The Value of an MBA Degree

The lightning rod perception of the value of advanced education, such as the MBA degree, has recently generated much controversy. The primary concern is associated with the cost/benefits of education.

It is reported that during the last ten years, the cost of college tuition has increased 300% faster than the CPI (Consumer Price Index) and 200% faster than the rise in medical costs. During the period 1987-2012, the amount of public support in the US for higher education has substantially decreased, in real dollars. Today, student loan debt exceeds credit card debt in the US for the first time ever. Additionally, there are horror stories of students who spend more than $100,000 in a MBA program and then land jobs as burger flippers.

Counter-intuitively, the number of MBA degrees awarded in the US increased 50% between 1992 and 2012. Likewise, the
number of MBA programs increased 33% during the same period.

Most surprisingly, of the people aged 25-34 in the US, only 40% have received some type of higher education, resulting in a global ranking of 16th. Those who do pursue higher education typically are remunerated by the marketplace due to their educational competitive edge.

Historically, there is a strong correlation between lifetime income and the amount of education one receives. The degree type and major also make a difference. During the past decades, dramatic increase in lifetime earnings result from having a master’s degree, with the highest payback coming from the MS in engineering and the MBA degree (typically about $400,000 more than earned with a bachelor degree).

Seemingly, a result is that higher education is now transitioning from a subsidized public service to a competitive market scenario, from servicing the traditional, full-time student to teaching the part time, older, working adult learner.

There is one aspect of the marketplace that is widely accepted – that change is inevitable. In 1988 there was no internet, no email. Trending the past four decades, one can project that 70% of the jobs in 2033, probably do not exist today. For most persons in the marketplace, the average tenure per job is 3.6 – 4.2 years. The typical American experiences 5 careers and 15 different jobs.

The challenge facing education and those wanting to advance in the marketplace with an MBA is that you have to prepare for a job that doesn’t exist today, using a technology that does not exist to solve problems which today aren’t known as problems. This is the key to the real value of the MBA degree.

Today all schools are under growing pressure to justify their costs and quantify the resulting value, which is an art not a science. .The value of any higher education is the broadening of one’s perspective and enhancing potential opportunities. For many the MBA degree builds self-confidence and communication skills (e.g.: group collaboration), expanding their set of skills.

To address appropriately the challenge of the future, a good MBA Degree which maximizes its value potential for its recipients, focuses on broad based, creative problem solving by enhancing self-starting, problem solving abilities, cost effectively. This can be accomplished through the use of real case studies that have practical implications regarding how to solve unknown problems in the future.

For many the value of an MBA degree is advancement in a current position. For others it might be a new job. It is noted that although the MBA degree might be an entry into the recruiter’s door, once inside the interview room, the personality, the ability to communicate and sell one’s talents becomes paramount. Most important for any employer, is the ability of a prospect to confirm their self-starting, creative, problem solving abilities, cost effectively. This is a true reflection of the value of a MBA degree.

The MBA degree is similar to fashion. It is not necessarily how much you pay for it, as much as what you do with it after you get it.

Dr. David McKinney
Dean – College of Business
President – Westcliff University