The Business School Tuition Bubble: What's the Value of Top

The recent meme-like explosion of higher-education-is-the-next-bubble stories has left a business school professor worried about the value of the current professoriate. If, when that thing bursts, the time will come for MBA faculty to face a moment of reckoning. When their worth is weighed, will top b-schools, professors still be able to claim great value?  

Michael Ryall, associate professor at Toronto’s Rotman School of Management, frets that the commitment to growth by top research institutions has led to more, less-qualified students being admitted, which has caused courses to be dumbed down to accommodate the dummies that would not have been there if not for the adoption of the growth model. Everyone learns less, and the knowledge value of the MBA ultimately goes down.

The essential question, therefore, is: What is the logic for having world-class academic researchers (who, for the most part, have never managed a business themselves) teach business classes to MBA students? The topics covered in many first-year microeconomics MBA courses, for instance, are a subset of those contained in Section III of Economics for Dummies. There may be good reasons for someone to pay $3,000 for a class taught by a researcher that covers the same topics in this $12 book — greater clarity and/or depth, for instance — but still, at a 250:1 cost ratio, students had better be getting something more for their money. It's not clear that they are.

Why dole out $100,000 for a top notch academic faculty that has to debase their curriculum to cater to the low performers? Ryall asked some colleagues to justify the soaring costs of an MBA, now that academic rigor and privileged knowledge aren’t solely the domain of universities. Here’s what they came up with:

Extracurricular networking opportunities
Signaling value
A gateway to immigration for foreigners
Access to “a lottery for a small number of plum jobs in consulting and finance”

These benefits are exactly the reason why higher education is so heavily criticized. Far from an idealized academic utopia, universities are just becoming a way for the elite to stay elite without actually being elite. In other words, maybe this Wharton-student-made Evolution of an MBA video isn’t as joke-y as intended:

Reflecting back on his own MBA education at the University of Chicago, where he graduated in 1981, Ryall writes that the curriculum was “unabashedly academic,” and likens it to a PhD program without the dissertation. He and his classmates were introduced to cutting edge principles in each field. They refined their analytical skills by engaging in the subtleties of academic discourse. They were learning about things that wouldn’t reach the mainstream for 10 to 15 years.

Of the two programs, then and now, it occurred to Ryall that only one required that courses be taught by an academic research faculty. I guess he has his answer for when that bubble bursts.

[HBR]

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