As an MBA holder from UC Berkeley, I should be very pro-business school. But after seeing the latest tuition figures compiled by US News & World Report, I cannot in good conscience recommend getting an MBA full-time today if you are paying full price.
Only if you are already rich, screwed up massively in college, want to take a long vacation (and rich), or despise your job and want a career change should you consider an MBA.
Take a look at the details yourself.
US News & World Report MBA Rankings 2018 – 2019
The first thing that stands out clearly is how wrong the rankings are. UC Berkeley Haas should be #1 since the school is located in the booming SF Bay Area and has the “cheapest” tuition. But besides the egregious rankings, the second most eye-opening part in this chart is the tuition.
Who in their right mind spends more than $65,000 a year on tuition alone?! Once you add food and shelter, we’re easily talking $100,000+ a year. Students are not only giving up two years of experience, but they’re also giving up another $150,000 – $300,000 in median lost income.
Yes, getting an MBA full-time is like taking a long work vacation for many people. But unless you are already rich, or are willing to work for decades after graduating, I’d much rather have the $300,000 – $450,000 in paid tuition and lost wages instead. Taking 4-6 weeks off a year in my late 20s and early 30s was good enough for me. How about you?
Some of you might think that given the MBA is a graduate degree, many schools provide grants to attract the highest caliber of people. Unfortunately, MBA programs are not like graduate programs in the sciences or humanities, where scholarships are readily available. MBA programs are businesses that seldom give out free money to students.
The Better MBA Solution: Get Your Employer To Pay
When I went to Berkeley Haas between 2003 – 2006, tuition was around $28,000 a year. I felt that was a steep price to pay back then as well. As a result, I applied to the part-time program because my employer was willing to pay 100% of the tuition if I stayed on for at least two years after graduating.
The program took me three years to complete. Every Saturday for nine months a year, I would go to class from 8:30am – 5pm and then spend another 10 hours a week doing homework and group projects. The first year was brutal due to the adjustment and all the core classes I had to take. But by the second year, the program was a lot of fun due to the electives I selected.
I could have finished the program in 2.5 years if I took two summers of classes, but I needed a break. I was regularly working 60+ hours a week in finance and was doing a lot of traveling.
Although the three years were tough, they went by quick. I worked for six more years before I finally left my employer in 2012. It was a good trade for both parties.
If you are considering getting an MBA, please first check with your employer to see if they have a tuition reimbursement program. It’s a business expense for them as well as a recruiting and retaining tool for their top employees.
If you plan on paying the entire bill yourself, then do research on how you can deduct the tuition of an MBA on your taxes. For example, if you earn under $80,000 the year you go to school or $160,000 if you are married, you can deduct all tuition and school-related fees. See more tuition deduction info from the IRS here and check with an accountant.
The Main Things I Learned From My MBA
Here are some of the things I learned in business school:
* How to create an income, balance sheet, and cash flow statement
* How to be a better negotiator
* How to be a better communicator
* How to properly analyze real estate transactions
* How to lead more effectively
* How to play nice with eager beavers
But the main thing I learned in business school was confidence. The more information I knew, the more confident I became. With an added diploma and three more years of work experience, I started to finally feel like I belonged in the finance world.
The problem with MBA programs right now is demand. Applications were down 5% – 10% for the top 25 schools last year and will likely decline even further this year once the data comes out.
The schools blame the decline of international applicants scared off by anti-immigration talk in the US, hurricanes in Texas, and white supremacist protests in Virginia for their declining demand.
But one variable they do not discuss is the extraordinary cost of tuition, which is just too obvious to me and any rational person working in a strong economy today. If business schools want to increase demand, they simply must lower price. You don’t have to go to business school to understand this concept!
Check out this chart highlighting the year-over-year change in MBA applications.
Business school demand is way down. Source: PoetsandQuants
Getting A Graduate Degree Is Contrary To FIRE
If your goal is to retire early, then getting a graduate degree doesn’t make sense unless you can go part-time or get your graduate degree in your early 20s.
The goal of FIRE is to break free from the grind as young as comfortably possible. By spending 1 – 4 years in graduate school, you are sacrificing precious time and money in order to hopefully leverage your degree for as long as possible.
Originally, I had thought that once I got my MBA at 29, I would work full-time until age 40. But I couldn’t take six more years of indentured servitude so I engineered my layoff at age 34. Not all was lost though as my MBA gave me some tools to figure out how to make money with my own two hands.
The only person I know who had a lower return on their MBA than me is a friend who went to Harvard Business School full-time. When she graduated at 29, she proudly told me, “I never plan to stop working Sam!”
But after she had a baby girl three years later, she never went back to work. Despite only working one year longer than the time she went to school, she met her husband in business school, who ended up making multiple millions at a hardware device startup. They live in a $4M+ house and life is good, so perhaps her return was stellar after all.
Still No MBA Regrets
Despite the ridiculously high cost of getting an MBA, you will likely not regret going. You’ll meet a lot of interesting people, go on amazing school trips, and be forever part of a fraternity that will always believe their MBA was worth it.
Just make sure you either work for at least 10 years after graduating or make at least 10X the total cost of getting an MBA before you stop working, whichever comes first. After all, getting an MBA is all about maxing your return on investment.
Further, an MBA is a great way to reset your career if you screwed up in high school or slacked off in college or work at a terrible job you absolutely hate. If this is the case, go for it and figure out how to deduct the cost on your taxes.
As for me, of course I don’t regret getting my MBA because it was largely free. It was painful to be working 80 hours a week for three years, but once I was done, working only 60 hours a week felt like a breeze. Hard work should never be an excuse for regret.
Staying in San Francisco for more than 12 years after graduating has proven to be a wise decision given a Berkeley MBA carries more weight here than in other parts of the country.
Finally, now that you know I got an MBA from Berkeley, doesn’t it seem like you’re getting even better value for what you’re reading on Financial Samurai? If not, I’ll gladly give you your money back. Go Bears!
Related:
Would You Accept $1,000,000 To Go To Public School Are Your Life?
Is An MBA A Big Waste Of Time And Money?
Readers, do you think getting an MBA is still worth it today? What types of people are willing to pay so much to get an MBA nowadays? Do you know anybody who went to graduate school and ended up becoming a stay at home parent or retiring shortly after?
Note: Some people really dislike folks with MBAs, especially those who didn’t get an MBA. There’s also tension sometimes between the engineer “creators” and the business development, sales, and marketing types (MBAs). The reality is, you need all types of people to make a business run well. Know the culture of the firm you want to work for before getting an MBA or applying to that firm.
This post strongly resonated with me. My fiancée and I have been considering getting an MBA for a long time.
For me, I could never justify the costs and thus I do not intend to go back to grad school as of now. Working in Biglaw and making over $250,000 a year, the opportunity cost was just too high. Also, as a corporate lawyer, I wasn’t sure the skills I would learn would be that useful. I see LBO transactions everyday already! Don’t really need to read more cases!
For her, I think it makes sense. She has a science background and could benefit from learning new business skills.
For international students, it’s an even bigger gamble because you may not get the precious H1B visa required to work in the US after graduation.
There’s no way I’d give up $250K a year for two years to get an MBA from a top 10 program.
Science background + MBA is a great combo. But again, she has to make sure she’s willing to work for at least 10 years after.
INSEAD or LBS sounds good! Shorter programs.
Most college and grad school tuitions are out of control, not just MBA’s. I just took $150,000 and put it in a compounding interest calculator. Over 25 years at 7% (which is what the market should average) it would become $814,000.
You’re missing out on $814,000.
Nuts.
Come on… that is $814K *in 25 years*. Pv that at inflation (3%) and it is like: $389K.
Yes it is still a big deal, but presentation/consistency matters.
The market averages 7% in it’s history AFTER inflation. You can argue about the CPI or which inflation number to use, but they’re all pretty close
https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp
Ok, my mistake. If your take is that you expect 7% returns, adjusted for volatility, after inflation over the next 25 years then I agree and the presentation is consistent.
You can say the same thing about University. It’s all a trade off over what you get out of it. But for sure, FIRE asap does not fit into education. If FIRE is your only goal, then you don’t need an education. However, I’d argue you miss out on a lot of life.
How about doing an MBA abroad, gaining experence in another country as well. You’ll be a better person for it, at a lower cost.
My friend went to Harvard Business school, it was 90% networking and partying.
It’s just a key to open up the next tier of corporate life – so the most important question is, do you really want that?
I think it’s still worth obtaining today, depending on some variables: overall life goals, who’s paying for it, and will you actually apply skills learned from getting the MBA? There’s probably more but that was what I asked myself before I went down the MBA path.
I had funds left from the military to use, and my employer has a generous education assistance package so I took the plunge…started the first week of MBA school when our first child was born :-) Crazy right?
My employer has a policy of paying for all of the expenses if you stay on for 3 years post graduation, I’ll hit that in January 2019. So for me, it’s paid for itself with promotions and having the military/employer funds to use. I know that’s not the case for everyone but that’s my story. I certainly do not encourage anyone to just get an MBA and take on massive amounts of student loans.
Yes, that is crazy! Who was taking care of your child if you were in school and working? I’ve been exhausted every single day being a stay at home dad with my wife for the past 18 months.
It’s great your employer paid. What school?
My wife, who was/is working full time too. We then had a private sitter once my wife was off of maternity leave.
I live in Central Ohio, both my undergrad and MBA are from Ohio State.
When I was in my 20s, with my engineering degree, my mom kept trying to convince me to get an MBA. But all the benefits they said, like confidence, communication, problem-solving, I was doing already in the job I had. After 5 years of working, I did take 4 years off to get a PhD in Engineering, with free tuition and getting paid $20k in stipend for just showing up (no teaching assistant responsibilities). I am very glad I did that as it allowed me to enter another industry starting at higher wages (double what I was making before) and upward mobility since. Though I am still working, but I like it.
Impressive! Glad the PhD worked out for you. I considered the same and concluded it wouldn’t for me.
see: https://www.financialsamurai.com/life-after-the-private-sector-should-i-get-a-phd/
At my undergrad, we faced budget shortfalls regularly. The school decided to lower the admission criteria of our MBA program and increase the price. Enrollment swelled and more revenue came into the college thanks to the juicy margins the school made on the backs of these aspiring business leaders. And my undergrad school wasn’t anywhere near a top 100 school. I can only imagine the income Harvard, Stanford, or UPenn make, let alone Berkeley.
I thought about going after an MBA but I got 2 years worth of accounting classes and another 18 months of exam studying toward my CPA paid for by my employer. If they wouldn’t have offered to pay, I definitely wouldn’t have gotten my license. But if I get an offer to go to a nice business school tuition free, I’d strongly consider it. Otherwise, pass. Way too much time and money to justify attending.
I think with an MBA, it really needs to be a top school. Otherwise it may not be worth it. Same goes for law school. Medical school is a different story, if you go to a US med school, you will probably get a residency spot, and be ok.
Curious to hear if other readers agree with this
At a Top 50 professional (non-medical) school on full ride w/ healthy stipends for living expenses. Simply cannot recommend professional schools from outside of Top 12 (business, law, masters programs, etc) unless absolutely certain that the lack of such an education would be an impenetrable barrier to entry in one’s dream job/field. Must also confirm that dream job is, in fact, dream job.
These schools are even more justifiable right now because the economy is strong and expanding, but imagine staring at six-figure debt in a deep bear market or recession. It would be a great time to start a business (See Sam’s post), BUT crippling debt perhaps likely to diminish your confidence in such a scenario.
Vast majority of US medical school students match into a residency program and will earn $200K + after graduating residency. General rule is off shore schools and US private schools will leave you debt burdened. Choose state universities. Top programs matter far less, IMO, unless you are seeking hyper competitive specialties, research and/or academia tracks. I attended FSU COM and received a partial scholarship with annual tuition of $10k, matched first choice in residency, now looking at $270k first year comp as family physician. Good ROI in the end!
If the tuition is free from a top 20 school, then it’s not a bad tradeoff. But I’d rather go for free part-time and still make money. Time is too precious.
Working in asset management, I went back and forth multiple times about getting an MBA. At the end of the day, I couldn’t justify the $200k+ in tuition / living costs along with the opportunity costs of 2 years of losing compensation. I did have a close friend that attended Harvard, and it looked like a giant party. Her section traveled all around the world, which obviously isn’t required, but if you’re mostly doing an MBA for the networking it’s hard to turn down all that fun (what’s an extra $50k in trips on top of $200k in loans?!).
I instead completed the CFA program, which my employer covered in full upon passing each level. The CFA program in my opinion is more rigorous in terms of a financial curriculum, but it doesn’t teach you anything about leading or managing people. I’m hoping I’ll continue to read more on the matter as I advance in my career and hope I made the right decision forgoing a lot of student loans. Thankfully, I started a 529 plan for myself right out of school, which I’ve now just transferred over to my infant daughter. It will be interesting to see the state of higher education once our kids are out of high school!
Getting a CFA if you are in finance is such a great alternative. And, you get to put it on your business card, unlike your MBA. Although I’ve seen it down with international candidates.
I’m the same–completed the CFA instead of an MBA and have no intention to go back to school.
To my surprise, I’ve never received an ounce of pushback over not having an MBA in any finance job or interview I’ve had. A few employers encouraged (and funded) my CFA, however. The lack of a school alumni network hasn’t impeded me much either.
Perhaps it’s different if you’re targeting the C-suite, but the value proposition of an MBA in finance seems diminished.
Not to mention that HBS case studies can be viewed online for a couple dollars!
It’s just if you want to get into certain companies. If they all have MBAs, like many money management firms or VCs, it will be impossible to get in if you don’t. Just look at the profiles of Kleiner Perkins for example.
Medical school is crazy tuition wise as well, and unless you are living under a rock, the cost of becoming a physician is splattered all over the media. Of course, if you are a rock start future doc and get accepted into NYU’s Medical School, no worries! And, unlike going to business school, medical school is four years! And depending upon your medical specialty, many MBA grads have lifetime earnings well above a physician’s. There are several doctors blogging about early retirement, and I have to wonder why, after all of the years of studying and residency, they choose to leave medicine, irrespective of being financially independent. Guess they aren’t happy in the profession. But my point is, this article could have very well been about the medical and dental professions. And there are no employers (except the US government, if you practice in an underserved community) willing to pay for tuition.
I wonder if more top medical school programs will offer free tuition to compete with NYU. If so, that would be great for everyone.
I feel bad for doctors given the regulations have changed so much since they first went to medical school. What they expected and what they got after getting out of school and residency was different.
My cardiologist friend saw a 50% decline in expected compensation, despite doing two fellowships after medical school that took a total of 10 years, including undergrad. Nuts!
My youngest went to Cornell, majored in economics just because he liked the math. Did not really like business or finance but began work in commercial banking after graduation. He had interviewed for more prestigious jobs in consulting and investment banking, but did not get any offers. Anyway, after about 18 months, decided he really disliked banking and all business. Decided he wanted to be a physician. Only he had no science prerequisites- luckily he got into a top postbaac program, spent 1 year taking all the prerequisites, and got into a top medical school. Talk about a 180 degree change! So far, he loves it, and feels he made the right move. He better, because it is obviously expensive and we are paying most of it. I did the math, and basically if he had stayed in commercial banking or a similar career, his overall earnings after a 40 year career would still be half of what he will hopefully earn over a 30 year career in medicine, even after deducting med school tuition, and opportunity cost of lost income (he did not make a lot). Most physicians still do well, just not as well as in past decades. My husband may be the exception- his salary has doubled over the past few years, because his reimbursement has gone up. So, financially it seems like medicine is the better choice for my son and he is happy, which is all that really matters in the end.
As for other medical schools following NYU’s tuition free policy–not holding my breath, unless some very wealthy donors step up to the plate, like Langone.
Cool. Just make sure he stays away from FIRE blogs so he actually does spend decades being a doctor and earning a great return as well!
The last thing you want to do is have him change his mind serval years after getting his medical degree.
I think doctors are leaving early because of the seismic shift that has occurred in healthcare over the past decade. Electronic medical records, which are helpful for aggregating data, have turned doctors into data entry techs. I spend the majority of my day sitting in front of a computer rather than delivering care. As a younger physician, I have come to accept that is how modern healthcare currently works and am hopeful that we can improve EMRs to where they help rather than hinder my delivery of care . Older doctors who used to spend the majority of their day providing care and talking with patients are dissatisfied with their profession and have means to retire. If things do not improve, I plan to work less and pursue other interests as soon as I can afford to work less.
ECS
I obtained an MBA part time as paid for by my employer about ten years ago. It opened a door that eventually lead to where I am today. In that respect worth every penny. Although after the door no one has looked at it.
My wife got half way through employer paid graduate school and pulled the plug to be a stay at home parent/entrepreneur. In her case the Engineering masters degree did not have value.
It all depends on the path you want to pursue.
Didn’t get a graduate degree until I was working, and completed it while I was employed full time. The result is that I paid (well, my company paid 100%) for my graduate degree before I finished paying for my undergraduate. If I could only have figured out how my employer could have paid for my bachelors as well.
Columbia MBA grad (’95-’96). If memory serves, it was about $24k/year. At the time, there were no classes on Fridays so was able to find a consulting gig (and was able to take some work home on weekends) that paid $25/hr. Did an accelerated program that started in January, finished in 18 months, including a 3 month internship (got a full-time offer and went to work there for 3 years after graduation). Because I worked, shared a dumpy apartment with 3 roommates, didn’t party at the fancy NYC bars or take ski trips to Europe on breaks, I finished school with only $12k in loans and paid it off with the small signing bonus I got, as compared to most of my schoolmates who finished with well over $100k in debt.
Anyway, getting my MBA was one of the best decisions I’ve ever made (financial and otherwise). If you are accepted into a top 25 program and are looking to advance in the corporate world, I think it’s fair to say it’s generally a great asset, but if you’re going the entrepreneur route or getting the degree from a relatively unknown program, the ROI may not be there (unless, of course you take Sam’s good advice and find an employer who is willing to pay for it!)
What is it that you do for a living that makes the ROI great? thx
Everyone has their personal experience, of course. For me, getting an MBA allowed me to transition into a finance career and was a good investment of time and money.
The big downside is that it pushes FOMO and “keeping up with the Joneses” to a whole new level. Both my wife and I went to top programs and now live in a HCOL area. Most of our friends are grads of these schools and in lucrative careers.
When you surround yourself with these high earners, it’s really hard to maintain FIRE and frugality mindset. Also if you just have a “normal” post-MBA career (which is generally pretty sweet), you feel inadequate because your classmates are running companies, founding hedge funds and taking their startups public.
Yep, I hear you. MAX FOMO baby!
One reason why I moved to the western part of SF, to escape the madness. And one reason why I want to live in Hawaii for at least 3 months a year. Even though I don’t go to work, I STILL feel more relaxed in Hawaii.
FIRE readers might be interested in the Full-time MBA program at the University of Florida, a top ten public university. All admitted students in the Full Time MBA Programs will receive a 100% Tuition scholarship, https://warrington.ufl.edu/mba/program-options/full-time-mba/.
Hi Sam,
I have the same thought whenever I think about getting an MBA – the cost is outrageously high, especially factoring in opportunity cost. I’m in my mid 20s, making high 5 figures with a year of experience. Nevertheless, I am leaning towards applying to an MBA. Why?
My work experience is in a very small niche of finance that isn’t very transferable to other jobs in the industry. I know in investment banking you can obtain an analyst to associate promotion, however in my niche the norm is to be pushed out to an MBA program after your analyst years. On the plus side, my superiors are extremely supportive of MBA applications, and everyone I know from my job has gotten into a top 15 program.
To me the high cost may simply be the price I have to pay to continue to move up the chain as an associate and beyond. Do you think it’s worth it to take the 200k hit from a FT MBA program if this is the only clear way to make the jump to the next level?
Go part-time. Do the math on what $200K turns to in 10 years at a 5% – 8% rate of return.
I got my MS & MBA as part of the fast track bachelors + masters program. I had a 4 year scholarship. My freshman year, I figured out I could graduate early and then get my Master’s in 1 year. I started taking grad courses my 3rd year of college. My 4th year of college I was doing my Master’s (taking 21-25 hour credit grad semesters). I had to get special permission from the Dean’s office. I finished in 4 years. I only had 3 more classes to finish up my MBA because I took so many credits. My company hired me when I finished the 4th year and then paid for the rest of my MBA.
Granted, because I did it so fast and finished everything by the time I was 23, I may not have been able to relate it to the real world. But honestly, in the workplace nobody cares. I have 2 graduate degrees on my resume plus tons of great work experience at top companies. At 27, I was making same/or more than some peers who were 30 and 31 who had taken 2 years off and gone to get their MBA. I know this because at my last company they hired fresh out of MBA school grads, and I was senior to most of them. I, also, outperformed them.
Do I wish I had gone to an Ivy League school? Yes, sometimes. But I can tell you I love having no student loans. Especially since my goal is to FIRE by 40ish. I rather take time off in my 40s with money.
I’ve learned so much, and I’m using what I learn to help my younger brother get an edge in the workforce.
In summary, it can be done without an Ivy League degree. If you have parents who are funding the degree, then obviously go for it. But if you’re like me when everything was funded by applying for scholarships, there may very well be a different route.
Sounds like you are well on your way to FIRE by 40! Congrats.
Great post. I also did my MBA part time, at Georgetown. Made a great network of friends and potential work colleagues, while minimizing expense.
While I agree the cost is significant, an MBA is probably one of the few graduate degrees actually worth the cost because of the ROI and a relatively short payback period.
One other note: MBAs are quite applicable and can provide career flexibility. Years down the line, someone with an MBA can pursue finance, marketing, economics, accounting, etc.
Thx Chris. What is it you do now and how many years of work left in you do you have?
Didn’t know Georgetown had a PT program. Wave of the future!
Sam one thing to note I believe the ability to deduct mba tuition as an unreimbursed business expense is no longer available due to the tax law changes. However, tuition and school related expenses can still be deducted from business income fully but you have to own your own business.
Thanks for the heads up. Check with an accountant folks!
I’m doing grad school part time on the weekends. I earn too much for the standard tuition deduction but have not heard of the business deduction. Do you need to be 1099 or self-employed to take advantage of this?
Under the IRS’s tuition and fee deduction, a student’s annual income can’t exceed $80,000 if filing as an individual on the return. That limit goes up to $160,000 if the taxpayer is married and filing jointly.
https://www.irs.gov/publications/p970
I fall into that last category of “working in a job you hate and looking for a career change”. I was absolutely miserable in my last job and felt stuck. Really wanted to get into a new industry but was having no luck when applying for jobs. Decided that if I could get into a top tier business school i’d go for it. Ended up doing that, and was able to get a job in my chosen industry upon graduation. I’m actually earning less (mostly due to moving to a lower cost of living area) than before, but am much happier. I guess for me it was worth it, but from an ROI perspective it probably wasn’t.
Gotta love the propaganda as to rational provided for declining applications – LOL.
It can’t be due to the value proposition of the product not being so good anymore, can it??
Seriously – a white supremacist rally would affect MBA applications? Hahahahaha
Either:
1) this is a load of leftist propaganda crap or
2) potential applicants are the wimpiest bunch of snowflakes ever.
I’m gonna go with #1.
No need to overly politicize it. Comments like yours give bad names to political conservatives / Trump supportors.
The fact of the matter is a number of employers that, in past years, extended offers to large classes of MBA students including internationals, changed their recruiting policies in 2016 – 2017 school year to only accept US Citizens and Permanent Residents, because Trump tightened work visa policies (bulge bracket IB – Morgan Stanley, Citigroup for sure, maybe even management consultants). Some of international MBA applicants were hoping to work in the US / UK after graduation, and word got around quickly that visa issues were preventing them from doing so, so they ditched the programs and went elsewhere. It’s $200k+ tuition plus living expenses they’re talking about. Most of these internationals are probably more well off than you or me, but they won’t waste it on an MBA program if it doesn’t do what it promises to do.
If you stop trolling maybe you can get into one of the top programs yourself. Then you can thank your parents for giving you the right to work in this country barrier free.
Great post Sam
There are lot of discussions on this subject indeed lately
In my view the bottom line is the ROI
If an MBA from a Top school (let’s say total cost 350K$) will secure you a job that will allow you to recoup the total cost in 5y the investment is worth it
Otherwise is not
There are tons of statistics out there such us average salary, percentage of employed after 1y, salary increase after MBA completation etc etc
Is it worth it?
Again…do your math and guess the ROI
Back to the original question: are the tuition too high?
Yes in absolute value ($)
My MBA was completely paid for by my job. When they offered the first year I grabbed at it. They held classes on the campus of my employment from Golden Gate University. It was Areli 20,000 dollars a year at the time. And glad I did it. In subsequent years the only paid part of the tuition. And then later not all the classes were held at my job, had to drive an hour.
I recommend getting a job and have them pay for it while you are working.
My sense is that you have be pretty far up in your class to benefit from any professional degree, even at a top school. The degree itself is simply not enough. What say you, Sam?
Not the case, IMO, for top MBA programs. Unlike law school and med school, grades in MBA matter very little. Employers are looking for smart enough people (you check that box by being admitted) and then it’s all about drive, passion, and leadership potential (mostly DRIVE).
Unless you’re going into high-level quant stuff, most employers don’t really care.
I went to Wharton BTW.
I’d love to hear everyone’s thoughts on getting an online MBA. I am aware of at least two programs that offer very inexpensive programs while also appearing reputable.
Gies College at University of Illinois has an ‘iMBA’ that is all online. The cost is around $22,000 for 18 courses.
Texas A&M Corpus Christi also has an online MBA that costs a little over $12,000 for 10 classes and can be completed in a year, going full-time. If you don’t already have a BBA, you’ll need to take four prep classes for an additional cost.
Obviously MBAs from these colleges wouldn’t be as prestigious as one from an Ivy, but I imagine that isn’t an issue for many people, whether due to location or intended career choice/goals.
Are these programs worth consideration or a waste of time?
If it’s for your personal benefit (I.e. Want to learn leadership skils, want a refresher on financial statement analysis / modeling) then do it if it doesn’t hurt your bank account. You will make the most of it and hopefully perform better at your current job.
If you’re counting on this degree for a leg up in joh hunting, no it will have no effect and it would be money wasted.
Different people will have different perspectives on your post. As a mechanical engineer, I was working with a very well known US firm back in India (I had graduated from a premier engineering school in India as well). Based on my work experience, I was paid higher than the industry standard, but I still fell short of $15k gross annual income.
I’ll be honest and tell you that seeing some extremely dumb people making 3-4x my salary just because they were sitting in the US did irritate me at times. I was hired for a leadership program after my bachelors, and through multiple rotations I soon realized that even though I had a strong technical acumen, affecting the financial aspect of my firm’s business (through procurement, strategic sourcing, etc.) gave me immense pleasure. Hence, within the first two years itself I realized that I would rather put my eggs in an MBA program than an MS program. I am from one of the MBA programs that you have mentioned in your screenshots, and I would be graduating in 2019. Over the summer, I was working with a consulting firm in a 60+ hours/week job and helped a major US retailer significantly improve its procurement and accounting divisions. I wouldn’t have been able to add this value without the MBA program. I would be continuing with the firm full time. The job that I would be joining would pay me $150k (Greater than 10x bump, and a bonus of $25k after that).
I’ve significantly improved my communication skills, have learnt about and follow smart people like you (can’t talk enough about how much value you create in this world!), know how to make more convincing presentations, know at least 25% of my class really well (read: network), understand financial markets way better than I did 1.5 years ago (I used to invest back in India as well, but I now have a better grasp of markets and investing strategies). I don’t know whether I’ll be able to retain this job for long (because hey, I don’t know whether I’ll make it to the H1B lottery), but I am sure that even if I have to go back to India, I am much more skilled than I was 1.5 years back, and would be able to find a job that would put me in a better spot financially (even though I took a debt of $100k+ in a weaker currency @11.5% APR), than I would have been by not doing an MBA.
Agreed that I’ll have to toil in this intense job for much longer to achieve my FIRE objectives (as my starting point is a significantly negative net worth), but looking at where I started, I have come a long way. I owe that primarily to my hard work and dedication, but in some part to my MBA program as well!
I got my MBA in my early 30s, part-time at night over several years. My employer at the time paid the entire bill. It was the highest priced MBA in the Indianapolis area at the time (early 2000s). Total cost was $24K. I got massive return as it allowed me to double my salary within four years of completing it (eventually becoming a VP at a different company). I’m possibly a rare person that can say it paid huge dividends. My concentration was Finance, so more importantly it really helped me in my investing and entrepreneurial side hustles that almost equal my full time salary now. And, I really enjoyed the experience. Being surrounded by motivated leaders and professionals from the area in classes each week was uplifting and allowed me to network at higher levels that also paid dividends after the MBA was done as I’ve done deals and business with many of these former classmates. Home run.
There’s a few people here that have gone for the “value” MBA rather than the “top school” and seem to have made a great ROI. I’m probably in that category – I took a non-US, 1 year full-time program, with “only” $40k in fees – and less time not earning too. Compared to the price of a top US school, that’s a bargain.
The school is top 20 to 40 worldwide, depending on whose league table you believe (some are more weighted by earnings increase, which favours US schools with young cohorts going into finance).
I was earning 3x my pre-MBA salary by 3 years after graduating, and I was not at an early stage in my career.
Once you get outside the top 5-10 “brand” schools, I’ve found it seems nobody really cares where you got your MBA from, but having one definitely adds value.
Hey Sam!
Currently a first year at one of the programs on the US News top 10 list. I’ve been a long time reader of your blog and your advice that we should invest in ourselves as much as possible. I’m currently paying sticker price for my full-time MBA (ouch!) but exited my previous company with a large equity payout, which helps. It’s a huge gamble and I both doubt and reinforce my decision for doing this everyday.
ROI data on MBAs is largely short-sighted and incomplete. The schools have plenty of data on salaries just after completing the program, but my guess is that the folks who are still working 10, 15, and 20 years out of their top MBA are doing quite well and don’t report the salaries (because no one asks!)
You’re right that the opportunity costs of going full-time are hard to make work. I am currently finishing my MBA part-time and I still struggle with the ROI given I already have 10+ years of work experience in structured finance. I also don’t perceive a huge pay bump at this point in my career. My employer is subsidizing the cost somewhat, but with having two small kids now, the opportunity costs are mounting. The saving grace is that I truly do enjoy the coursework and I resonate with what you said regarding confidence. Despite my work experience and undergrad economics degree, this process has increased my confidence tenfold.