Business Schools Pricing Themselves Out of the Market?
While attending the AACSB Annual Accreditation Conference our team had the pleasure of hearing Betsy Ziegler, Chief Innovation Officer at the Kellogg School of Management at Northwestern University, discuss five emerging trends in higher education: the price of education, the power shifting to the students, face-to-face learning, the rise of micro-credentials, and the future of work. In this blog series I’m going to explore these trends and give my perspective on the issues as a recent college graduate.
“We are pricing ourselves out of the market. Over the past five years, tuition has grown 4.5 percent per year on average, overall debt burden has grown by 3.3 percent and the average post MBA salaries have only grown by 1.6 percent. If you add in a tough job market since the financial crisis the return on investment is rightly called into attention,” says Ziegler.
It’s no surprise that schools are worried about pricing themselves out of the market as students across the country are rallying for tuition-free college. Justifying paying such astronomical amounts of money is becoming increasingly difficult for recent college graduates–salaries aren’t inflating at nearly the same rate as college tuition has. According to Gallup-Purdue Index, in a poll of 30,000 alumni only 38 percent of students who graduated college in the past decade strongly agree that their higher education was worth the cost.
With a positive spin, October’s job report seemed like great news for the economy, but in truth it wasn’t such great news for recent college graduates. The increase in jobs was overwhelmingly attributed to people over the age of 55, while workers age 25-54 have seen a decline of work month after month. Despite average student loan repayments reaching nearly $400 per month, students are reluctant to say “no thanks” to a college degree. Why? Well, because as Jefffrey Sellingo, author of College (Un)bound said it’s “seen as the only entry ticket to a good job.” It is what a high school diploma was to our parents—once a luxury, now a necessity for most occupations. Students are earning bachelors degrees to
Unsatisfied college grads plus a rocky job market equals tension in the higher education space. Universities must find innovative ways to keep students interested in earning degrees, while providing a robust campus and classroom experience.