Will an MBA Degree Help You Survive the Recession?

Jose Ferreira is the founder and CEO of Knewton. Prior to founding Knewton, Jose served as an executive at Kaplan, where he led a company-wide re-engineering effort that designed Kaplan's courses. He is the only person ever to have developed test-prep strategies so effective that Education Testing Services (ETS) was forced to remove an entire question type. Beyond test prep, Jose previously served as a derivatives trader at Goldman Sachs and a Partner at New Atlantic Ventures (formerly Draper Atlantic), investing in new media and SaaS companies. Jose graduated from Carleton College with a B.A. in Philosophy, and received his MBA from Harvard Business School.

I recently spoke with Jose to get his thoughts on earning an MBA or another advanced degree in a recession. Here's what he had to say:

Some news outlets are reporting significant increases in grad school applications. How many students are making the decision to go back to school?

More people are applying and acceptance rates are going down. In the specific case of the GMAT, test-taker volume was up over 10% in 2008 alone. With more applicants, schools can afford to be much more selective in terms of whom they admit.

What are the pros and cons of staying in school during a recession?

There are many good reasons to earn a graduate degree. The foremost is to boost your career prospects. You will gain a great amount of practical experience, and continued education appeals to employers. Whether you are seeking to refresh current credentials, develop new high-demand skills, or are even considering a new field of employment entirely--investing in yourself by pursuing a graduate degree can provide you with the skills and qualifications necessary to land a job in this competitive environment.

On the down side, while others are furthering their careers within the competitive landscape of the office place, those in school remain on the sidelines. And of course, debt considerations are very real, and it’s notoriously difficult to keep your head above water financially while in grad school.

What are some of the things college graduates should keep in mind when trying to decide whether or not to pursue an advanced degree?

Don’t make the plunge unless you head back to school with a focus of purpose. Narrow down your intended field of study and make sure the schools to which you’re applying cater to your specific career needs. Take several factors into account--opportunity costs, your readiness, family priorities, and of course tuition costs. You are likely to incur a great amount of debt (for some it becomes a second mortgage), which you could be paying off for the next 30 years. Of course the prospect of school debt shouldn’t inhibit everyone from pursuing a graduate degree, but return on investment should always be a consideration.

Speaking of debt, should students attend a high-priced school with brand name reputation and worry about debt later? Or is it better to worry about the debt now and attend a lesser-known school with affordable degree options?

As a general rule, if you are accepted to one of the most selective and prestigious graduate schools, don’t let costs stop you from singing up. Your degree from any one of the top schools will make you a strong candidate no matter where you live after graduation. On the other hand, cost should certainly be a major factor in your decision when weighing schools of similar reputation.

A lot of people are worried about finding a job after graduation. Can you tell us what type of job prospects students can expect to encounter in specific business fields?

Search for jobs in fields not as affected by the recession. Right now, there is almost no demand for a 22 year-old hedge fund manager. But there is an ever-increasing market for those looking to work in education and healthcare. According to the Department of Labor, education jobs will see a 14 percent increase by 2016, while healthcare positions will increase by 24 percent in the same timeframe. Your dreams of swapping credit derivates may be dashed, but there are plenty non-profits looking for energized young people to create policy that will help people stay in their homes.

Do you have any additional advice for students who are considering an MBA or another advanced business degree?

Ace the GMAT. The GMAT is the one of the most important aspects of the business school application. To have a reasonable chance of getting into any of the top programs, you must get a score above 620 -- and scoring much lower than that dramatically limits one’s chances of being admitted into even a mid-level program. In order to ensure you get the best score possible, take a prep course such as Knewton’s GMAT prep course, which offers practice CATs designed by the developers of the actual GMAT with live online instruction, video workshops, practice problems and more.