Once they stood to inherit the world, or at least a tidy little corner of it. Now, staring into the abyss of the worst financial crisis in decades, California’s MBA students are tempering their expectations, networking like crazy and looking for a Plan B or even C.
“People come to business school to shoot for the stars,” said Bangaly Kaba, 29, a second-year student at USC Marshall School of Business. “At some point, you have to look at what’s in front of you because the stars aren’t available.”
Graduates of the top 25 schools such as the Marshall School, UCLA Anderson School of Management and Stanford Graduate School of Business are typically all but guaranteed six-figure incomes that justify the $100,000 and even $200,000 in student loans they carry. Stanford reported that three months out of school, 92% of last year’s graduates had accepted jobs with a median salary of $125,000, signing bonuses of $20,000 and other compensation of $45,000.
But now, some investment houses where students had hoped to turn summer internships into jobs are dead, companies are cutting back campus recruiting trips, and the job market is swarming with laid-off Wall Street employees, business school officials said.
Kaba was well on his way to MBA nirvana as a summer associate this year at Lehman Bros. in New York City. The venerable financial firm shut down days after his job ended.
“It was a huge job to get, with one of the top investment banks in the world,” said Kaba, a second-year student at the Marshall School. “There was a 1% chance of getting that job. . . . It was not even fathomable the company could go bankrupt.”
Kaba is not discouraged, however. A former inner-city teacher in Washington, D.C., and onetime dean of an international boarding school in Switzerland, he said he was enjoying the ride.
“The West Coast is a great place to be, the lifestyle, the way the school is run. Everything is a lot more chill,” he said.
Incidentally, Kaba said the side benefits of investment banking -- the Porsche, penthouse and wine locker -- have been greatly exaggerated. Over the summer, he worked 13-hour days while sharing a Manhattan apartment that “was not that big or nice.”
Now, he has several meetings with prospective employers in New York City, and although one is informational, he remains optimistic about finding work.
“I lost the prospect of working at a firm I had come to know and love . . . but in reality, I’ve lost so little,” said Kaba, who added that he has no house, children or investment stake to worry about.
California business students generally may be better off than their East Coast counterparts, several school officials said. The state’s economy is more entrepreneurial, the schools’ alumni networks are strong, and the area is not completely dominated by finance or other industries devastated by layoffs and shutdowns.
Even after the Internet bubble burst over the Silicon Valley, Stanford managed to place more than 80% of its graduates in jobs right away, said Celia Harms, the school’s senior associate director for recruiting services and marketing. Harms and other school officials said those who land jobs can still anticipate signing and performance bonuses, although the top-end salaries may drop slightly.
But Jim Ellis, dean of the Marshall School, said nobody really knows how the economy will shake out.
“We’re lucky that we’re 3,000 miles away from the epicenter of this shake,” Ellis said. “When you’re back there in the maelstrom, you talk about it breakfast, lunch and dinner. We think our students will have a better chance, but we don’t know that.”
Peter Giulioni, executive director of the career resource center at the Marshall School, said it was time for business students to come down off their thrones.
Giulioni said: “I’m the first person who tells them they’re not special. But this is a buyer’s market. You got to get these kids grounded in reality.”
Eric Jordan and John Drachman took a big hit of reality. Second-year students in the Marshall School’s joint real estate-MBA program, they encountered the double whammy of the mortgage default crisis in 2007, followed by the current credit crunch, global finance crisis and recession.
Drachman said his undergraduate education ended during the downturn of 2002-03. “Sometimes I think I jinxed it by going back to school,” he said, joking. Still, even they are optimistic. And if things don’t get better soon, they’ll wait it out.
Both men said it was not a bad time to be in school, with the economic collapse a live case study. In fact, there are early signs, including an 11% increase in registrations for the Graduate Management Admission Test , of a surge in business school applications, according to David Petersam, president of AdmissionsConsultants, a Vienna, Va., firm that counsels applicants on getting into college and graduate school.
“Traditionally, full-time MBA application trends are countercyclical, going up in economic downturns,” Judy Olian, dean of the Anderson School, said in an e-mail.
“They sit on the sidelines of industry for a couple years while adding value to their own credentials,” Ellis said.
Some business schools might decide to expand admissions, making competition for jobs even worse. Business school career centers are also doing double duty, helping displaced alumni as well as current students ferret out employment opportunities.
But most MBA students who were interviewed said they believed they would come out OK.
“I haven’t seen hand-wringing, I’ve seen concern,” said Eric Mokover, the Anderson School’s associate dean for career services. “They’re going to have to work hard to land a satisfying job.”
Jeff Favretto, 41, is attending Anderson’s special program for employed professionals while working at the Jet Propulsion Laboratory. He doesn’t see the Four Horsemen of the Apocalypse coming, but if they do, he’ll roll with it.
“If we get down to digging up potatoes, I’ll go get a hoe,” Favretto said.