Negative ROI on prestige online programs

Discussion in 'Business and MBA degrees' started by smartdegree, Nov 20, 2021.

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  1. Rich Douglas

    Rich Douglas Well-Known Member

    That's a personal choice, of course. Personally, I have no problem with it, unless it is just a shield to hide behind while taking potshots at someone else.
     
  2. GregWatts

    GregWatts Active Member

    Don't think it is that complicated. Most who take DL MBA's are largely career development for people who already have a job / career. Employers "generally" don't give you a raise for completing it, albeit they might pay for it. Will it provide a promotion? Possibly, but if you are already "in" you can probably get the promotion without it.

    The FT cohort's are generally in a different situation. If you are an auditor and get a MBA to move into consulting, you will get a raise... but that is a different situation.
     
    Rich Douglas likes this.
  3. Rich Douglas

    Rich Douglas Well-Known Member

    (Boring lecture tangent to your point coming....)

    When you choose to pursue a degree, you enter into an exchange of capital: two from you and two from the school. You give your money and your academic effort. They, in turn, give you an education and a degree.

    A degree, like any credential, is a proxy. It speaks on your behalf when you cannot do so yourself (with your performance).

    When the norm was lifetime employment--or nearly so--companies chose to invest in their promising employees. Management training systems were robust and people could advance quite well without a degree. Companies were willing to invest in their human capital, and they tended to promote from within. It not only motivated people to excel, but the company itself was more confident it new the candidates' performances. If you moved 6 or 7 times in the course of your career, you were considered a job-hopper.

    But two things came along--coincidentally, at the same time--to upset that equation.

    First was the almost immediate and almost complete shift in the early '80s in retirement plans, with new laws permitting employers to get out from under their pension liabilities by switching from defined benefit plans--pensions--to defined contribution plans (401Ks and the like). Open-and-shut, it was sudden. So, yes the employers got off the hook, but so did employees. No longer were you bound to your company's pension plan and the need to stay until retirement. Now, you could pick up your retirement savings (and their contributions, subject to a vesting schedule) and move. This meant employees were more mobile. And they did move. A lot.

    This meant that employers could no longer count on seeing a return on their training and development investments since employees could simply walk out the door at the next good offer. But...it also meant employees without credentials didn't look so hot to other employers, even if they were well-trained within their companies. They needed credentials. This brings us to the second phenomenon: the rise of college degree programs for working adults.

    Back in the early 1970s, a guy named David Chigos--who was a higher-up at the General Dynamics location in San Diego--wanted to get management training for his managers. He thought an MBA program would be a good idea, so he turned to the folks at San Diego State's b-school for help. Their answer: if you (and they) are serious about a business education, the students should take two years away from work and do an MBA on campus. (There were no night school programs at the time and online programs didn't exist.) Instead, Chigos--with a PhD from US International University (now Alliant)--started his own school. Keeping the records in the trunk of his Cadillac, David started and grew the university into the second-largest private university in California--National University.

    During the 1970s and '80s we saw a huge rise in degree programs directed towards working adults. The Union for Experimenting Colleges and Universities, the University Without Walls system, the "big three," Walden, Nova (now Nova Southeastern), and a plethora of programs for night and weekend students at local universities all around the country. (Those were heady times!) When the internet--along with the World Wide Web--we saw rocket fuel added to then engine to the point were you can do a degree from just about anywhere on Earth--and have hundreds or even thousands of schools to choose from. Whoooooosh!

    As a result, we saw a huge rush to earn more and more credentials--often to perform the same jobs--as employers needed ways to discern the qualifications of applicants. (It didn't help that the internet and WWW allowed people to apply for jobs all over the world and not just their local areas, flooding HR managers with applications and causing a need for handy factors to sort through it all...like whether or not someone has a degree or more.) David Hapgood identified this phenomenon as early as 1971 in his book, Diplomaism. Nothing's changed since then, except more so.

    Back to the issue of earning degrees and getting a return on that investment, it's a very individual question. One person might do just fine in a career without that advanced degree--or any degree at all. Another might need it very much. Yes, we've seen a general trend towards more and more credentials--and who knows what affect Covid's effects on the human capital market will bring. But it's safe to say that employees will continue to see the demand for higher credentials and will need to look for ways to stay competitive.

    Finally, there's the question of the degree process itself. Earning a degree nontraditionally--online, at night, whatever--especially while working in a career, almost ensures you will be excluded from a lot of the developmental and career-promoting that goes on in full-time programs. But that's okay, right? If you're in the midst of your career, you should already be doing those things in the workplace and in professional organizations. The degree is added to that. But if you want to enter a field like management consulting, for example, getting your degree online at XYZ university might not get you there. And doing your PhD that way might not get you on a traditional track towards an academic position. There are plenty of anecdotes to show that people have done it, but it would be a very interesting study to determine how it is done.

    TL;DR: Doing a DL MBA makes sense for career professionals looking to burnish their credentials and to advance their careers. Might not be such a good idea for entry-level folks, people who might be better served in a traditional, on-campus program.
     
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  4. cookderosa

    cookderosa Resident Chef

    I think it is human nature to seek succinct summaries in life. It's how we benefit from time on the planet, we understand. But really though, for every instance of prestige generating a+ ROI, the vanity of it all probably drives most people to do it, ROI be damned.
     
    SteveFoerster likes this.
  5. Courcelles

    Courcelles Active Member

    An online MBA might not get you a raise in an arbitrary short time period, but as Rich says, people move jobs a lot more than they used to.

    So keeping up in a credential arms race is important, even if it shows no ROI short term. You’re almost surely going to be looking for new work eventually.
     
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  6. nosborne48

    nosborne48 Well-Known Member

    Interesting. I am familiar with the shift from defined benefit to defined contribution retirement accounts of course. That's one reason I've stayed with public sector employment. I hadn’t thought of it in terms of freeing employees though. Hm.
     
    Rich Douglas likes this.
  7. "I guess the lesson here is you need to do your due diligence before doing a "prestige" online MBA" - nice observation.
     
  8. Follow up - a couple of other threads have similar veins. The "Negative ROI for online MBA's" and the "Cybersecurity Masters". A person is remiss if they think that the school/program has their best interests at heart. Some due diligence is in order. ;)
     
  9. JoshD

    JoshD Well-Known Member

    I will give my take from someone pursuing a graduate business degree at what many would call a prestigious university.

    Prior to applying and being admitted to Duke University’s Fuqua School of Business, I had a successful banking career at a small bank in my town. I now work for a $100 billion bank with a great opportunity climb the corporate ladder even more.

    However, the career opportunities were not exactly what I was after but more so, the connections. I made a great connection with the President and CEO of US Polo Global Licensing Inc. I have sat in on small chats with Coach K at Duke. I have listened to other executives speak and made connections with Director level employees at Apple, Google, Microsoft, Fidelity Investments, Synchrony Bank, etc.

    For some, the ROI may not be financial in the beginning. Building those connections though goes a long ways. Long term gain versus short term for me.
     
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  10. ArielB

    ArielB Member

    It would be interesting to see, as a comparison, the ROI on the "box check" MBAs, like WGU and the host of AACSB-accredited schools that offer an MBA for under 15k.
     
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  11. Steve King

    Steve King Member

    https://www.theatlantic.com/business/archive/2012/05/does-it-matter-where-you-go-to-college/257227/
    If this study from 1999 is to be believed, Does It Pay to Attend an Elite Private College? Cross-Cohort Evidence on the Effects of College Type on Earnings, the answer is that the school’s reputation does matter.

    According to a nice summary published in The Atlantic, the study “looked at data on thousands students who went to college in the 1970s and 80s. The researchers grouped their subjects' schools by reputation using old college guide books, then compared their post-campus wages. The rankings, it turned out, mattered a great deal. The more elite a school, the better its alums' paychecks. The effect also increased over time. Among students who had graduated high school in 1980, those who had gone on to a top private university eventually made 20 percent more than their counterparts from bottom tier public school. For the class of 1972, the wage boost was just 9 percent.” The article references additional studies that reinforce this observation.
     
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  12. nosborne48

    nosborne48 Well-Known Member

    Generally true in law but there's a caveat. The Top Ten (or Top Three or Top Fourteen, pick your particular prestige ranking) degree makes the graduate eligible for employment in one of the gigantic Wall Street Big Law firms and for a half dozen years or so the new lawyer will make dizzying amounts of money. But most don't make partner and will end up looking for work after that. They still can do very well but they don't all land on their feet.

    Paying sticker price at almost any private school (and many state schools) not in the Top Whatever is financial suicide.
     
  13. nosborne48

    nosborne48 Well-Known Member

    I do think that my aggressively un-prestigious LL.M. contributed materially to a really major promotion and salary increase but it wasn't the sole factor. These things are hard to measure.
     
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  14. Rich Douglas

    Rich Douglas Well-Known Member

    In my experience, there is a negative correlation between the need for a prestigious name and one's own professional accomplishments.
     
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  15. Neuhaus

    Neuhaus Well-Known Member

    The thing is that this seems to rely on the notion that you earned your MBA, walked into HR and said "I have a new MBA" and they raised your pay. This used to actually be incredibly common. Nowadays? It still happens but not on any grand scale. School districts typically have something like this. Show them you earned a doctorate and they bump your pay a bit. That coupled with tuition assistance for the doctorate and it can easily create a positive ROI especially when taken over the course of a career. The last place I encountered this was a call center for a financial services company. The way they structured salaries was that you could get the job if you had:

    1. Securities licenses but no degree
    2. A relevant degree but no licenses
    3. A bachelor's degree (any field) AND securities licenses ($1,200 pay bump)
    4. Item three plus an MBA or equivalent ($1,000 pay bump)

    If you came in under option 1 and earned a bachelor's degree you got the $1,200. If you came in under option 2 you didn't get a pay bump because they spent money on you getting you licensed. If you came in under option 3 and earned a Masters later you got the extra $1k.

    The only time and place that is common is for relatively low level positions that we have arbitrarily decided now require masters degrees even though people without them are perfectly capable of carrying out those functions. Beyond that, the most likely source of a pay increase is what I would consider a "soft" qualification. That is, I come up for my annual review and when they are considering my merit based pay they look at my vast achievements in the workplace coupled with the fact that I earned a Masters degree and they decide to give me a higher than usual pay bump. The other way, of course, is one like my situation surrounding my MSM. I wanted a promotion. That role required a Masters degree I did not have. I got a Masters degree. The box was checked and I was able to move on. My work and accomplishments got me the promotion. My MSM prevented it from being scuttled due to a largely administrative factor.

    One of the problems with the modern MBA is that literally anyone with a bachelors degree and a pulse can enroll. Years ago you had to apply and you might not get in (also, far fewer programs competing against one another). Midlevel managers were the target. There are some exceptions to this, of course. But, generally, an MBA student had 2-3 years of RELEVANT work experience.

    If you sell cell phones at the Verizon store and earn an MBA from Drexel in your off hours then you're pretty much limited to whatever pittance Verizon may pay you for the degree (if anything at all). You're not going to immediately supercharge your career just because you have the paper. You might qualify for some different jobs, of course, but they are going to be entry level because your past experience just doesn't matter to, say, the financial sector.

    Schools vigorously marketed the MBA as a way to increase salary and, in some cases, to skip all that entry level business altogether and go get yourself a corner office. They market it as something that sets you apart which it used to actually be. Employers, meanwhile, now see a market saturated with MBA graduates who have no actual business skills beyond their degree. They have no experience. They aren't accountants or analysts. They are people with an MBA who now want a job. What kind of job? Businessperson, please. So employers are allowed to get picky. They can mandate that the administrative assistants now have bachelors degrees or even MBAs.

    The problem isn't that you need a more prestigious school. The problem is that degree inflation is creating a very serious bubble. Lobbying trade organizations for higher education push higher degree requirements for licensed professions across the country. New, highly specialized masters degrees allow schools to rebrand the same course content. Now they can take a few classes from their M.Ed. and their MBA and call it a Masters in Educational Leadership, for example.

    The bubble is gonna pop eventually. Multiple generations of people being told they need to get degrees lest they flip burgers are currently flipping burgers (or not with the current labor shortage...) with a few hundred thousand in student loan debts to top off their woes. My parents would accept nothing less than a bachelors degree from me because of how they viewed its importance. With my children I am looking more closely at whether they have an actionable plan. When I was a kid the idea of going to college and studying "whatever" was perfectly fine. "Study your passion," they said. "The money will follow," they said. I would rather my kids be the best damn barbers in town with a well laid out plan for managing their businesses than bumping around listlessly with a six figure debt on their shoulders, pushing 35 and still having no idea what they want to be when they grow up but, hey, this college guy said that if I get an MBA it will all get better!
     
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  16. nosborne48

    nosborne48 Well-Known Member

    That's why I suggest that MBA wanna-bes think about getting a master's with specific professional content such as accounting or tax instead of the general business MBA or even DBA. The CPA license is a very valuable credential.
     
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  17. Rich Douglas

    Rich Douglas Well-Known Member

    I think it's already popping. At the entry level, anyway.

    Employers use credentials as a way of screening people out as much (or more) than they do screening them in. This is fine when the human capital market favors them. They can set higher educational requirements, comforted by the facts that (a) higher education levels correlate to higher reliability and trainability, and (b) there will be a steady and reliable flow of applicants to reject in order to find the one they want to keep.

    But what if (b) above changes? That's what we're seeing now. If this persists, if the human capital market continues to favor the worker, employers will have to lower their standards. They may even have up amp up their training and development capabilities in order to bring qualified-but-untrained candidates up to speed--as opposed to hiring people already qualified and trained.

    You know who knows this and does it? The military. When I enlisted in 1977, it wasn't a very popular thing to do. Even the Air Force would accept non-high school grads with high enough ASVAB (look it up, folks) scores. Just a few years later, Reagan set out to both build up the military and pay it better. Boom! went the recruiting numbers. Suddenly, not only did you need a high school diploma to enter the Air Force, you had to read at least at a 10th grade level. (That's higher than you might think, folks.) We administered the test in basic training. If you failed, you got 1 week of remedial reading training (which my team conducted, by the way). If you didn't improve to meet the standard by then, you were discharged and sent home.

    At the officer level, this works as well. Oh, not strictly education level; a bachelor's degree has been a basic requirement for commissioning in the Air Force as a line officer since the 1960s. But who gets into ROTC and Officer Training School? That fluctuates madly with supply and demand. On the other end, too. I was in a huge commissioning year group ('83) that came up for promotion to major just as the force was shrinking by about 40% (after Desert Storm). "Welcome to early retirement, son. Now, take your retirement pay and health benefits and beat it, huh?" Being an MBA and a PhD candidate didn't matter one whit at that point.

    Well, the industrial sector doesn't have the down-range planning skills the military has, so they're much more reactive. Right now, we're seeing a radical shift in what employers will accept in their job applicants. It will shift again.
     
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  18. Rich Douglas

    Rich Douglas Well-Known Member

    This can work either way. The benefit of having a general MBA is its flexibility, valuable for people new to the career game and figuring out who they are. But I agree strongly that, for those already on a defined career path (or interested in changing to a different one), a more-specific master's--or even a professional doctorate--can be a much better fit.

    As for the CPA, most people don't know just how hard that is to obtain! If you do that successfully, you'd better be aiming to be an accountant! :)
     
  19. Johann

    Johann Well-Known Member

  20. nosborne48

    nosborne48 Well-Known Member

    "Cesped" is an interesting word. It means "grass" but often refers (as "grass" does in English) to the "lawn". It doesn't sound Spanish to me and I've often wondered about its origin.
     

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