By Anne VanderMey, reporter
FORTUNE -- Professional schools have had better years. Facing a brutal job market, underemployed graduates have begun to speak up, some even suing their former institutions, claiming they were duped into acquiring massive debt loads based on the promise of a secure, six-figure-salary job.
That promise is particularly critical at business schools, where graduates expect a quick financial payoff as well as an education. At these programs, the standards for reporting employment statistics, in true B-school fashion, are rigorous and involve accountants (a system some law schools are considering). But even those career statistics can have their flaws. Prospective students take heed: The six-figure school-reported numbers are not a guarantee of a sweet paycheck come graduation day.
The current system has its roots in 1994, when the MBA Career Services Council (CSC), the professional association for MBA career services professionals and recruiters, started developing a set of reporting standards to allow for uniform career reporting across the top schools.
"We all sat around in a room and we hashed it out," says Jackie Wilbur, career services director at MIT's Sloan School of Business who was co-chair of the MBA Career Services Council's standards committee at the time. Those standards were officially adopted by the CSC in 1999. In 2006, it established a set of agreed upon procedures to allow for auditing. The result was a uniform set of extensive, enforceable rules.
In many ways, B-schools have led the charge in employment reporting standards, Wilbur says. She expects other types of programs will likely follow suit and double down on reporting standards.
"Given the rising cost of education, every piece of the equation of the educational offering is going to have to go more and more this way," Wilbur says -- including undergrad programs. "Parents are going to demand better information about return on investment."
But a scandal this summer at the University of Florida revealed that even some B-schools still have to clean up their act. Florida's Gainsville Sun reported that an internal university investigation found the school had provided US News and World Report with inaccurate employment data in 2009 (it did not submit its records to the CSC that year, though Wilbur says an audit would have picked up the discrepancies). The school vehemently denied the conclusions of the report, which found that several students were listed as employed when they were seeking employment, and that other students seeking employment were omitted from the data altogether.
A host of reasons to fudge the data
Schools have a strong incentive to deliver good employment reports, says Read McNamara, executive director of career services at the Vanderbilt University's Owen School of Management, as even tiny changes in the stats can lead to big changes in a school's ranking, which, in turn, can directly affect application numbers and funding.
Emily Anderson, co-chair of the CSC and Vanderbilt's senior associate director of career services, says that each year about 100 schools volunteer for random auditing checks. Of those, about 25 are selected each year, meaning schools can expect to be audited about once every four years. Most career services directors agree that the audits are necessary.
Among the chief temptations: not including enough students -- schools may selectively include only graduates with high-paying jobs, though Wilbur says the CSC requires a school to report responses from 85% of each class for each report. Some member schools are requesting that the standard be raised to a minimum of 95%.
A school may also include too many students. One program, which had enrolled a professional athlete, attempted to report his outsize salary in their average. Only "MBA-level" jobs are included in the report (sports aren't considered MBA level, even the pros), but that can be a tricky definition. Misreading of that definition can also run the other way, and can result in some lower paying jobs being deemed as not MBA level and discarded from the stats. Wilbur notes that, as in the case of the athlete, the auditing process should catch these types of errors.
The CSC also has to contend with the hurdle of how the data itself is collected. According to the standards, the information must come from a "reliable source," but the criteria for what constitutes a reliable source are loose. It can be a parent, employer or "your personal knowledge" -- leaving room for interpretation, or error.
"I'm not going to tell you every school's employment report is perfect because they're probably not," Wilbur says. But as far as reporting in and open and comparable manner across schools, she says, "We're so much further along than almost any other type of professional degree program."
Aspiring MBAs: What to keep in mind
In most cases, dirty accounting will not skew a B-school's employment picture dramatically. Prospective students should instead be wary of other things, says Al Lee of PayScale, an employment data research firm. Students should look out for what he calls the "happy graduate bias," where unemployed graduates are less likely to report their status than their salaried former classmates.
Would-be MBAs should also note that salary statistics are based on students with jobs -- and a high average salary may not mean that graduates' salaries were higher, but that low-paying jobs were drying up, keeping them from pulling down the average. For example, Lee says, official reports of the overall average salary for college graduates actually went up during the recession because only exceptional students got hired, even though the total number of students with jobs took a dramatic dip.
B-school hopefuls should also look out for the types of people included in the data. Some MBA grads may have high-paying jobs that they're going back to. Others may have years of work experience. The cautious buyer will look at the salary in his industry of choice, independent industry salary data, and -- if the school reports it -- the starting pay based on a person's years of work experience.
Most aggregate salary data for MBA graduates is anything but conclusive. While the Graduate Management Admission Council reports that the median starting salary for 2010 grads was $78,820 -- with 42% receiving a median $15,000 signing bonus, PayScale research indicates that the average 2010 starting MBA salary was $61,000 including bonuses. The PayScale data, which screened for anyone who identified as having an MBA, is drawn from a larger and more inclusive, but probably less elite pool of grads.
"One thing that's absolutely clear is that if you just go to a random MBA program it is not a guaranteed route to a six-figure salary after you finish," Lee says. "The top 20 programs, there's a decent chance that could happen, but once you get out of the top 20, that's just not the case."
Compounding the problem, top programs also tend to offer better and more thorough salary and career reporting statistics. Other schools will often neglect to break down salary data by industry or years of experience. So what to do to hack through the jungle of career stats? Check the sample size, look at the percentage of the class with jobs, and look at what jobs they're getting. Prospective students should do this before singing up for any professional program, and – most important – before taking on debt to pay for it.
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