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Tuesday, January 8, 2013

WSJ: The M.B.A. Crisis

Wall Street Journal:  For Newly Minted M.B.A.s, a Smaller Paycheck Awaits:

Soaring tuition costs, a weak labor market and a glut of recent graduates ... are upending the notion that professional degrees like M.B.A.s are a sure ticket to financial success.

The M.B.A.'s lot is partly reflected in starting pay. While available figures vary by schools and employers, recruiters' expected median salary for newly hired M.B.A.s was essentially flat between 2008 and 2011, not adjusting for inflation, according to a survey by the Graduate Management Admission Council.

For graduates with minimal experience—three years or less—median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined....

Another burdensome issue: a high debt load. Nearly 60% of graduating M.B.A.s said they expected to repay some loans after graduation, according to a 2012 GMAC survey. Among households headed by people with student debt who attended graduate school and are under 35, average student loan debt climbed to $81,758 in 2010 according a Wall Street Journal analysis of Federal Reserve data. That figure is up from $55,594 in 2007. ...

A weak economic climate is only partly to blame for the M.B.A.'s plight. The changing nature of B-school programs, evolving corporate needs—as well as the perceived value of the degree—have all helped dilute the M.B.A.'s allure. Formerly, the traditional M.B.A. was mainly the product of a full-time, two-year program. But beginning in the early 1990s, many schools created part-time and executive M.B.A. programs, with lower-ranked schools often following in the footsteps of academic leaders. Online degrees also gained in popularity. ...

U.S. schools granted a record 126,214 masters degrees in business and administration in the 2010-2011 academic year, a 74% jump from 2000-2001, according to the Department of Education. The M.B.A. march is part of an overall boom in advanced degrees that took on added steam as some recent college graduates and others sought refuge from the recession by pursuing advanced degrees. Tuition and fees for full-time M.B.A. programs has risen 24% over the past three years, according to the main body that accredits U.S. business schools.

MBA

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Comments

Inside the B-School Scam! Those professors are all criminals. They've defrauded the business world! They couldn't get a real job if their life depended on it. I bet they all have inflated salaries, cush jobs, and don't do any work. Sue them!

Posted by: JD/MBA | Jan 8, 2013 12:48:22 PM

You should check out the website Poets and Quants. WSJ is likely correct---do not know---but this trend is not yet true for top 30 schools. Also, the top schools tend to be larger. MBA for top 30 schools at least, has not yet fallen in value. It is like Manhattan Real Estate---it falls the least and slowest, and rises the most and the quickest.

Posted by: Mike Rulle | Jan 9, 2013 6:56:24 AM

Other causal factors may well be that a) top tier MBA schools used to fill the ranks of IBanks, which clearly isn't happening any longer, and b) a very large percentage of MBA students today are pursuing entrepreneurial management majors and using the education to launch start-ups (which have lower salaries). Thus, the salary number shifts.

From what I can see (having spoken at a number of top 10 MBA schools in the past year), the student is there for different reasons now. Where once it was to get a big job at a top employer, now it's to fast track themselves with the best VC's. I think it's a good sign.

Posted by: SDenny | Jan 9, 2013 10:21:47 AM