US / MBA / Hard Times and Smaller Paycheck

Like many students, Steve Vonderweidt hoped that a master’s degree in business administration would open doors to a new job with a higher paycheck.

Soaring tuition costs, a weak labor market and a glut of recent graduates are upending the notion that M.B.A.s and other professional degrees are a sure ticket to financial success. WSJ’s Ruth Simon reports on the News Hub. Photo: AP Images.

But now, about eight months after receiving his M.B.A. from the University of Louisville, Mr. Vonderweidt, 36 years old, hasn’t been able to find a job in the private sector, and continues to work as an administrator at a social-service agency that helps Louisville residents obtain food stamps, health care and other assistance. He is saddled with about $75,000 in student-loan debt—much of it from graduate school.

“It was a really great program,” says Mr. Vonderweidt. “But the job part has been atrocious.”

Soaring tuition costs, a weak labor market and a glut of recent graduates such as Mr. Vonderweidt 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.

Choosen excerpts by Job Market Monitor from

via Cost of College: For Newly Minted M.B.A.s, a Smaller Paycheck Awaits – WSJ.com.

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Morning Advantage: New MBAs Should Expect Lower Pay

Many newly-minted MBAs are finding that the return on investment from a graduate degree may not be panning out quite as expected. Ruth Simon at the Wall Street Journal reports that the expected median salary for newly hired MBAs was essentially flat between 2008 and 2011. For graduates with minimal experience (three years or less), median pay was $53,900 in 2012, down 4.6% from 2007-08. Pay fell at 62% of the 186 schools examined. And the trends are similar for more seasoned MBA grads as well.

Simon cites soaring tuition costs, high student debt loads, a weak labor market and a glut of recent graduates as sharing the blame for the problem, as well as evolving corporate needs and the changing nature of B-school programs, with part-time, executive MBA and online degree programs gaining in popularity. Brooks Holtom, a management professor at Georgetown University’s McDonough School of Business says that the number of M.B.A. degrees granted has grown faster than the population, diluting the perceived value of the degree.

As more colleges offer free, open online courses — and as millions of students flock to them — companies and universities need to figure out how to monetize these massive open online courses, or MOOCs. Tamar Lewin of the New York Times reports that the co-founders of Coursera, a leader in the space, want to keep courses freely available to poor students worldwide, because they believe education is a right, not a privilege. And even their venture backers say profits can wait. For now, Coursera is working to support its business by creating revenue streams via licensing and certification fees, and by providing recruitment data to employers. Many educators predict that the bulk of revenues for MOOCs will come from licensing remedial courses and “gateway” introductory courses in subjects like economics or statistics that enroll hundreds of thousands of students a year.

Choosen excerpts by Job Market Monitor from

via Morning Advantage: New MBAs Should Expect Lower Pay – Dana Rousmaniere – Harvard Business Review.