Do You Really Need An MBA?
That question was asked this week in Forbes by Ashley Stahl. A business coach and entrepreneur who holds two Master’s degrees (International Relations and Spiritual Psychology), Stahl posted 10 reasons against pursuing an MBA. Ready?
- You won’t make more money.
- The value of an MBA depends greatly upon the rank of the school.
- The debt puts you risk averse at a time you should be trying things out.
- Earning an MBA is a time suck.
- An MBA may not be relevant to the job you truly want.
- The value of an MBA doesn’t last forever.
- You don’t need it for a career pivot.
- Hiring managers may perceive you as overqualified.
- You don’t need an MBA to build a solid professional network.
- The degree has become diluted.
No surprises there. Such reasoning has been used for decades. But they don’t quite add up.
Impact on pay? In 2015, the Graduate Management Admission Council (GMAC) reported that MBA graduates – worldwide – enjoyed a median salary increase of 90% after graduation. Hmm…that seems like a pretty strong return; it sure takes the edge off the opportunity costs! And pay is up across the board. At the University of Rochester’s Simon Graduate School of Business, a solid second tier program, graduates enjoyed a 30% pay increase from 2010-2015, up from $91,593 to $125,367. And you’ll find similar stories at programs like Ohio State, Arizona State, Purdue, Boston University, and Penn State. Such success isn’t true across the board. At the University of Iowa’s Tippie School of Business, for example, starting salary and bonus only grew from $92,802 to $94,500 in that same period. Overall, among the top 75 MBA programs, pay is rising across the board.
And such growth only account for starting pay. Over 20 years, the difference is staggering. According to a joint study between Poets&Quants and PayScale, Bachelor’s degree holders managed median earnings of $1,301,000 over 20 years. For all MBA degrees, the number shot up to $1,771,000 and for Top 50 MBA degrees, the number is $2,266,000.
Debt? In 2014, the New America Foundation reported that MBA debt load rose just $627 to $42,000 from 2004-2012. Compare that to graduate school overall (an inflation adjusted $40,209 to $57,600), an average Master’s degree ($37,965 to $58,539) and a law degree ($88,634 to $140,616) over the same time period. In that light, an MBA is absolute bargain!
Even at big ticket schools, the returns are better. Take Wharton, where SoFi reports that graduates earned an annual average salary of $183,472 within three years of graduation, contrasted to an average debt of $121,213 (the highest debt recorded by SoFi among Tier 1 and Tier 2 programs). It’s an even bigger gap at Stanford, with $76,987 debts being offset by $177,590 salaries. Talk about being a penny wise and a dollar foolish if you forego the MBA!
Mind you, Stahl makes several valid points. There is a huge gap between the value of a top MBA program and a boilerplate one. That’s also why you invest in Apple instead of penny stocks. The value of an MBA does depreciate over time. However, it affords the opportunity to get into normally closed doors and build on your degree’s value. The same dynamic applies to the network you develop at business school too. Sure, you can change careers without an MBA – it just takes a lot more time and energy, which is as much currency as money. Overqualified for a job? An MBA enables you to redefine an old job or create a new one – who wants to be boxed in?
Perhaps a better – albeit overly rosy – argument comes from Jonas Revensburg, the recruitment manager at the University of St. Gallen MBA program in Switzerland. He describes it as a “once-in-a-lifetime experience,” a “personal journey” that fosters “self-exploration and self-development.”
“[An MBA program] has the ability to transform your life, only if you let it, by making the most of it,” he writes. Most of our MBAs make a double or even a triple transformation – change industry, country and job function, after graduation. Don’t just go to school, graduate and fit in a box. Carve your own path; no one said that the path of success is easy. Success is not a destination, it is a journey. Don’t play by the rules; leave some room for spontaneity and creativity. Embark on your extraordinary success journey when you start your MBA and don’t underestimate the personal experience. It will be the most rewarding and fulfilling of your life experiences.”
Which side do you take? Check out their full arguments in the links below and let us know your thoughts.
DON’T MISS: DO YOU NEED AN MBA TO MOVE UP IN PRIVATE EQUITY
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