Now that the Government is proposing to hike the cost of an undergraduate degree by 113% to $42,000 and an MBA now costs up to $126,000, it begs the question….what do I get for my money?
To help answer that question, it is worth ‘unpacking’ what are the key components of a degree – and it goes well beyond what you learn in today’s Zoom classes.
Having been teaching an array of marketing subjects for over 30 years, I believe there is the ‘3 C’s’ of business education:
The tuition fees of any degree should be evaluated against a series of key questions:
a. How relevant is the course material to a 21st century business environment?
b. Who are the academic staff and what are their ability to not only inform, but engage in a manner that keeps you motivated through what can be a very exhausting time of your life, balancing professional and academic work time, against a rapidly diminishing personal free time?
a. What is the physical environment like i.e. the lecture theatres, break-out rooms, student amenities, how easy is the campus to access from my home/work?
b. What is the social experience i.e. the interaction with other students as well as academic and admin staff?
What is the value of the University Brand and the Course in the eyes of:
a. The marketplace (do they enhance job prospects – both from the employer’s and graduate’s perspective)?
b. The current students (has the course improved my self worth and sense of achievement)?
c. The alumni (by how much has the course value added my career prospects and built my business network)?
What we find is that the relative importance of each of the ‘C’s’ will change, depending on the institution and the importance that the individual student places on what they want out of enrolling in a particular course.
In over 100 classes I have asked one simple question….. “Why are you here?” In most cases it distils to a consistent response that bears little relationship to the quality or breadth of the course content. “I want to build a local alumni network so I can progress my career faster” said Kaylie a financial industry marketing manager. “My MBA gives me access to a far wider range of senior management that I would not normally come across in my day-to-day business life” she concluded. This is more reflective of the perception of the University’s brand in the marketplace and as a consequence, its power to enhance the student’s personal brand.
The students’ objective of building a local alumni, has been harder to achieve over recent years, as the proportion of the international student cohort has increased. In 2019, 442,000 students were enrolled in higher education, up from 61,000 twenty years ago. “I had 2 offers for my MBA, Sydney and Chicago. As the courses looked similar – I much prefer Bondi in summer than Chicago in winter” said Imelda from Lima Peru. Lifestyle can quite often be a deciding factor for international students when choosing University options.
As a result, domestic students are thinking twice about the benefits of an MBA, as local enrolments have dropped by 7% over the last 2 years. Over the next few years, the proportion of local students is likely to increase, however it is highly dependent on how long the restrictions on international student arrivals are in force and the fallout from China’s recent recommendations to its students not to study in Australia.
Scott Galloway, a Professor of Marketing at NYU Stern School of Business in New York, believes that top tier business schools are the “ultimate luxury brand”. Why? ‘Certification’ from the top tier Universities provides the value add and justifies the price differential vs the lower tier Unis.
However the last 6 months has provided a real challenge for our top tier Universities. Covid-19 adjusted learning has meant that to a great extent, the Customer Experience part of the equation has become generic. As classes are all done via Zoom, there is very little if any campus or student cohort interaction. If they are not providing the Customer Experience that significantly differentiates it from its competitors, the requirement will be to heavy up the marketing on the other 2 ‘C’s’.
Thus to improve the value equation, they will need to either provide greater course differentiation, or build more robust bridges to the business community, which strengthen their enrolment flow and graduate employment.
So what does all mean in terms of the value of the degree?
Research undertaken in 2018 by MBA News, showed that the vast majority of potential MBA students expected to get a salary increase of between 20 to 50% on graduation. So how does that compare to reality? Well that research also showed that after 3 years of graduation from tier 1 schools in Australia, salaries can increase between 59 to 78%. So from a financial perspective, the investment in a quality business school education appears to provide a pretty good ROI. But what will happen over the next 3 years?
When we buy luxury brands, we are paying a significant premium above the functional value of a product – be it the Chanel logo on the handbag or the ride from home to the office in a Mercedes. When choosing to enrol in a top tier University like Melbourne Uni, AGSM or MGSM, what we are buying is the quality perception of that degree in the marketplace to justify the price premium. Thus the pressure is on those tier 1 schools find innovative methods to differentiate themselves, either by content or by their bridges to the business community.
If not, the potential student cohort can justifiably ask “Do I really need those letters on the end of my name?”
Paul has taught Marketing & Advertising subjects for over 35 years at Uni NSW, AGSM & MGSM.