-year students in 2009.

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