Like many students, Steve Vonderweidt hoped that a master's degree in business administration would open doors to a new job with a higher paycheck.No. Not like the old days at all. I was considering an M.B.A if I didn't continue in political science. I took business classes in college. Finance was attractive to me, even a career on Wall Street.
But now, about eight months after receiving his M.B.A. from the University of Louisville, Mr. Vonderweidt, 36 years old, hasn't been able to find a job in the private sector, and continues to work as an administrator at a social-service agency that helps Louisville residents obtain food stamps, health care and other assistance. He is saddled with about $75,000 in student-loan debt—much of it from graduate school.
"It was a really great program," says Mr. Vonderweidt. "But the job part has been atrocious."
Soaring tuition costs, a weak labor market and a glut of recent graduates such as Mr. Vonderweidt are upending the notion that professional degrees like M.B.A.s are a sure ticket to financial success.
The M.B.A.'s lot is partly reflected in starting pay. While available figures vary by schools and employers, recruiters' expected median salary for newly hired M.B.A.s was essentially flat between 2008 and 2011, not adjusting for inflation, according to a survey by the Graduate Management Admission Council.
For graduates with minimal experience—three years or less—median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined.
Even for more seasoned grads the trend is similar, says Katie Bardaro, lead economist for PayScale.com. "In general, it seems that M.B.A. pay is either stagnant or falling," she says.
The pressures are greatest for those attending less prestigious schools, says Stanford Business School professor Paul Oyer, who studies personnel trends. But even at top programs, some graduates are likely to struggle in today's environment, he says.
Another burdensome issue: a high debt load. Nearly 60% of graduating M.B.A.s said they expected to repay some loans after graduation, according to a 2012 GMAC survey. Among households headed by people with student debt who attended graduate school and are under 35, average student loan debt climbed to $81,758 in 2010 according a Wall Street Journal analysis of Federal Reserve data. That figure is up from $55,594 in 2007.
It is all a far cry from the late 1980s and early 1990s heyday for M.B.A.s, when some companies would hire 100 or more M.B.A.s.