State of Economy Drives an Increase in MBA Degree Completion

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1 State of Economy Drives an Increase in MBA Degree Completion Changing demographics and the current state of the economy is driving many professionals in the business sector to take a second look at enrolling in an MBA Program. Considered by many as recession proofing, this strategy has led to an increased number of individuals entering MBA Degree programs. According to the U.S. Department of Education survey conducted in 2011, there was a 49 percent increase in awarded MBA Degrees over the past decade. Statistics show that going back to school to obtain a master s degree pays high returns in terms of employability. Individuals with a master s degree have much lower rates of unemployment than individuals without an advanced degree. The U.S. Department of Labor s 2011 figures showed that the chances of remaining employed are much higher with an MBA degree than a Bachelor s degree alone. (

2 Companies are managing through an unprecedented economic environment, said Dave Wilson, president and CEO of GMAC, owner of GMAT Test. It is precisely because of these pressures that they place such a high value on newly minted MBAs to help them survive and thrive. MBA Degree Substantially Improves Job Outlook The 2011 job market for business school graduates rebounded from 2010 levels. More than half (54%) of all graduate business students seeking employment received at least one job offer by the time of the survey. Last year, only 32 percent had job offers. Those with job offers received 2.0, on average, which was a slight increase compared with 2010 (1.8). New analysis of students receiving job offers revealed additional details about their job search efforts. For example,nearly sixteen resumes/applications were submitted landing six job interviews, on average. ( Salary Considerations Graduate Management Admission Council (GMAC) research shows students who graduated from a Part-time MBA program received a median salary of US$91,000 with an additional bonus of US$15,000. Those with an executive MBA could expect a median starting salary of US$125,000 and an additional bonus of US$28,445. (

3 The Graduate Management Admission Council guide is a valuable resource for those considering entering a MBA program. A thorough discussion of the following topics is can be found in the guide: - Is the Degree Right for You? - Benefits & Career Impact - Online Learning Benefits - Financing your degree ( Master s Degree: Is it right for you? Remaining competitive in your field, and in a global market place, requires updated skills and innovative approaches to the way business is conducted. Master s degree programs are specifically designed to provide the skills to accomplish this purpose. Professionals looking to enhance their knowledge and skills in the areas of strategic management, finance & economic abilities, leadership, and marketing will find an MBA or Executive MBA a profitable investment. (

4 The MBA According to GMAC, the typical MBA student has an average salary of approximately $91,000. On average, MBA programs are 24 months and open to those students with less than five years business experience. MBA programs are designed to develop a business leader mindset which is able to comprehend complex business issues and to think strategically. Soft skills are developed, such as cross cultural awareness and building teamwork, are both essential skills in a global marketplace. Program All students regardless of their backgrounds are motivated to: Set their career on the fast-track Augment their management skills Develop both personally and professionally The Executive MBA Many students are motivated to pursue graduate degrees to increase job prospects, but earning an MBA degree also leads to significantly higher job salaries. An MBA degree increases earning potential and creates a substantial gap between the salaries of those with MBA degrees and those with no college education or even those with bachelor degrees. Program The executive MBA is an accelerated MBA program between months duration and offered only to those professionals with business experience. GMAC research found executive MBA students typically had seven years of experience and were earning a median starting salary of US$125,000 with an average bonus of US$28,445. (

5 Executive MBA students are highly skilled and accomplished managers, executives and entrepreneurs, with the motivation and potential to be competitive leaders on a global scale. Due to their experience, performance and job responsibilities, MBA applicants are often admitted to the program without taking the GMAT placement test. Executive MBA students noted the following returns on their investment in the program: Critical thinking and decision skills Comprehensive knowledge of all aspects pertaining to business Enhanced skills and confidence for added responsibilities and team leadership Knowledge of the most current trends, concepts, and strategies Enhanced vision of the global marketplace Since the executive MBA program student is a mature and experienced professional, a powerful network is formed from senior management and upper level executives, a value to any organization. Benefits and Career Impact The Executive MBA is a transformational experience, both personally and professionally. Earning an EMBA provides professionals with a powerful credential that not only enhances confidence and the individual s leadership skills, but it also increases the number and prestige of the professional opportunities open to them. In fact, many students find a promotion waiting for them once they ve completed the program.

6 How will this program impact the individual s career? During the process of earning the Executive MBA, knowledge and skills that will have a major impact on the student s career are gained. Skills such as: Operation of all aspects of an organization Professional expertise Ability to think strategically Increased awareness of globalization and multiculturalism A broadened professional network The end result is a professional who offers their organization a vast amount of skill and knowledge in the area of management, along with the technical expertise gained through participation in an MBA program. Executive MBAs Enjoy Higher Salaries Increased salaries can be expected for managers who successfully complete the Executive MBA program. According to the Executive MBA Council, a 21 percent increase in salary can be expected for the student who completes an MBA program. Interestingly, employers are willing to increase salaries in response to successful completion of the Executive MBA program because they have experienced employees being even more loyal to the organization after completing the program. Due to that fact, employers often will offer incentives and ways to make earning a degree more feasible. The salary and bonus packages of recent Executive MBA program graduates who participated in the Executive MBA Council 2011 Student Exit Benchmarking Survey increased by 16.3 percent from program start to finish. The average salary and bonus package at program start for students in the 2011 survey was $135,323. By the end of the program, the average salary and bonus package rose to $157,423.Both average starting and ending salaries increased from those reported in the 2010 survey $127,955 in average starting salary and bonuses and $142,534 in average ending salary and bonuses, representing an 11.4 percent increase.

7 Tracking the insights and attitudes of Executive MBA program graduates is done by the Executive MBA Council through the administration of the Student Exit Benchmarking Survey to calculate the return on investment. Surveys were given to 3,212 students across 102 programs. Thirty-seven percent of these students received promotions while still in the program. According to Michael Desiderio, executive director of the Executive MBA Council, Return on investment of the EMBA experience can be viewed in many ways, but survey data regarding the salaries continues to show that the marketplace clearly values the contributions of EMBA graduates. ( Career Outcomes Employment status was just one consideration when alumni assessed the value of their MBA degree. The following represent what they thought were the most valuable career outcomes: Greater income potential Greater career opportunities Leadership development Extended professional network Development of skills Graduates from part-time MBA programs saw the following as the most valuable outcome- enhanced qualitative skills that opened opportunities for leadership advancement. Executive MBA alumni saw the most valued outcomes from their degree as preparation for advancement in leadership and for the development and expansion of their professional networks.

8 Return on Investment Proven Worth in Today s Job Market The Executive MBA: A Solid Investment in Yourself Ambitious, career-minded executives have their sights set on what must be done to take their careers to the next level. These professionals are not allowing a less than stable economy to deter them from seeking an Executive MBA degree. When it comes to developing strategic vision, personal and leadership development, along with other relevant career skills; the Executive MBA degree is one of the most solid investments an individual can make for their career. Your Potential Return on Investment (ROI) As can be seen in Table 1, the total return on investment over 10 years is 177 percent or nearly 18 percent on an annual basis. Of course, most MBAs will work well beyond 10 years after obtaining the degree and, thus, the total as well as annualized return will be much greater for them. Given the strong returns, the payback period is relatively short only 4.5 years on average. Moreover, if the alternative to pursuing an MBA was to stay in their current jobs, the expected annual raises during the period of the study would be approximately a 7 percent total over the two years of the typical MBA program (U.S. Department of Labor, 2006). Table 1 shows a 52 percent salary increase on average for those obtaining an MBA. (

9 Return on Investment: How Well Does the Executive MBA Perform? Current research shows an excellent return on investment from the Executive MBA degree for students and their organizations. Over a ten year period Executive MBA alumni, on average, experienced nearly a doubled return on their investment. Within four years of graduation, alumni recouped 100 percent of their investment. Typically, within the first year after graduation, alumni recouped one-third of their investment. ( High Recommendations According to a survey conducted by the Executive MBA Council, participants indicated strong satisfaction with the Executive MBA programs and would recommend the program to other executives interested in achieving an Executive MBA degree. Significant impact According to 2010 council research: Participants in the survey received an 11.4% increase in salary and bonus. At the beginning of the Executive MBA Program salaries were an average of $127,955 and rose to $142,534 upon program completion. Thirty-seven percent of the participants received a promotion. Sixty-eight percent of participants were assigned new responsibilities.

10 ( Websites like finaid.org provide sample calculators to perform what if scenarios that will identify, based on input, the ROI, break-even, and Net Present Value (NPV) expect from the degree given inputs. The calculator also offers sensitivity analysis: change any of the inputs and see the effect of that change on the ROI, break-even, and Net Present Value. This may be particularly helpful as results are compared across different assumptions and various enrollment and financing options are explored.

11 Online MBA Programs Most business professionals serious about advancing their careers understand the importance of an education. Reaching the top of one s career means having an edge over the competition and that edge could be an MBA degree. Today, there is also the option of pursuing an MBA degree online. An online degree gives the business professional the opportunity to pursue their degree with minimum interruption to their life and job. Since the individual continues working while working toward their degree income is not lost. That is just the beginning. Here are a few more benefits of online MBA programs: Flexibility With an online program there is the flexibility to individualize the program allowing the student the freedom to determine their own pace and approach to the coursework Cost A Master s degree online will typically cost less than a Master s degree from a traditional university Student Diversity Online students are often a very diverse group. The opportunity to network with such a diverse group is an asset both to the student and in their career

12 The Value of Online Learning Earning a degree represents a considerable sacrifice on the part of the student. Many adults simply are not able to pursue a degree due to family and job constraints. Even programs geared for adults at the local college are impractical for many business professionals who frequently travel out of town. The flexibility and freedom afforded by online learning is unsurpassed. Online learning makes it possible for even the student residing outside of the United States to obtain a degree from an American University. While studying online can be just as rigorous as traditional programs and the degree is as valuable, it is important to choose an online program from a school that is accredited, respected and has earned a strong reputation. There are many advantages to online degree programs and courses such as freedom and flexibility; but, there are also serious considerations like choosing a program that is credible and finding the program that best fits the student s personal needs. Before selecting a degree program it is important to take into consideration individual learning styles, goals and whether online learning is a good fit. According to the Distance Education and Training Council, the popularity of online courses has grown exponentially and continues to explode at the rate of 33% a year. Currently there are more than 3 million students enrolled in online courses or degree programs. Today s technology makes it possible to replicate many of the same activities of the traditional classroom setting. As an example, message boards and chat rooms facilitate student networking and relationship building. It provides added accessibility for the students to their

13 professors. If a lecture or activity is missed it is easily accessed since it is always available. For visual learners, videoconferencing in real time provides the opportunity for students and professors to interact on a more personal level. From a financial standpoint, the advantage of online learning lies mainly in costs saved. One of those primary costs saved is income. Most students continue working at their regular job, thus there is no loss of income while working toward a degree. Students also attend classes from their home alleviating on campus housing and transportation costs. Most online courses and degree programs are offered at the same price whether the student resides in the school s state or not. Since online courses and degree programs at state schools can be significantly lower than on-campus programs, relocation to the school is not necessary. According to survey results of a randomly selected group of 449 human resource professionals from the Society for Human Resource Management, among HR professionals there is an increased acceptance and respect of online courses and degree Flexibility is perhaps the greatest perk of studying online. With online learning, basically all that is needed is a computer and a connection to the internet. Seventy-nine percent of the participants in the study indicated they had hired job applicants with online degrees within the last twelve months. A large majority (87%) of the same participants expressed the opinion that online degrees are given more respect than they were five years ago. ( Further, 73 percent of the participants indicated that online courses are equal to traditional courses in credibility. This represents an increase over the 68 percent who held the same opinion in Nearly half of those surveyed believe that online degree programs are equally credible to traditional programs. (

14 Accreditation and Financial Aid Accredited MBA Programs: Why Accreditation is Important Accredited MBA degree programs offer the most current and relevant curriculum available. They tend to attract the best and brightest teachers and draw the best students for their enrollment. Accreditation ensures the student receives the most valuable information relevant in today s business arena. MBA schools receive their accreditation through AACSB (Association to Advance Collegiate Schools of Business) or other regional accrediting programs. The MBA accreditation process includes an extensive peer review intended to promote superior program quality. The student can have the peace of mind knowing they are receiving an outstanding education. Another important consideration for attending an accredited MBA school is that if you should decide to pursue a PhD, most programs will require an MBA from an accredited program. Federal financial aid programs offer financial aid assistance only to students who are attending accredited schools. Why an Accredited MBA Program? While an MBA degree is not a guarantee of employment, it does increase the chances of finding one a lucrative position. Employers look for several qualities in prospective employees, one of them is a quality education from an accredited program.

15 Accrediting Agencies In the U.S., accreditation comes from private groups rather than the government. Here are some trusted accrediting agencies: Association to Advance Collegiate Schools of Business (AACSB) National Distance Education and Training Council (DETC) - National Southern Association of Colleges and Schools (SACS) - Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Virginia Middle States Association of Colleges and Schools (MSA) - Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico and Virgin Islands Western Association of Schools and Colleges (WASC) - California, Hawaii and the Pacific Basin New England Association of Schools and Colleges (NEASC-CIHE) - Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont North Central Association of Colleges and Schools (NCA- HLC) - Arizona, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, South Dakota, West Virginia, Wisconsin and Wyoming Northwest Association of Accredited Schools (NAAS) - Alaska, Idaho, Montana, Nevada, Oregon, Utah Washington Financing Your Degree The financial cost of a graduate business degree represents a major investment. Most students need financial assistance to attend school and work toward their degree. There are several different costs to consider. Those costs are: Out-of-pocket costs include any charges such as tuition and fees, book expense, supplies, equipment, relocation and living expenses. Opportunity costs represent income sacrificed by returning to school either full or part-time. It is important to figure in opportunity costs to get a realistic picture of what a graduate business degree costs.

16 Long-Term Costs refers to the total cost of student loans including accrued and capitalized interest on unsubsidized loans. There is little difference in the financial aid application process from school to school when applying for federal financial aid. Each institution and lender will have different requirements and deadlines for institutional aid applications and private loans. The following information is relevant only to US citizens planning to study within the United States or abroad. Individuals who are not US citizens and need information on financial aid should contact their prospective school. Here are the basic steps when applying for financial aid: 1. Talk to a financial aid counselor about the financial aid process 2. Ask about any institutional applications and required deadlines 3. Complete the Free Application for Federal Student Aid (FAFSA) 4. Ask a financial aid counselor about the different types of Loans available The following types of financial aid may be available to you, grants, scholarships, loans and federal work study. You may also find financial assistance from at least two other sources: employer reimbursement and tax credits for US citizens. Although the school you are applying to will assign a financial aid counselor to assist with the process of applying for financial aid, you are still in control of the type of financial aid you apply for. Most individuals apply first for grants and scholarships since this is free money, which reduces the amount of money you have to borrow and eventually repay. The following are the three main types of student loans: federal loans, private loans and campus-based loans. It is very important to borrow responsibly, meaning borrow only what is absolutely necessary. When the time comes to repay loans it is important students remember that timely repayment is critical to establishing, maintaining or enhancing a good credit history- an important consideration not to be underestimated in the current economic environment.