Share of Wallet, ROI and Your B-School Goals
I wasn’t surprised when ITT (one of the largest for-profit educators) announced in September that it was closing down all its campuses. I’ve been scratching my head at the onslaught of schools advertising—very expensively– on television about how easy and flexible it is to get a degree. I kept wondering: these schools aren’t inexpensive, but they never address the return on investment—what proof do they show of better job outcomes pre-to-post education? Over the past decade, with the proliferation of education options, there has been a consistent rise in defaults on school loans.
As the graph below shows, consumers 20-29 spend nearly 37% of their share of wallet on school loans.
So how can we help guide prospective students to good choices about their investments in education and potential return on those investments?
- Ask the ROI question: What are your placement rates and average salaries post degree for people with this major? What % of the graduates do these figures represent? If you don’t get clear statistics, be wary of investing your share of wallet at that school.
- Keep in mind that public colleges in your state of residence offer very economical paths to a college degree or grad school. They are often less expensive than the schools advertising on TV.
- Don’t assume that private schools are out of your grasp…the reality is that many private schools have very aggressive scholarship programs, backed by active alumni networks and financial support of big donors. This can enable highly qualified applicants to avoid huge debt and put scholarship honors on their resumes, often leading to networking relationships with named donors funding part of the scholarship awards. And, the bonus: most of these schools can tell you the average return on investment for their students. At Vanderbilt, the ROI for a two-year MBA is under 4 years.