Are MBAs still a good personal investment ? Tell your story

tomar

Ad Honoris
Jan 2011
14,285
Perhaps you or someone from your family, friends , coworkers have gone through an MBA programme.

Tell us from your perspective what you gained and what you invested.

It is hard to make a general statements as costs and benefits vary significantly on an individual basis.

Costs of an MBA generally include 2 years of lost income (plus any salary increase one might have achieved during these 2 years) PLUS 2 years of tuition (which for the better -but not necessarily the best MBA programmes in the US is about $100 000 total) ... there could be additional costs if one needs to move to a new city and pay for travel and/or room and board.... But we will assume the smarter choice is to find a suitable MBA within commuting distance

The benefits are a higher salary when the MBA is obtained and potentially access to better employment opportunities





If we go by the below , then for a grad with a salary of $60K the uplift will be on average $25K..... So it would take at least 9 years (best case, generally more as one has to factor in things like additional cost, time to get a new job after graduation, higher tax bracket etc..) to just repay the costs of the MBA...

Compensation projections published by the National Association of Colleges and Employers predict that the average starting salary for MBA grads in the class of 2019 will be $84,580 – more than $25,000 higher than the average starting salary projection for grads with a bachelor's degree in business


Since those who go for MBAs typically have a good education and a relatively good income already the delta between before and after MBA can be low.

Also whilst post MBA salaries for the top schools may seem high, the belows shows a statistic that only roughly around 70% of MBAs are employed at graduation (for Stanford, considered one of the best it is 64%)

 
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Jun 2017
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maine
IMO, an MBA (or MBA education) is very much worth while.

MBA degrees focus not only on pure finance; mine is in marketing. I had an undergraduate degree in ancient history with some post-graduate education from Scotland--not exactly highly marketable per se. On the advice of more pragmatic family members, I took an MBA degree. When one is plotting out a problem (such as life), having a end in mind is paramount; mine was not money: I went into non-profit marketing--and that degree was of prime importance in landing a job. From that, I went into business for myself as a researcher (at first mainly corporate but now mostly genealogical): the training in finance was vital to setting up and maintaining a presence in the corporate world. I am not flummoxed by financial terminology; I understand financial reports and can interpret them as they apply to what I am doing. If worse came to worst and my research business fell through, I have a marketable skill that I can utilize.

Just about anything one can learn is useful but a business degree can be used just about everywhere. As the expression goes: "Business makes the world go round--love just keeps it populated".
 
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tomar

Ad Honoris
Jan 2011
14,285
IMO, an MBA (or MBA education) is very much worth while.

MBA degrees focus not only on pure finance; mine is in marketing. I had an undergraduate degree in ancient history with some post-graduate education from Scotland--not exactly highly marketable per se. On the advice of more pragmatic family members, I took an MBA degree. When one is plotting out a problem (such as life), having a end in mind is paramount; mine was not money: I went into non-profit marketing--and that degree was of prime importance in landing a job. From that, I went into business for myself as a researcher (at first mainly corporate but now mostly genealogical): the training in finance was vital to setting up and maintaining a presence in the corporate world. I am not flummoxed by financial terminology; I understand financial reports and can interpret them as they apply to what I am doing. If worse came to worst and my research business fell through, I have a marketable skill that I can utilize.

Just about anything one can learn is useful but a business degree can be used just about everywhere. As the expression goes: "Business makes the world go round--love just keeps it populated".
Thanks ....

This is a good example, where initial education did not "open enough doors" and thus the MBA created opportunities that werehard to land without it...

Can you share what work experience (if any - how many years) you had prior to the MBA and what was the cost of the MBA ?
 
Jun 2017
734
maine
Can you share what work experience (if any - how many years) you had prior to the MBA and what was the cost of the MBA ?
Pre-MBA: 2 years in US (training salespeople) and 2 years in Scotland (personnel). Cost? I don't recall the exact amount, but the degree was from the University of Illinois which today charges $20k + (but I was in-state).
 

tomar

Ad Honoris
Jan 2011
14,285
This video says 10.5 years payback period for a top MBA, lower for non top schools

 

Ichon

Ad Honorem
Mar 2013
3,770
Interesting question- I started MBA a couple of years ago then withdrew after the first year for some family stuff and recently started up again. Not at a top 10 school but at a top 25 school (most of the research I have seen indicates the school rank matters most in the first 5 years after the degree and is mostly a factor of networking with alumni).

For me the motivation wasn't strictly money, the money matters but mostly to ensure I would make enough to compensate for the lost salary and cost of the program. It was more about autonomy and having MBA allows me to direct projects myself more easily rather than having to work my way up another 5-6 years with just an undergrad degree and work experience via promotions and side moves to new employers. Long term I will be working for myself and having the experience plus an MBA will open doors that might not otherwise solely due to experience at least in most business and technology fields.

I don't think MBA matters as much in certain fields like project management, healthcare, media, manufacturing, and most non-professional services at least so far as compensation goes. If creative agency is important being able to talk in the same terms and understand what the finance people want really does matter so there are other benefits than simply compensation.

Also, I think the current timeline on retirement should be viewed with a longer horizon. Working until 72 or later will be common in the next 20+ years and the extra income due to MBA makes a much larger difference in lifetime earnings if the retirement age is pushed back.

Even with the high cost of MBA more than 80% of people who complete a program are able to pay back the cost of lost salary and tuition in under 6 years so if you complete a program even as late as age 55 if you work to 65 it would be worthwhile- if you end up working until 75 it is even more beneficial. I am one of the older people in my program (not the oldest but in the older half) and I am not yet 40- most people in my program are 26-30 and have been in school without any breaks. Maybe the top graduates will walk into jobs but most have very little experience outside of academics whereas I have nearly a decade of experience in a couple of fields and already have job offers for when I finish from previous employers and co-workers who started their own companies.
 
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tomar

Ad Honoris
Jan 2011
14,285
Even with the high cost of MBA more than 80% of people who complete a program are able to pay back the cost of lost salary and tuition in under 6 years so if you complete a program even as late as age 55 if you work to 65 it would be worthwhile- if you end up working until 75 it is even more beneficial. I am one of the older people in my program (not the oldest but in the older half) and I am not yet 40- most people in my program are 26-30 and have been in school without any breaks. Maybe the top graduates will walk into jobs but most have very little experience outside of academics whereas I have nearly a decade of experience in a couple of fields and already have job offers for when I finish from previous employers and co-workers who started their own companies.
The problem with an MBA at age 55 is that is an age where currently it is very difficult to actually get a job (especially in Europe)... The cliche is that you are "over the hill", less productive and more costly (especially if you have an MBA)... The employment rate by age group across a variety of countries shows that the 55-64 age group employment rate is lower by at least 15% points than the 25-54 group (as is the case in the US, 63.1% employment vs 79.4% ), often by 20% points (average for the EU), and can exceed 30% points in countries such as Poland..


6 years is rather on the low side for pay back though (see above video), it can be 10 years or more, especially for those already making a good salary. Btw in the payback indications above I have not factored in the cost of student loans - it turns out about half the MBAs have them (neither have I counted the "opportunity" cost of not being able to use the MBA money for something else - the dow jones was about 11 000 in 2010 vs 28 000 in 2019, so $100 000 invested there would be $250 000 today- nor the NPV taking into account inflation, i.e. you pay money now but get payback over a long period with $$$ that have dimished in value ... so for example $100 000 in 2010 is equivalent to $118 000 today)

51% of MBA students end up taking out loans, according to NCES. Students who finish school with the average MBA student debt of $66,300 would repay $85,871 on the standard 10-year plan, assuming current interest rates



Could you share the tuition cost of your MBA... Thanks
 
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