March 5, 2013
On Wednesday, February 27, 2013, the student loan ombudsman at the recently minted Consumer Finance Protection Bureau (CFPB), Rohit Chopra, declared yet another systemwithin the U.S. economy ‘too big to fail.’ While Sen. Warren is grilling Ben Bernanke on what exactly the Federal Reserve is doing to remedy the unacceptable influence big banks wield on the health and state of our economy, the student loan debt market, comprised of public and private lenders, has shot past $1 trillion and continues its relentless climb.
Last year, students borrowed $117 billion from the federal government alone—our most inexpensive and forgiving education creditor. [Although, if our ever-competent and productive legislators [sic] fail to reach an agreement by July 1st of this year, interest rates on subsidized Stafford loans will be hiked to 6.8%.]But, is this any surprise? The cost of college is increasing at a rate of 8% per year, five times the current national rate. This tuition inflation rate translates to a doubling of tuition every nine years. Of course, tuition is nowhere near the entirety of the cost of higher education. In fact, an investigation by Business Insider estimates an average of $70,000 in additional costs above the tuition sticker price, and that is just an undergrad number.
Some are lucky enough to be able to cover the cost of undergraduate and graduate degrees, but more are unable to do so without incurring debt.As you look toward your MBA degree and the multi-faceted investment it involves, take the time to objectively evaluate where a graduate management degree from your targeted institution(s) have the potential to take you. Do not sell yourself short or the institution, but approach this analysis soberly. It may well be that you conclude that you need to set your sights higher and, therefore, incur even more cost in order to track your future in the direction it needs to go. If you have the drive and are willing to make the commitment to do what it takes to get into a top tier school, then go after it. If that does not make sense for your career path and goals, however, then get what you need at less cost.
The numbers surrounding student loan debt are terrifying, both macro and micro (I speak from experience here). But, just as a fledgling company needs investment to grow and prosper, so do individuals. If you decide to take the plunge, then go all in. Sign up for a GMAT class, take trips to universities, apply for scholarships and grants, accept loans if necessary. After all, where is the reward without the risk? Just be sure to do all of these things prudently and with a clear head. Do not be duped into a system that will not reward your risk.Defaults will hurt us all.
WSJ got me reading, sure, but is it better to have an irritated reader than none at all? I suppose so. Admittedly, I am doing exactly the same thing both the Journal and the researchers at Northern Illinois University are doing: using Facebook in a shameless attempt to capture your attention. It worked on me and now it has worked on you. Maybe after you’re done here you can go read People or watch Fox News for some more pandering.
I’ve written before about the GMAT as a selection tool (here and here), and it is a conversation I have with all my students. It is important to understand why we have to take the GMAT and what the GMAT really is. The more you understand about the test, the more power you have over it (and the less it has over you). The basic idea is that the GMAT is built and validated to predict only one thing: your future academic performance in the first year of graduate school. That’s it. What the GMAT doesn’t predict is how smart you are or how successful you will be in your post-MBA career. Although, to that last point, some are sadly using it to do just that, which is what prompted this post.
The article is more of a snippet and it is formatted as a series of Facebook status updates (though I believe the irony of this is lost on them). An aside: the trend of online articles presented in sentences-as-paragraphs form is frustrating to me, and this one exemplifies the issue. Anyway, it did spark my memory of other invalid ways of predicting job performance so I figured I share it with you.
Scroll down to the third snippet in the stream of three and you’ll find some interesting statistics derived from GMAT data regarding the decreasing average age of MBA applicants. Of course, we can only conclude the MBA applicant is getting younger if we assume that those taking the GMAT are submitting b-school applications soon after taking the exam rather than waiting until closer to the end of the five-year test score expiration date.
Interestingly, 44% of GMAT test takers worldwide are 24 and younger, which is a 7% increase over five years. Speculation of a tough job market caused by a struggling US economy that is forcing undergraduates to apply to grad school earlier than planned is presented. We then learn that 77% of Chinese GMAT test takers are 24 and under—finally some hard numbers that don’t rely on assumptions!
I could not help but tenuously link the bit about Facebook and a younger MBA applicant pool, then land squarely on the side of grumpy-old-man cynicism. I respect people with drive and ambition and who recognize the value of graduate business education. However, solid time out of school including a muddy trudge through life before heading back to academia makes for a stronger applicant and a more meaningful grad school experience. My hope is that business schools continue to value highly years of work experience in their applicants and that they keep the number of 24-and-younger MBA degree seekers to a minimum in their admitted cohorts. Above all, I hope they don’t start using Facebook to predict academic performance. Let’s let the GMAT have that one, OK?
January 22, 2012
I don’t read Forbes magazine with any regularity. If there is a copy in the dentist’s office, then I might pick it up and look at the cover, but will rarely be enticed to actually open it and read an article. However, as is becoming ever more apparent, the age of print media is ceding tremendous ground to its virtual counterparts. As proof, I come across an interesting Forbes article online with some notable frequency. Here’s the latest eye catcher:
“The MBA Megabucks CEOs” has a title I just couldn’t pass up. Maybe it was the timing—GMACs’ 2012 Alumni Perspectives Survey Report was recently released and in it we learned a couple things about remuneration trends with MBA degree holders. Anyway, it reads almost like an article out of People; full of straw-man evidence and blanket statements that get folks comparing themselves to others in useless ways. Still, that kind of thing is entertaining, no?
As it turns out, forty out of the 100 best paid CEOs in America during 2011 hold an MBA degree. The article also gets into some patterns among the world’s ultra-rich and, interestingly, that list contains a bunch of people that dropped out of school.
So to answer the question in the article’s title: Sure, it could. But we knew that already. While the promise (or better-than-average chance) of seeing a return on our investment in graduate education is an important factor in our decision to go, I hope it is not the only factor you are considering. Don’t get an MBA just to get a bigger paycheck. Have more purpose than that. As sentimental as it may sound, I hope you pursue an advanced degree mainly out of a desire to become a better person. That way, if you do end up with the Big Stack, you’ll do some good with it.
January 7, 2012
In a recent post, I brought you some welcome news about the 2012 job outlook for MBA hires. Well, good news is a wonderful thing in such an economic climate and WSJ’s MarketWatch threw together some interesting bullet points from GMAC’s report you might want to peruse.
With 2011 behind us and so many of you clamoring to get the GMAT out of the way before the test change in June 2012, it’s sometimes hard to lift up our heads and have a look at what happens after this whole grad school thing is over. Well, now is a good time to do just that ‘cause it sure looks like roses.
December 7, 2011
Joe Thomas, Dean of the Samuel Curtis Johnson Graduate School of Management at Cornell University, made a pitch in a Huff Post article, “The Relevant MBA.” In a previous post, I took a glance at some of the more unsavory opinions out there surrounding the MBA and those of us who have one, then lobbied for the uselessness and errant nature of these myopic opinions. Here, a guy makes a bid for the relevance, value, and hope the MBA educated offer the world.
Undeniably, Mr. Thomas has an agenda. However, he also has a unique perspective and is in a position of leadership at a top school. While the vision he paints is a touch romantic, leaders must possess and communicate powerful visions that will inspire those around them.
Listen to the articulation of his vision and let it resonate. Don’t get into this degree if you plan on just showing up, being counted, and walking across a stage in a couple years without much to show for it besides a piece of paper. Rather, take this foray back into academia for all it is worth, and hold onto the belief that you can absolutely have an impact—a profound one. Believe it and act on it.
December 5, 2011
The Business section of the Huffington Post ran an article on Nov. 2 entitled “5 myths about MBAs.” Naturally, such a provocative title got me reading. I find the title provocative for a few reasons: (1) I have an MBA; (2) based on personal experience, it is very hard to find neutral or otherwise indifferent feelings regarding the MBA as a degree and those people who possess one (M-B-A is a polarizing three-letter combo); and (3) a lot of the stuff I’ve heard, read, and even thought myself before getting the degree was/is pretty darn far off the mark. So does this article help? Well, you be the judge, but here’s what I think:
People use heuristics to filter through a perpetual information barrage that would otherwise leave us drooling on the floor. These mental shortcuts allow us to make quick judgments and decisions in order to move through the sea of stimuli we continually face every minute of every day. One go-to heuristic for assessing people is stereotyping. We all do it. We take a broad brush and use it to paint a monochrome picture of groups of individuals whom are lumped together based on some shared aspect/characteristic/attribute.
Most commonly, race comes to mind whenever the word stereotype enters the conversation. However, that is far from the only instance in which we stereotype our fellow humans. For example, what do you think of people who work for Google? Thoughts on the Occupy Wall Street protesters? How about Tea Partiers? The Y-Generation? Baby Boomers? Teenagers? Old people? The poor? The wealthy?
While heuristics are helpful, they can give way to unfounded, unsupported, non-representative, erroneous conclusions about large swaths of humankind. The article, “5 myths about MBAs,” attempts to reveal truth and dispel assumption. This is a good thing, especially in light of some of the stuff happening around the world right now.
What’s important is that we avoid making generalizations (and taking the bait when they are made about us), particularly insidious ones that cultivate contempt. What’s also important is that those of us in the “MBA Club,” make sure we unfailingly add credibility to the education and what we do with it.
This is my new favorite article. I am sad that it took me half a year to stumble across it (was originally published in April 2011), but I will now be assigning it to all of my undergrads for the foreseeable future. In fact, it will be the first thing they have to read in any class I teach.
I will revisit some of the content and issues the author of this article brings up, but one fact you might find interesting is “when business students take the GMAT, the entry examination for M.B.A. programs, they score lower than do students in every other major.” Want an anecdote?
Last week, a student in my MGT330 class (Recruitment & Selection) approached me at the break. He says: “Hey, yeah, so I just wanted you to know that I was interested in understanding some of the stuff I’ve been confused about in here, so over this past week I actually read some of the textbook and things make a lot more sense now. Anyway, I just wanted you to know that.”
I was dumbfounded. The only return I could muster was, “Great! I’m really glad you did that! If you need any more clarification on some of the concepts that you’re struggling with, please let me know. I’d be happy to talk with you about it some more.” Then, because I couldn’t help myself, I lightheartedly added, “Who would have thought actually reading the textbook would have been so useful!”
I winked, he laughed. We have three weeks left in the semester.
Read the article I linked at the top of this post and send me some feedback on your thoughts and experiences. Business education is a topic I’ve tackled in the past and one that I will continue to write about in the future. To get caught up with and weigh in on some of my other ideas regarding the topic, here’s an incomplete but relevant selection of five posts for you to read:
- The MBA and Woody Allen: 50/50 and showing up
- Go Get your Letters
- Going to Business School with an Open Mind
- Part-time Business School Student / Full-time Professional
- Certified Managers, right?