College savings plans: Skip that MBA
Brick and mortar institutions of higher learning, while still in their early stages, are dying. You need only look at your recent Wall Street Journal or Financial Times newspapers for an example of discouraged companies refusing to hire overpriced labor. Colleges are simply churning out graduates who demand wage compensation for skills they haven’t developed. As an example, look at the unemployment rate of MBA’s in 2009 versus 2007.
Unemployment Rate among US MBA Graduates
(% of students without job offers three months after graduation)
1. YALE UNIVERSITY, SCHOOL OF MANAGEMENT
in 2009: 8%
in 2007: 6%
2. WASHINGTON UNIVERSITY, OLIN BUSINESS SCHOOL
in 2009: 8%
in 2007: 4%
3. HARVARD BUSINESS SCHOOL
in 2009: 8.8%
in 2007: 3%
4. STANFORD UNIVERSITY, GRADUATE SCHOOL OF BUSINESS
in 2009: 10%
in 2007: 3%
5. MIT, SLOAN SCHOOL OF MANAGEMENT
in 2009: 12.8%
in 2007: 2%
6. UNIVERSITY OF MARYLAND, SMITH SCHOOL OF BUSINESS
in 2009: 13%
in 2007: 2%
7. UNIVERSITY OF CHICAGO, BOOTH SCHOOL OF BUSINESS
in 2009: 13.5%
in 2007: 2.4%
in 2007: 2%
Yet, in spite of all the headlines about MBA programs needing reform, MBA enrolment is still increasingly high.
The question that is never asked among these debates is why companies require degrees instead of skills? Or more specifically, why do companies still believe that degrees translate into skills? Aside from the glut of college students via the government-vehicle of cheap credit and the problem embedded in signaling education, at some point in time consumers must ask what it is they receive from these brick and mortar institutions that they couldn’t receive free through internet.
For example, students of my discipline, mathematics, may learn math from the comforts of their home, in a series of progressive youtube videos (starting from arithmetic and ending at second semester calculus) from wonderful free sites like Khan Academy . Furthermore, these students may purchase the previous edition of their math textbook (usually only a few years old) for roughly 1/10th of its original price. Or, the more ambitious student may receive the equivalent of an undergraduate degree in mathematics from the professors at The Massachusetts Institute of Technology; having access to online textbooks, lecture notes, problems, examples and video lectures all for free at MIT OPEN. Or, even here at the Mises Institute, students may study under the classical liberal tradition at The Mises Academy for about the cost of a college textbook.
The point is simply that the internet is changing the way we educate ourselves in subjects like mathematics, and employers and institutions of higher learning are lagging behind. There is still, and, simply, may always be demand for physical classrooms (but even this is need of reform)
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