MBA News: Business School May Not Pay Off for Many

An article in this week’s Wall Street Journal (WSJ) suggests that in light of the boom in business school graduates, the value of an MBA may not be what it once was. The median pay for graduates with three years of experience or less fell in 2012, down 4.6% from 2007–2008. With rising tuition costs and a mounting average debt, students at lower-ranked business schools may especially have difficulty securing a desirable job upon graduation. The article suggests that in addition to an ailing economy, one of the challenges to the value of a business degree has been the increased popularity of such programs among less competitive schools and the introduction of part-time and executive degree programs. The Atlantic points out that the impact of this oversaturation of MBAs on average salary statistics should not be surprising: “Mediocre students who graduate from mediocre graduate programs aren’t going to suddenly find themselves working for Goldman Sachs.” Steve Vonderweidt, a social services administrator who earned his MBA from the University of Louisville, is profiled by the WSJ as one case in which a less prestigious degree has failed to pay off, as Vonderweidt finds himself burdened with $75,000 in debt and unable to find work in the private sector.

Graduates of top-tier business schools, however, may fare better. According to Bloomberg Businessweek, some schools, such as Chicago Booth, defied the odds, with the average Chicago Booth graduate’s salary rising 7% since 2010, a trend that seems to hold for most of the top-ranked programs. Still, even among the leading schools, salary averages may not account for the actual variances in what the typical MBA can expect to earn, which are affected by such variables as years of work experience and industry choice. Although the average salary for Harvard Business School graduates in 2012 was $125,085, those working in the financial field made, on average, predictably more ($138,164) than those working for nonprofits ($77,591). All of this reinforces the idea that getting into a high-ranking school is crucial and that prospective students are well advised to do the research necessary to have realistic expectations of their earning potential.

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