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Smaller Paycheck For Some MBA Graduates

January 9, 2013 10:26 pm0 commentsViews: 221
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MBAs and Other Business Programs for Working Professionals

Many professionals hope and expect that getting an MBA would open the door to a better job and a higher salary. However, some people who have graduated from lower ranked schools in recent years are having difficulty finding a job. Or, if they found a job, the paycheck is not as high as what they expected.

The other problem that some graduates have had is that they took out as much as $75,000 in student loan debt. Getting a graduate business degree at that price means that you really need to find a good-paying job, and it is not always available for graduates from second and third tier programs.

These days, some MBA graduates are dealing with higher tuition, a weaker job market and a glut of business school graduates. Many of these graduates thought that getting an MBA was a ticket to a higher earning potential.

In fact, at this time, the expected median salary for MBA graduates overall was flat from 2008-11. For MBA graduates who have less than 4 years of experience, the median pay was $54,000, which was down almost 5% from 2008. This was according to a survey in Pay also fell 62% at the 187 schools that were examined.

Even for some of the more seasoned business school graduates, MBA pay is currently stagnating or falling. This is not to say that MBA school is not a good investment. It is just that in the current business environment, pay is not increasing like it has in the past.

The other increasing challenge for some graduates is a higher debt load than in the past. Almost 60% of MBAs who graduated in the last year said that they will need to repay some loans for their education. For households who have student debt who went to graduate school and are less than 35, the average student loan debt is up to $81,000. It was only $55,000 in 2007.

Things have indeed changed a great deal from the early 1990s when MBAs were in higher demand. At that time, some employers hired MBAs first and found jobs for them alter. One of the reasons that there is less demand today is the slower economy. However, another factor is that there are more programs offering MBAs than ever before.

The regular MBA used to be a full time, two year program. Now there are many more part time and executive MBA programs, and there are many universities offering online MBA degrees. So, the number of MBAs has grown more quickly than the population. An MBA is not quite as exclusive as it was 20 or 30 years ago.

And still another factor is that companies are looking for more MBA graduates that come in from overseas. This provides more competition for America-based MBA graduates.

The rise in sheer numbers of MBA graduates can be seen in the numbers. US universities gave out a record 126,200 MBAs from 2010-11, and this increased a shocking 75% from 2000-01. This boom in MBA degrees is part of an overall increase in advanced degrees, which has increased even more in recent years as more students have left the job market to get more education, due to the slower economy.

Some companies state that they are moving somewhat away from the MBA, and want to hire more undergraduates. The idea is to hire less educated workers at a lower salary and to train them on the company’s way of doing things – in house.

Other companies will look for an MBA degree, such as UPS, but having the knowledge and experience to do the job often counts the most. Also, getting that MBA does not always guarantee a higher salary today. For some employers, such as Humana, an MBA can be very valuable, but it just a piece of the larger puzzle.

None of this is to say that you should not earn your MBA at a solid on campus or online school. But you should take note of how much debt you are going to take on, and do not assume in the slower economy that you will be able to automatically pay for that debt with a higher salary.