Prospective students in their thousands pore over rankings tables when they research the relative merits of MBA programmes. If they decide to enrol, and eventually complete the course, they will join millions of graduates. But evidence suggests many students are misguided in their belief that an MBA will transform their prospects. Indeed, it appears many are being encouraged to take on student debt they might never be able to repay.

“A degree has value only if the degree is scarce, and the MBA is completely unscarce,” says Jeffrey Pfeffer, professor of organisational behaviour at Stanford Graduate School of Business.

Prof Pfeffer has published on a wide range of topics but is well known for taking on the industry in which he works – business education. He argues that schools’ reputations have suffered from promoting themselves as a route to enhanced future salaries. The professor has been pointing out for a decade that the value of a degree is linked to the prestige of an institution rather than what it teaches – but few people have been listening.

“People don’t hear what they don’t want to hear,” he says, adding that he nonetheless believes that unless you go to an elite school – by which he means one ranked in the top 15 worldwide – an MBA is a complete waste of money.

For some the penny has dropped. Mariana Zanetti did an MBA about 10 years ago at IE Business School in Spain – a school that would qualify, using Prof Pfeffer’s definition, as an elite institution. However, she believes the MBA had no relevance to her subsequent career progress, which she attributes to her previous achievements and personal qualities.

She has self-published a book, The MBA Bubble, in which she condemns MBAs as ruinous investments and discusses the ethics of schools promising particular salaries to graduates as part of their marketing tactics.

“The schools don’t help a lot in getting your next job,” declares Zanetti. She says when she found a position after completing her MBA, the only thing her new employer was interested in was the job she had before doing the course – the MBA itself made no difference. To add insult to injury, she earned no more than in her previous position, and took home fewer benefits.

Zanetti’s story and her book sparked a lively debate and not everyone agrees with her. But she says she would not expect agreement. People, she says, tend to “answer with their egos”. If individuals have done an MBA, it becomes part of their “brand” and they do not wish to damage that brand.

“But I don’t think it’s the MBA that adds the value – it’s the selection process that makes the difference,” she says. She would even recommend getting a place at a top school and turning it down to prove you were of a high calibre without wasting money. “I get messages from people who have already graduated from business schools saying ‘thank you for writing this book’,” she says.

Among them might be the likes of Nicole Drown, who graduated from Tiffin University with an MBA in 2010. Tiffin’s website says students can study online or at its campuses in Ohio or Romania. Students do not need the Graduate Record Examinations or Graduate Management Admission Test for admission and the entire course costs a modest $25,200.

Costs can mount, however. Drown, 43, who also completed an undergraduate degree at Tiffin, now finds herself with debt of more than $80,000 but earns only a third of that a year because she cannot find a higher-paying job. “I was hoping to get into a different role, not sales again,” she says.

She does not think she will ever be able to repay her loan. “This sounds horrible, but an MBA means nothing,” she says, adding: “We were promised a pot of gold at the end of the education rainbow, but the pot of gold does not exist.” Despite everything, she maintains she does not regret doing her MBA and believes it is a good qualification. Nonetheless, she has found networking opportunities from her MBA to be rather limited.

Amir Muradali, who attended the well-regarded though not top-ranking Queen’s School of Business in Kingston, Canada, understands the importance of networking. He gained his MBA in 2006 and through the Queen’s alumni network was able to find a very satisfactory role working for IBM, the technology group, in the oil and gas industry. He is now running his own business and wishes to build connections with MBA alumni from other institutions.

Muradali has also set up the Association of MBAs in Canada because he wants to help graduates tackle the problems they face. “A lot of MBAs in Canada feel they are not valued at work. There is very little understanding of the nuances of an MBA,” he says. “The challenge employers are finding is that there are so many MBAs to choose from.”

Muradali reckons he will be repaying his MBA loan for another eight years, giving a total repayment term of 15 years. Despite the difficulties he faces, he says his only regret is the corporate world’s apparent lack of recognition for MBAs.

Research indicates more than 100,000 MBA degrees are awarded annually in the US alone. However, as Prof Pfeffer points out, no matter how many people do the degree, the number of jobs remains relatively constant. Logic dictates large numbers of people will be disappointed. He reiterates his view that an MBA is a waste of money unless it is from an elite school. But he does not think the attraction of the degree will ever wane. “I don’t think people are going to get the message,” he says. “I don’t see any change in behaviour whatsoever.”


The no-cost option: Moocs are starting to offer MBA content

Given the high price of an MBA programme at a top-ranked business school, it is surprising what some of them offer for free in the form of massive open online courses, or Moocs, writes Adam Palin.

Hundreds of thousands of students have enrolled on business Moocs, attracted by high-quality content available to study online at their own pace. Most importantly, there is nothing to pay.

Six of the schools that offer the world’s top 10 full-time MBA programmes in the FT ranking already have Moocs.

Coursera, the largest Mooc platform, hosts business courses by Chicago Booth, Iese, Stanford, Wharton and Yale. MIT Sloan, meanwhile, is launching courses on EdX, the platform co-founded by Harvard University and Massachusetts Institute of Technology.

While Moocs remain standalone courses, rather than being part of a unified programme, the University of Pennsylvania’s Wharton School is the first leading school to offer a suite of courses that duplicate core MBA content.

The Wharton “foundation series” comprises four introductory courses in corporate finance, financial accounting, marketing and operations management. Each involves a weekly workload of up to eight hours, running for about nine weeks. Content includes online video lectures and tests, while online forums allow interaction with course instructors and classmates – a broadly typical structure for Moocs.

Successful completion of each course earns a basic certificate of accomplishment. For $49, students can obtain a verified certificate linked to their online identity by opting for Coursera’s “Signature Track”. However, these certificates neither confer credit towards a degree nor represent any recognised form of qualification. Like all business schools offering Moocs, Wharton emphasises that students who complete the course are not alumni of the school.

Besides indulging in the joy of learning, why do people invest the time in completing a Mooc? For those preparing for an MBA, a Mooc may be a free, convenient way to develop understanding of basic concepts, taking the pressure off during the first weeks at business school.

Considering the average tuition fees reported by top 10 full-time MBA schools are almost $115,000, a free sample of a business school curriculum may be worth your while.

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