Those who can't do, teach, as the tongue-in-cheek saying goes. So what does it mean for MBA students when the dean of a business school—whose mission is to "educate leaders for business and society"—admits the institution is bleeding cash?
A financial dive is exactly what has been taking place at the Yale University School of Management, its dean, Edward Snyder, told the The New York Times early in August, when he revealed that the school "lost $15 [million] to $20 million over the last 15 years."
The Times article is short on details about the loss, and a Yale spokesman downplayed the announcement. The business school—which opened in 1976—is "one of the youngest business schools," so its small alumni base affects fundraising, says Tabitha Wilde, the school's director of media relations. The loss, according to Wilde, was really an investment in faculty and curriculum.
"We hope that people will understand that we were in the build-up phase, and the only way to consider this a 'loss' is in comparison to more established schools, which isn't an apples-to-apples comparison," she says. "These were small, controlled deficits resulting from investing in faculty and curriculum. The money was not 'lost' in the sense that the school didn't manage its finances."
But recent MBA grads of other schools, such as Terry Evans, say the administrative side of a b-school can't be divorced from the classroom.
"If you're involved with an organization that's losing money and that doesn't know how to manage its own business, that's certainly not the place you want to target or put your investment in," says Evans, a program administrator at the New York State Office of Mental Health and a 2012 Excelsior College MBA.
[Read about how b-schools shortchange business strategy.]
Yale is an expensive school, so applicants who are considering studying business administration in New Haven, Conn., should think long and hard about whether the education that the school offers is actually effective, according to Evans. "If they can't run their own house, then there's something wrong," he says.
But other MBA students and recent graduates questioned the degree to which a business school's finances actually trickle down to the classroom.
"As a student, I'm pretty far removed from the economic situation of the program," says Ryan Kolynych, a second-year student at the University of California—Irvine Paul Merage School of Business. "I'm more interested in the quality of the teachers and the quality of the education, as well as the relationships the school has with the surrounding business community."
It's also important to remember that academic institutions—even if they are schools of business—don't have the same goals as businesses, says Andrew Swick, a 2011 Yale MBA and the founder of CheckedTwice, a gift registry website.
"It does have different underlying motivations," he says. "Yale is a research institution. It's not an MBA factory."
B-school applicants who are worrying about Yale's finances should remember that the school recently received its largest gift and is moving into a new, state-of-the-art facility, Swick says. "This is now the perfect time to be considering Yale School of Management," he says. "Now all of those expenditures have come to fruition."