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The Master of Business Administration (MBA) degree was once considered the holy grail for aspiring entrepreneurs looking to break into the business world. Demand for the prestigious credential has waned in recent years.
Application volume is down at 70% of two-year, full-time MBA programs in the United States, according to a 2018 survey by the Graduate Management Admission Council. While prestigious U.S. business schools experienced declines in applications (Harvard -4.5%, Stanford -4.6%, etc.), MBA programs in Asia, Europe and Canada experienced gains in application volume. Some analysts blame anti-immigrant policies relates to visas as the primary culprit for declining MBA applications in the United States. Foreign student applications were down nearly 11% from 2017-18. Another common explanation is that students simply do not believe the return on investment is worth it.
The average cost of tuition for top-10 U.S. MBA program was over $130,000 in 2017, according to US News and World Report. That does not include room, board and lost income from staying in school versus entering the workforce. The total price tag can approach $300,000 when factoring in everything else. Meanwhile the National Association of Colleges and Employers said the average first-year salary for MBA graduates in 2019 was around $84,580. Returns are of course much better at top-10 programs, with average first-year salaries of around $166,000.
The foregoing data lead many to believe that an MBA is only worth it if you get into one of the most prestigious schools in the country. An MBA from Wharton, Stern (NYU), or Darden (Virginia) can set you for life simply from the networking opportunities. But there are many other paths to that corner office with the plush executive office chair.
The primary payoff from two years of graduate business school is the piece of paper and the network. If the knowledge and education are the most important factors, in lieu of the degree and network, you can get it for free.
The massive open online course (MOOC) movement has changed the game of higher education. Numerous online platforms such as Udemy, EdX and Khan Academy offer courses in myriad categories from prestigious universities. Most of them do not offer actual college credit. But you're still getting a quality education. What makes these programs so attractive is that many are free or very inexpensive. The platforms typically make money from premium upgrades.
You can't earn a physical MBA solely by taking MOOCs. You can, however, combine several courses from different platforms to get an equivalent education. Laurie Pickard, author of the book Don't Pay For Your MBA followed this model and educated herself for a fraction of the price of even average MBA programs.
The MBA's reputation isn't helped by prominent business figures discouraging students from enrolling in programs. Mark Cuban, of Shark Tank and Dallas Mavericks fame, told CNBC that he is no fan of the MBA and doesn't encourage people to pursue them. Silicon Valley angel investor Jason Calacanis said the same $200,000 for business school could be spent on starting several companies. Even if one or two of them fail, chances are one will end up being a multi-million dollar success.
Eco Office cannot provide advice one way or the other on pursuing an MBA. What we can do is design and outfit the perfect office setting for your Bay Area business needs. Give us a call today at 408-437-1700 to discuss your options.
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