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Shocking news: The value of an MBA is rapidly declining
Posted on 1/17/13 at 11:52 am
Posted on 1/17/13 at 11:52 am
quote:
U.S. schools granted a record 126,214 masters degrees in business and administration in the 2010-2011 academic year
LINK
Poorly informed buyers are responsible for the market imbalance. The accessibility of online and part-time programs amplifies the problem. Also, many schools are motivated to print an MBA for anyone who wants to buy the degree. The overabundance of MBAs has heightened employers' awareness of the fact that MBAs are not a commodity. The result is described in the article. Newly minted MBAs seemed surprised to learn they aren't given jobs or promotions just because they have an MBA.
quote:
I tell candidates that if they want an MBA, then go to one of the top five schools: Wharton, Harvard, Stanford, MIT, and Kellogg. If they cannot get into one of these schools, then don’t even go to another school. The return on investment is just not there.
LINK
I'm not sure I agree the list is down to five, but his points regarding saturation and rising costs are obvious. There isn't much substance to the article, but his message is clear - calculate ROI before investing in an MBA.
11
Posted on 1/17/13 at 12:02 pm to lsu711
i know the ROI is there, but DAMN quote:
2013-2014 ESTIMATED STUDENT BUDGET
Wharton MBA Costs
Tuition $59,736
General Fee $2,410
Course Materials Fee $600
Pre-Term Fee $2,060
Tuition & Fees $64,806
Health Insurance $3,222
Room & Board $22,188
Books, Supplies & Misc $5,784
Total Expenses $96,000
Wharton MBA /LAUDER MA Cost
Tuition $59,736
General Fee $2,410
Course Materials Fee $600
Pre-Term Fee $2,060
Lauder Fee (Summer Tuition) $12,500
Lauder Academic Year Fee $13,100
Tuition & Fees $90,406
Health Insurance $3,222
Room & Board $22,188
Books, Supplies & Misc. $5,784
Summer Lauder Program Expenses $12,000
Total Expenses $133,600
Link to 2013 Wharton MBA Debt vs Income
quote:
Brought down to individual terms, a typical Wharton MBA in this class will graduate with average debt of nearly $124,000. With monthly payments of $1,477 over 10 years, the total would come to $177,256, including nearly $53,000 in interest alone. It would be the proverbial bite that would be hard to chew for most because a graduate would need an annual gross salary of $176,560 to comfortably pay down the loan, according to financial advisors. That's not a comforting thought when the median starting pay of a Wharton grad was only $110,000 last year. (You can crunch your own numbers on an online loan calculator to estimate the impact of your own debt.) And none of these numbers include the debt assumed by students during their undergraduate years
quote:
Just take a look at what has happened in the last decade alone. In 2001, Wharton recommended that applicants budget $59,728 a year to attend, or about $120,000 in total for the two-year MBA program. Graduates from Wharton in 2001 reported median base salaries of $95,000 a year.
quote:
For the class of 2013, however, these calculations are likely to get scarier. Wharton is now recommending an annual student budget of $89,200 -- a sum that does not include the school's global immersion program, which typically costs between $4,000 and $5,000 more. That brings a student budget up to $94,200 for the first year alone, or $183,400 for the two-year program.
This post was edited on 1/17/13 at 12:13 pm
Posted on 1/17/13 at 12:06 pm to lsu711
I agree with him for the most part, but there is also some value on getting an MBA and working in the same city/area. For example, an MBA from Emory university in Atlanta carries a lot of weight if you work in the Atlanta area afterwards.
This post was edited on 1/17/13 at 12:08 pm
Posted on 1/17/13 at 12:21 pm to lsu711
is there going to be a shift towards some other post grad degree/study?
Posted on 1/17/13 at 12:22 pm to ZereauxSum
The second article touches on this, but personal goals play a big factor. The problem is prospective MBAs are optimistic when it comes to projecting their own potential. This causes many to overpay for the degree, which throws another MBA into the job pool and perpetuates the downward spiral.
Posted on 1/17/13 at 12:32 pm to jimbeam
quote:
is there going to be a shift towards some other post grad degree/study?
Masters programs in finance, accounting, economics, etc. still don't provide the diversity of skills necessary for management. I think the shift will be to weight professional experience much more heavily. We can observe the short-term impacts of so many MBA graduates entering the job market. The percentage MBAs with jobs at graduation has declined. The average salary of those who have found work has declined. In response, many prospective MBAs are taking a long term perspective to justify the degree - "upper management positions at my firm require an MBA". 10 to 15 more years down the road, the value of an MBA for "c-level" positions will decline as well.
Posted on 1/17/13 at 12:33 pm to lsu711
Posted on 1/17/13 at 12:41 pm to jimbeam
If my employer wouldn't have paid the entire cost of me attaining my MBA, wouldn't have gotten it. I can surely say with confidence that I haven't noticed a difference at all with me having one versus not having one. I've held mine since 2008.
Posted on 1/17/13 at 1:07 pm to lsu711
quote:
I think the shift will be to weight professional experience much more heavily.
This, in our local area we're seeing that many companies and recruiters view MBA's without legitimate leadership experience as an unproven commodity.
Posted on 1/17/13 at 1:14 pm to ZereauxSum
quote:
I agree with him for the most part, but there is also some value on getting an MBA and working in the same city/area.
I agree with this a lot. University of Houston is a great value and has a very well connected alumni base in the O&G industry in Texas.
Posted on 1/17/13 at 1:21 pm to Hammond Tiger Fan
He says ROI isn't there for any school other than the five mentioned. I don't agree because everyone's opportunity cost is different, employers contribute to tuition costs and schools offer scholarships.
Bhatti would argue you should not have pursued an MBA because with no cost and no reward, your lost time is worth something. Odds are whether that time was spent with your family or starting Microsoft in your garage, it was more valuable than the experience of sitting through MBA classes. Would you consider the MBA to have been worth your time?
Bhatti would argue you should not have pursued an MBA because with no cost and no reward, your lost time is worth something. Odds are whether that time was spent with your family or starting Microsoft in your garage, it was more valuable than the experience of sitting through MBA classes. Would you consider the MBA to have been worth your time?
Posted on 1/17/13 at 1:26 pm to lsu711
quote:
Bhatti would argue you should not have pursued an MBA because with no cost and no reward, your lost time is worth something. Odds are whether that time was spent with your family or starting Microsoft in your garage, it was more valuable than the experience of sitting through MBA classes. Would you consider the MBA to have been worth your time?
It may serve a purpose later down the line in my career, but within the intermediate timeframe, it hasn't justified it's cost. I'm just glad I wasn't the one footing the bill for it. Yeah, I had to spend time working towards it, but when I chose to get it my kids were very young and my wife benefited from that b/c I stayed home a lot due to studying, doing homework, et al.
All I'm saying is if I had to pay for it out of my own pocket, I wouldn't have gotten it.
Posted on 1/17/13 at 2:21 pm to lsu711
quote:
He says ROI isn't there for any school other than the five mentioned. I don't agree because everyone's opportunity cost is different, employers contribute to tuition costs and schools offer scholarships.
Even if it were true, it wouldn't apply to you, right? Didn't you go to one of those top 5 schools?
Posted on 1/17/13 at 2:42 pm to rickgrimes
I do and I've found the "total cost to attend" figures to be a worst case scenario. Prior to enrolling, my projected payback was around 5 years. Now with real numbers, it will be about 1 year. I had overestimated the costs, underestimated my summer compensation and exit salary and not considered any tuition reimbursement from my future employer. My only guess is Wharton has a higher percentage of students who had high paying jobs prior to b-school, saved little, and racked up debt in order to continue that lifestyle into b-school.
Posted on 1/17/13 at 3:48 pm to Hammond Tiger Fan
I'm in the same boat. My employer now is paying for me to get my MBA as we speak. I had no interest in paying for it; however, if they want to pay the bill then I don't mind getting a little extra on my resume for future use.
Posted on 1/17/13 at 4:53 pm to lsu711
quote:
I do and I've found the "total cost to attend" figures to be a worst case scenario. Prior to enrolling, my projected payback was around 5 years. Now with real numbers, it will be about 1 year. I had overestimated the costs, underestimated my summer compensation and exit salary and not considered any tuition reimbursement from my future employer. My only guess is Wharton has a higher percentage of students who had high paying jobs prior to b-school, saved little, and racked up debt in order to continue that lifestyle into b-school.
I need to talk with you about your experience...you ended up at Kellogg, right?
Posted on 1/17/13 at 4:59 pm to CajunFootball
quote:
I'm in the same boat. My employer now is paying for me to get my MBA as we speak. I had no interest in paying for it; however, if they want to pay the bill then I don't mind getting a little extra on my resume for future use.
Same thing for me, wouldn't have gone back to school unless someone else paid for it..
In my case, 3 months after I completed it I moved into a new career that came with a 60% pay increase. So it worked out well for me.
I honestly don't believe the degree does anything except creates more open doors as progress in your career.
Posted on 1/17/13 at 5:19 pm to lynxcat
quote:
I need to talk with you about your experience
Sure. I'll be at my computer between now and 6:30 if you want to post an email address.
Posted on 1/17/13 at 7:11 pm to lsu711
TIA
This post was edited on 1/17/13 at 10:05 pm
Posted on 1/17/13 at 7:17 pm to lynxcat
Got it if you want to take it down. I'll shoot you an email later.
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