Monday, June 11, 2012

Link of the Day - UCLA privatizing its MBA program?

Well, not exactly privatization, but close (they call it "self sufficiency").  This link at InsideHigherEd discusses a recent vote by the UCLA system to refuse state funding for the MBA program.  As a result, UCLA will be able to set its own prices for their MBA program.  Additionally, money freed up from state aid would potentially help other programs at UCLA.  The proposed changes will lead to a notable increase in the cost of tuition for the UCLA MBA - but it would put their costs in line with top tier private schools in state.

California is in a steep financial crisis and their state (much as Texas) has responded by backtracking away from academic funding.  At least one other top tier public MBA program has made a similar move.  There is no indication that this will turn into a trend.  However, should this become fully implemented, it's virtually certain that others will consider it.

Contentious topic with a controversial (and deeply contested) decision.  Thoughts?

Yes - I know this one is probably a powder keg.  Please keep the discussion civil!

4 comments:

  1. Sitting back and being objective about the story, I get two different feelings. One, it is a sound business strategy for the business school. Being able to charge higher tuition fees to students, brings in more money for the department and allows UCLA to higher the best teachers because they would have their own funds and not be held back by lower state funding. I think it is a good decision for the school.

    On the other hand, it’s a bad thing for the students. An increase in tuition could lead to lower enrollment numbers and it could lead to some of the smartest students going to another school because they can not afford the higher tuition costs.

    Overall, it is a decision that more than likely will not directly affect myself or my kids and if it helps the university grow or stay afloat in these bad economic conditions, then I say go for it. In business, you have to make hard decisions that some people may not like, but when it comes right down to it, you have to do what you think is best for the business. And like it not, universities are a huge business and their main objective is to make money.

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  2. UCLA is a public university and, similar to a not-for-profit organization, their primary objective should not be to make money. Their objective should be to add value to both their students and the communities in which they operate. They have been subsidized by tax payers who should see a recapture of that value; also the idea behind in-state and out-of-state tuition. Although perhaps frivolous, if UCLA privatizes one program, I don’t see how they could truly segregate it from seeing some of the benefits the rest of the institution receives through tax payer subsidies.

    Universities are huge, bureaucratic and thus slow to change. Government funding is continually shrinking for public universities, so change is something that is inevitable; or an alternative source of revenue. UCLA’s plan seems to be more of the latter, at the detriment of the students. University students, to link this to the text (Strategy Spotlight 2.7), have extremely high switching costs and have no real choice but to accept the impending tuition increase.

    Some plausible additional motivation for a decrease in government funding of public universities can be found through this link to Forbes; explaining the profit potential for student loans and their subsequent defaults.

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  3. With the state that the economy is in currently, student enrollment has increased in efforts to make more money. UHCL's plan to improve the business school will affect students because of higher tuition fees but I believe that students will accept this change in order to better their future career options. I think that this is a great opportunity for the business school and also for future growth of the university as a whole.

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  4. Remember, this is the University of California Los Angeles (UCLA), not the University of Houston Clear Lake (UHCL).

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