Some MBA Programs Are an Overpriced Credential, but Others Give Real Value

Once a hot degree, the MBA is now being questioned by more and more people. Wall Street Journal columnist Andy Kessler, for example, recently wrote that “the cost is prohibitive.” As a professor who teaches in the now questionable program, please allow me to provide some insight.

Before I go on, here’s your disclaimer. I enjoy teaching my MBA students. If I was on the outside looking in, I could easily go scorched earth. Given that I believe teaching is my calling, I think I provide value. But, I’m also not naïve. There are many flaws with the MBA in 2020—but there are still some good reasons to seek one.

The main flaw in the “burn it down” media regarding higher education is that the practices of elite programs are often projected onto the landscape of all of higher ed.  This is akin to the flawed thinking that suggests the “average CEO” earns what those fat cat CEOs take home.

When people imagine grocery shopping, most don’t gravitate to Whole Foods. It’s likely Walmart, Costco or a local supermarket. When they picture a personal vehicle, it’s not The Ultimate Driving Machine, rather it’s more likely to be Toyota, Chevy, or Honda. When discussing the MBA in general, it’s more appropriate to think of programs at a regional state university than Harvard of Stanford.

Only a relative handful of the total granted MBAs are from the elite schools. Decreasing enrollment at elite schools does not have to signal gloom and doom for everyone else. While the lesser programs may aspire to be elite, they also know that their “customers” exist in a different market segment. Most MBA students are working adults seeking to change careers or to bolster their resumes.

Additionally, lots of them learn nothing about business at all in college, and only later, when they’re trying to advance in the business world, do they realize that they have big knowledge gaps to fill. But those bright and hard-working adults don’t want to take out a second mortgage to do so.

Thus, to keep down the cost, some “non-elite” MBA programs have moved partially or wholly online, as it has at my institution, where MBA enrollment has increased tenfold. Critics will argue already inferior programs will be even more watered down as professors become system administrators of standardized assignments. Yet, given the video and audio software available, online courses have the potential to be as good, or better than, traditional courses – especially when considering how much informal online learning already takes place. 

Students report feeling engaged in my courses because I deliver leadership training in a podcast fashion that can be replayed at any point. They also appreciate that I allow flexible deadlines so that they feel more in control of the flow of the class, which is in line with how many of them consume content (e.g. iTunes U and YouTube).

While that may not convince purists, when the MBA is delivered effectively and efficiently at an appropriate cost, students leave with an educational background in accounting, finance, marketing, leadership, and strategy.

Unless the landscape changes, though, widespread college closings due to the higher ed bubble bursting or through an industry shift toward apprenticeships, on-the-job training, and employment testing—adults will still seek such signals, often for extrinsic benefits, and colleges will try to provide the best MBA programs for these degree seekers.

Yet, as I indicated above, I’ve heard all the criticisms. For those readers who are fans of that red meat style of critique, here is your tomahawk steak. MBAs are said to be a waste of time and money. As management scholar Henry Mintzberg wrote 15 years ago, the wrong people are pursuing an MBA at the wrong time and for the wrong reasons. They mistakenly believe that simply attending more school will better educate them for success in their next job.

Back when an MBA wasn’t so common, the degree was a stronger signal to the job market that you may possess something unique. In 1955, colleges granted ten times more undergraduate business degrees than MBAs. Now, it’s virtually one-to-one. It seems like everyone has an MBA. It’s the new bachelor’s degree.

You’ll be more successful learning on the job, the critique continues. You can even buy books like The 10-Day MBA and What they Don’t Teach you at Harvard Business School and get the knowledge at a fraction of the tab.

It’s easy to bash the MBA, because it’s not what it once was.

Then there is that “post-Enron,” virtue signaling mandatory ethics course designed to protect the school from an association with nefarious business practices. Yet, it’s highly unlikely that the course has ever discouraged any aspiring white-collar criminal from immoral practices.

So with all those flaws, why should anyone waste their time with an MBA?  I’ll end with the same advice I give to my undergraduates when they ask me that question.

Make it a rational decision. Do your research. Begin with the end in mind.  In order to get the most out of an MBA, the adult learner needs a cost-benefit analysis involving location (elite vs. non-elite schools) and program type (full-time vs. part-time).  If you have the funds and the time to make the MBA your full-time job, target a full-time program at the best school that will accept you. Once there, excel in class and grow your network. You’ll probably land a solid position with this strategy for now.

If your situation requires you to stay at your current job, remain close to your home, and possibly have your company pay for the tuition, target a part-time program in the local market or research fully online MBA programs from non-predatory institutions. This strategy will provide you with some new tools and a credential to add at the end of your name that, like many of the students in my program, you can leverage at some local company where all of management has the same degree.

It’s easy to bash the MBA, because it’s not what it once was. But then again, neither is your music collection, your communication devices, and your television. The difference is that while the latter examples have evolved, the MBA is at the point where it will either become a Betamax or an Apple Watch. Time will tell.

Programs that understand the need to effectively position their MBA against the other post-secondary options will find a good market, but those that waste students’ time and money won’t. 

Jason Fertig is an assistant professor of management at the University of Southern Indiana in Evansville, Indiana.