The Value of a CSUF MBA

I do not like saying “I told you so,” but it was a nice surprise to read an article validating my decision to enroll in CSUF’s MBA program.  The article, “Have B-Schools Become Debtors’ Prisons?” was published on Fortune Magazine’s website (August 18, 2011) and described why many current graduates from top-tier MBA programs are being plagued by high levels of debt after graduation.

First, I feel some background might be helpful.  When I was deciding which MBA programs to apply to, I was told by several colleagues that I should do everything in my power to try and get accepted into a top-tier school.  This meant finding a school with a top notch reputation, such as UCLA, or one with a well-connected alumni network, like USC.  However, I knew those schools would be challenging for me to get into, and even more challenging to pay for.  I was waitlisted at University of Washington (Seattle), but after crunching the numbers I decided it would be much too expensive.  My options were definitely limited because of my financial situation, and from a value standpoint CSUF’s Mihaylo School of Business of Economics made the most sense for me.  So far I have been very happy with my decision to attend the graduate program.

This brings me back full-circle to the Fortune.com article.  It was encouraging to read that attending a top-tier MBA program does not automatically put you on the fast track to financial success.  In fact, since an MBA degree is such a substantial investment, students can often take a step backwards financially when they first complete their degree.  To illustrate this point, the article provides several average MBA student debt loads.  At Pepperdine University, students can expect to graduate with approximately $66,242 in debt, and those amounts increase as the schools’ prestige grows.  Stanford: $71,403 in debt.  Dartmouth: $98,500 in debt.  Wharton: $109,836 in debt.  Those amounts are several times larger than my first car loan!

Several reasons are cited as the cause for such high debt loads, including increasing tuition and stagnant salaries.  Ever-increasing tuition costs are making MBA degrees more expensive to pursue and forcing students to incur higher-debt loads in order to cover their tuition.  To make things worse, salaries have not grown at the rates many employees expected and this makes the repayment of loans more challenging.  The article explains that students from graduate schools rated Nos. 40-50 earned an average salary of $81,599.  The salary situation for top-10 rated MBA programs appears to be a little less challenging, but an MBA degree from a top program does not guarantee financial success.  The article describes how Wharton graduates earn annual salaries that range from as high as $350,000 to as low as $25,000.  This wide range of salaries makes it difficult for students to conduct useful cost-benefit analysis when comparing graduate programs, thus making an important decision in many students’ lives more unclear.

All these issues with debt and salaries lead to problems for MBA graduates.  Some have to select less prestigious schools because they cannot afford a specific program’s tuition payments (to me, the top-10 MBA programs are only necessary if one is planning to pursue a career on Wall Street or in high finance, and even then their employer should probably be helping defray some of the costs).  I believe that students that have to select a slightly less-prestigious MBA program will need to put in extra effort in order to ensure they achieve all the goals they set for themselves.  Other MBA graduates may be forced to find occupations in fields they do not enjoy or excel in, because they have to choose a better pay check over a better work-life balance or pursuing their dreams.

All these issues identified in the article lead me to believe that MBA schools will need to reevaluate their tuition situations in order to ensure prospective students are not priced out of MBA degrees.  Business schools will also need to ensure that their curriculum properly prepares students for a successful life in business.  Economies and businesses are evolving rapidly with changes in technology and globalization.  Graduate students will want to ensure that they are getting good value for the money they spend on an MBA degree, and will likely be more diligent when conducting cost-benefit analysis of various programs.  MBA programs would be best served to limit future tuition increases and focus on preparing graduates for their careers in the rapidly changing business world.  I believe the schools that are able to differentiate themselves based on those criteria will be the ones that attract the largest numbers of prospective MBA students.

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