No, no, no! – $200,000 in debt after a degree in communications

It almost never makes sense to incur $200,000 in student loans so you can graduate with a master’s degree in communications.

In a story about young women dropping out of the work force to go to school, this anecdote about one student going for her master’s degree in strategic communications caught my eye.

“I was working part-time at Starbucks for a year and a half,” said Laura Baker, 24, who started a master’s program in strategic communications this fall at the University of Denver. “I wasn’t willing to just stay there. I had to do something.”…

… Including the loans that financed her undergraduate education at Wartburg College in Waverly, Iowa, she will complete her master’s program next year owing about $200,000 in debt.

“I have to have faith that I will eventually get a good job that pays enough to pay my living expenses and pay back my loans,” she said, “and hopefully make me happy in the process.”

To pay off a $200,000 student loan you need a $200,000 annual salary

According to this Georgetown University report on the economic value of college majors, the median salary of a worker with a master’s in communications is about $65,000.  Mind you, that average is for all levels of experience, so a new graduate just beginning her career should expect to earn less.  When Ms. Baker begins to pay down her $200,000 student loan after she graduates next year, her monthly payments can be expected to be about $1,775.  Here’s the cautionary language that accompanies the calculation results for that $200,000 loan amount at the FinAid loan calculation website.

It is estimated that you will need an annual salary of at least $213,044.40 to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 0.9. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $142,029.60, but you may experience some financial difficulty.This corresponds to a debt-to-income ratio of 1.4.

Bad news recap

• When she graduates, the best case scenario will be a job paying about $65,000, which translates into an estimated monthly take-home of $4,165.
• Monthly student loan payments will be $1,775, meaning 43% of her take-home pay will go towards her student loan.  This is considered a financially risky profile.
• Of course, this doesn’t take into account any other debt a new employee typically incurs, such as a car loan or credit cards.  And she should forget about qualifying for a mortgage until she’s in her forties.

I expect Ms. Baker plans to defray some of her loan payment expenses by taking advantage of the Public Service Loan Forgiveness (PSLF) or the Income-Based Repayment (IBR) federal programs.  But given the size of her debt, it’s likely the bulk of her loan obligations would remain intact.

If she were my daughter, I probably would have counseled her to stay at Starbucks for a while longer.

Marriage ‘penalty’ - Another thought comes to mind.  I would be quite concerned if my son were contemplating marriage to someone who owed $200,000 in student loans and whose main marketable achievement was a degree in communications.

Is this young lady another “Occupy” protestor in the making?

$200,000 in student loans - today's communications major may be tomorrow's 'Occupier'

Hybrid learning breaks down geographic barriers for Northeastern University

Northeastern University is expanding its brand of co-op business education across geographic regions by investing heavily in hybrid education, with its first branch campus in Charlotte, NC.

The goal is to offer master’s degrees in industries like cybersecurity, health informatics and project management, matching programs with each city’s industries and labor needs, through a mix of virtual learning and fly-ins from professors based in Boston (tuition will be the same as at the main campus).

And it’s not doing it on the cheap

Northeastern, which is spending $60 million to support the expansion, is perhaps the most ambitious of a handful of brick-and-mortar institutions looking to broaden their footprint in new markets and with new methods of instruction….

Northeastern has hired 261 tenured and tenure-track professors in the last five years, about twice as many as in the previous five, and plans to add 200 more in the next three years — all of whom will be based at the home campus in Boston.

Examining traditional assumption that face-to-face is always better than online

“This is a time of huge transition in an industry that hasn’t changed much since the Middle Ages,” said Charles P. Bird, a former vice president of Ohio University who helped develop the institution’s online offerings and now works as a consultant. “Higher education is going from traditional face-to-face delivery, and the unexamined assumption that that is good, to thinking about delivering a high-quality online experience, whether fully online or hybrid.”

Drexel University has struggled with a similar enterprise it began in 2009, perhaps miscalculating the importance of local relationships.

“Bill Gates says place is going to matter less and less for universities in the future, but I think that’s wrong,” said Mr. Aoun, Northeastern’s president. “I think a successful university has to be part of a community.”

Savings for students, and the question of quality

Tuition costs for Northeastern’s new hybrid master’s are the same as those for its Boston campus program, but the savings for students will be in time, convenience, and living expenses.  I remember years ago when my husband was planning his return to school to pursue an MBA.  Since online was not an option, we had to price out the potential costs in terms of my lost income and moving expenses.  Today, that equation is quickly changing.

An important question that remains unanswered is about how the quality of online education compares with face-to-face.  Northeastern, ranked 56 on BusinessWeek’s list of business schools , would seem to have a good chance of serving up a high quality experience with its hybrid approach.

Related:

• The University of North Carolina’s Kenan-Flagler Business School is taking its brand online.
• M.I.T. adds credentialing to its online course program 

Is data analytics the new ‘plastics’?

…
In “The Graduate”, recent college graduate Ben receives advice from an old family friend.

Mr. McGuire: I just want to say one word to you -just one word.
: : : Ben: Yes sir.
: : : Mr. McGuire: Are you listening?
: : : Ben: Yes I am.
: : : Mr. McGuire: ‘Plastics.’
: : : Ben: Exactly how do you mean?
: : : Mr. McGuire: There’s a great future in plastics. Think about it. Will you think about it?
: : : Ben: Yes I will.
: : : Mr. McGuire: Shh! Enough said. That’s a deal.

Is data analytics the new plastics?  If so, even traditionally math-phobic marketing students may be forced to confront mathematics and statistics courses.

Faced with an increasing stream of data from the Web and other electronic sources, many companies are seeking managers who can make sense of the numbers through the growing practice of data analytics, also known as business intelligence. Finding qualified candidates has proven difficult, but business schools hope to fill the talent gap.

This fall several schools, including Fordham University’s Graduate School of Business and Indiana University’s Kelley School of Business, are unveiling analytics electives, certificates and degree programs; other courses and programs were launched in the previous school year….

Data analytics was once considered the purview of math, science and information-technology specialists. Now barraged with data from the Web and other sources, companies want employees who can both sift through the information and help solve business problems or strategize. For example, luxury fashion company Elie Tahari Ltd. uses analytics to examine historical buying patterns and predict future clothing purchases. Northeastern pizza chain Papa Gino’s Inc. uses analytics to examine the use of its loyalty program and has succeeded in boosting the average customer’s online order size….

Fordham this fall will introduce a required analytics course—Marketing Analytics —for M.B.A. students on its marketing track. “Historically, students go into marketing because, they ‘don’t do numbers,’”said Dawn Lerman, director of the business school’s Center for Positive Marketing. But these days, with so much data available surrounding consumer behavior, “you can’t hide from math and statistics and be a good marketer.”

…
Three more words:  21st Century Skills

ADDED:

As the use of analytics grows quickly, companies will need employees who understand the data. A May study from McKinsey & Co. found that by 2018, the U.S. will face a shortage of 1.5 million managers who can use data to shape business decisions.

Nose under the tent – top business school goes online

The University of North Carolina’s Kenan-Flagler Business School is taking its brand online.

While online programs are still mostly seen as the purview of for-profit schools, like the University of Phoenix and Capella University, UNC is hoping to change that image.

The business school this Monday launched an online M.B.A. program with 19 students, dubbed MBA@UNC, that will offer the same core curriculum as its regular full-time M.B.A. program. It is the first online program of its kind from a top-20 U.S. business school….

UNC officials say that admissions standards for the new program are just as high as for an on-campus M.B.A. UNC students in the class of 2012 had a median Graduate Management Admission Test score of 700 and a grade point average of 3.3.

The cost is $89,00, just under the $98,000 for the on-campus program.  Meanwhile, other top schools seem to be in a wait and see mode.

So far, other top schools, including Harvard and the University of Chicago, say they don’t have formal plans to create their own programs.

While the Anderson School of Management at the University of California, Los Angeles, has offered “a handful” of hybrid or fully online versions of short electives in recent months, they’re still “experimental at this stage,” said Carla Hayn, senior associate dean for the fully employed M.B.A. and executive M.B.A. programs. “We’re wading very gently into these waters.”

Ms. Hayn said “there are other aspects to education”—such as networking and learning to read social cues, “that are kind of hard to get online.”

UNC Makes Risky Online Bet

‘paper value of an MBA might be overstated’

“I think the paper value of an MBA might be overstated,” said Taft. “For it to be useful, it needs to form part of a wider package of skills and attributes, and more than a mere credential next to your name.”

John Taft is the Chairman of the Securities Industry and Financial Markets Association (SIFMA) and the CEO of RBC U.S. Wealth Management.  He is predicting more layoffs in the financial services industry next quarter, affecting even employees with expensive MBA degrees and years of experience.

Taft said on the job experience in the capacity to perform in the workplace is more important than whether or not you have your MBA.

His thoughts come as enrollment at the nation’s top business schools is growing—as well as online MBA programs that cost tends of thousands of dollars. In fact, Kenan-Flagler Business School at the University of North Carolina began its first ever online MBA program this month. Students have been shelling out $89,000 in tuition for it.

Even though an MBA degree will not necessarily protect your job or revitalize your salary, Taft acknowledges there is an argument supporting the usefulness of MBA degrees. He said they are often best used to reposition yourself and redirect your career.

New York leads with oversupply of lawyers

Just how bad is the job outlook for lawyers? According to our quick analysis, every state but Wisconsin, Washington, D.C., and Nebraska produced more — in some cases, far more — bar exam passers in 2009 than the estimated yearly openings for lawyers in those states….

As is the case in every state, not all of these new grads will practice in New York. But the data still points to a surplus….

On the national level, there were nearly twice as many bar exam passers (53,508) in ’09 than openings (26,239).

Everything I’ve read indicates that the job situation has only deteriorated since 2009.  Going into debt to attend law school can be a very risky proposition.

Data for each state, including median wages, is at EMSI.

ADDED, relevant advice:  Do Not Go to a 3rd or 4th Tier Law School Unless You Are ‘God’s Little Snowflake’

More parents help pay for MBAs

Economic uncertainty, younger students going to business school instead of finding employment and the spiraling cost of tuition all seem to be factors in this change.

From 2003 to 2007, the number of prospective students who said they expect their parents to help them pay for business school doubled, and was approaching 40 percent in 2010, according to a 2011 survey by the Graduate Management Admission Council….

“Any time there is economic uncertainty like there is now, there is a general reluctance to borrow,” Chitty says. “Borrowing from Mom and Dad is going to seem a lot safer than borrowing from the government and taking on a loan which likely can’t be discharged in bankruptcy and can follow you for the rest of your life.”…

Driving the need for parental aid is an uptick in the business school pipeline of younger students, especially those in the 24-years-and-under age bracket, says Michelle Sparkman-Renz, GMAC’s director of research communications….

U.S. students are less dependent on parental support than their European and Asian counterparts, but those under 24 still expect to finance about 20 percent of their degree with help from family. Students from ages 24 to 30 intend to have parents pay for about 10 percent of their tuition, GMAC says…

The spiraling cost of tuition is one of the reasons students may be relying more on parents to pay for business school, says Dan Thibeault, president and co-founder of Graduate Leverage, a student loan consolidation and debt management company in Waltham, Mass. Of the MBA students he works with, about 15 percent to 20 percent have $150,000 worth of debt when they graduate, he says.

“That was unheard-of five or six years ago. Maybe a student in a four-year dental program would borrow that much, but for a student to come out of a two-year MBA program with that much debt is almost shocking,” he says. “It may lead a sympathetic parent to say, ‘Wow, that is a suffocating amount of debt. I have to get involved.’ “ 

Source:  Bloomberg Businessweek