College and the MBA: Not Dead Yet

Penelope Trunk's blog is one of my guilty internet reading pleasures. I balance out reading her posts about a train wreck personal life and deliberately controversial advice by reading Fred Wilson's thoughtful venture capital blog.

Trunk's latest post on the value of a college education led me to think about the topic since I promote education as an admission consultant for MBA programs. Trunk's post proposes that the availability of information on the internet and work experience available through social media has resulted in private colleges no longer being worth the cost when measured by job placement. She attacks college career centers which is kind of like going after the punter, the smallest player on a team, in a football game.

Trunk linked to Ben Casnocha's post on the topic which analyzes other aspects of the college experience besides job placement including the arguments against "signaling" studies. Google couldn't find the original researcher for me but the signaling theory is essentially that someone who is motivated to achieve the highest or most prestigious education sends a signal to future employers of their skills or level of motivation. All in other words, it's why someone will hire a Harvard MBA over a less recognized program even though they study the same material.

The drivers that resulted in this discussion are:

• Colleges may be pricing themselves out of the market: Colleges have joined health care as the two industries whose costs have increased at twice the rate of inflation for too long. What was once thought to be a very inelastic, price-insensitive market is starting to stretch.
  
• Colleges have more competitors: Performance in college had been the best way to evaluate the capabilities of an 18-22 year old who doesn't have a great jump shot or can't run the 40 yard dash in under 4.5 seconds. It's measurable, can be benchmarked, and takes 4 years. The 4 years is actually probably the more important piece because it requires sufficient dedication and reliability to complete a degree. Peace Corps used to require a college degree (or 5 full-time years in one profession like farming) mainly because if someone spent 4 years and finished college, they were more likely to finish their 2 year Peace Corps assignment. Now, college has more competitors. People in their 20's can demonstrate their website portfolios that show similar levels of commitment and talent as a college degree. Additionally, community colleges have done very well with focused vocational programs and raising their reputation.
  

However, while a college degree or graduate programs are being questioned, this will still be the dominant destination for people in their 20's because:

• People will college degrees are more likely to be employed and make more money: Data shows that you are twice as likely to employed if you have a college degree compared to a high school diploma. Sure Bill Gates dropped out of college and did pretty well but can you think of anyone else who doesn't have a good jump shot or crossover dribble?
• Social Media careers have their limits: My standing comment on posts that worship social media like a golden calf is to ask about social media market penetration. Does even 5% of the Western world use twitter? Do 10% of the Western world blog and do 20% read blogs regularly? Until social media reaches double digits as a distribution channel, it won't even replace direct mail. It will receive a few percent of the budget from direct mail but that won't fund too many positions. The conversion rates and ability to track response may look cool but you'll still reach the largest audience with Google or traditional methods. Social media needs more volume for it to become as viable a skill as the critical thinking of a liberal arts degree.
  
• As do web portfolios: As far as web portfolios, the danger is that they are made by people in their 20's and can contain career killer content like calling a business WTF Consulting or writing articles like this (note the comments section). If anyone has any Generation Y web portfolios that reflect the equivalent effort as a college thesis, please send them to me and prove me wrong. Most web portfolios that meet this threshold are written by older individuals that well, have college or more advanced degrees
  
• The Value of an MBA: To bring this back to my secondary job of MBA admissions consulting, the MBA degree still is the best options in two areas. First and foremost, it is the best option to career switch into a business sector due to the dedicated 2 years to learn a new field, get internships, and access to companies. Career coaches have told me that you can switch industry or function but never both without an MBA or industry specific training. Second, it provides the most job training of any non-licensed (like medicine) graduate degree as students learn about how to write resumes, interview, and other nuts and bolts of job finding. There are other advantages, such as networking, access to alumni, and "signaling" that I described above. However, the first two are aspects of the MBA that will survive the disappearance of the investment banking industry or the competitors that colleges are facing. It's possible for an MBA program to price itself out of the market but the other options for these two aspects have not yet emerged.