Applicants often dwell on whether getting an MBA is worth the price-tag — and rightfully so. But it’s also worth contemplating the cost of forgoing the degree.
COVID-19 has sent the global economy spiraling into a recession that has affected many of us.
During times of financial strife, it’s normal for people to react by tightening their purse strings. We often become more inclined to guard our nest eggs, and less likely to shell out our savings. However, at least one big-ticket item has bucked this tendency during the current recession: an MBA degree.
‘THE MBA HOLDS THE POTENTIAL TO EMPOWER PEOPLE TO ACHIEVE THEIR HIGHEST AMBITIONS’
Throughout the current admissions cycle, I’ve been hard-pressed to find a school that hasn’t experienced a significant spike in applications. Yet one question I consistently receive from applicants hasn’t changed: “Is getting an MBA worth it?” It’s a reasonable question given the jaw-dropping sticker prices (see What It Now Costs To Get A Top-25 MBA Degree), but there is another cost that should be considered as well: missed opportunities.
I’ve been studying this space for more than two decades and one of the most rewarding aspects of working as an admissions consultant is watching the incredible feats people go on to accomplish with their degree, the impact they make and how they ultimately become the best versions of themselves by way of B-School. I truly believe that the MBA degree holds the potential to empower people to achieve their highest ambitions, and in doing so, to make this world a better place. And scholarships can significantly reduce the sticker price (see MBA Scholarships At Record Levels, With Awards As High As $200K). In fact, I always tell my clients to focus on getting in first and then figure out how to make it work financially. The former is harder than the latter (see Acceptance Rates At The Top 25 U.S. MBA Programs)!
While questioning its value is important, perhaps we should also start asking ourselves another question: “What is the cost of NOT getting an MBA?”
A THOUGHT EXERCISE WORTH DOING
Before writing off the degree or staying stuck in “analysis paralysis,” which can also have negative consequences, I encourage you to engage in a thought exercise. Ponder what you would hope to gain with an MBA, such as a dream job with meaningful impact. Write that down. Next, think about what you could feasibly accomplish without one — write that down, too. Compare the two — what are you losing? Is that worth forgoing? Will pursuing this degree be something that you regret later?
As Harvard Business School associate professor and social psychologist Amy Cuddy explains: “If we are focused on the potential benefits, we’re likely to take the action, thereby approaching the positive. If we’re focused on the potential costs, we’re likely not to act, thereby avoiding possible dangers.”
Cuddy stipulates that power makes us approach challenges, and powerlessness makes us avoid them. “How does this relate to applying to business school?” you might ask. I would encourage anyone toying with this life-changing decision to take hold of the steering wheel. Contemplate the cost of going and not going, as opposed to pushing the question to the back of their mind and procrastinating for the safety of the status quo.
DRAMATIC INCREASES IN EARNINGS ARE AN OBVIOUS ADVANTAGE
It’s also important to note that a recent study examining the reasons behind people’s regrets revealed that our strongest regrets concern not living up to our “ideal selves” — or becoming the person we wanted to be. We most lament not becoming the person we aspired to be, rather than not becoming the person we were expected to be.
Even the most conservative estimates of the earnings potential of a top MBA make a no-brainer case for the degree. The most thorough analysis, though dated since it was done six years ago, found that a graduate of a top 50 MBA program made $2.3 million in salary alone during a 20-year career span (see The Most Lucrative Seven-Figure MBA Degrees). That is $1 million more than someone with just a bachelor’s degree. A graduate of a top ten MBA program made $2.8 million, while someone who earned an MBA from Harvard, Stanford or Wharton topped $3 million in income over the same timeframe.
The most recent return-on-investment analysis by Forbes magazine found that an MBA from a leading business school is still incredibly valuable and pays for itself in roughly four years, even without scholarship support. Alumni of Chicago Booth, for example, would have a net gain of nearly $95,000 in income within five years of graduation after accounting for their opportunity costs (two years of forgone compensation) tuition and required fees. According to Forbes, the pre-MBA compensation of Booth students surveyed was $83,000. Five years later, the median pay of the same Boothies was $245,000. The ROI and income gains are even greater for alums of one-year MBA programs.
THE POTENTIAL TO ACHIEVE YOUR DREAM JOB AND A MORE PURPOSEFUL LIFE IS EVEN MORE IMPORTANT
More importantly, though, MBA degrees have the potential to help you achieve your dream job and a more purposeful and fulfilled life. There is simply no comparable experience for leadership development that enables you to reinvent yourself — and, by extension, the world around you.
The following people all pursued an MBA that resulted in remarkable achievements:
- HBSNOT alumna Naa-Sakle Akuete built Eu’Genia Shea and Mother’s Shea — B2C, for-profit shea-butter brands that work to improve the lives of shea-nut pickers in Ghana. Akuete works with 7,500 shea-nut pickers who are paid a 20% premium for their nuts, and 15% of company profits are channeled back to the families of the pickers to help cover educational costs.
- Jason White, a Chicago Booth alumnus, became the youngest team president in the NFL and the first Black team president in NFL history. White, who is a former running back, now serves as president of the Washington Football Team.
- Duke Fuqua alumna Michelle Egger founded a company called BIOMILQ, which aims to provide more complete nutrition for infants and reduce the carbon footprint from dairy-based formula production.
- Alicia Boler Davis, an alum of Indiana’s Kelley School of Business, became the first Black woman to join Amazon’s top leadership council.
- Alumni of the Wharton School sprung into action and used their talents to fight against the pandemic. One of such alums — Joe Ammon — was able to make a positive impact by continuing to lead his startup according to its original intent: providing healthcare workers with comfortable footwear. By July, the company — Clove — had donated more than $75k worth of shoes and compression socks to hospitals across the U.S.
- Tuck School of Business alum Muyambi Muyambi founded Cycle Connect — an organization dedicated to increasing access to bicycles, and therefore transportation and income, to people in rural Uganda.
- Nina Brener-Hellmund believes that business school is one of the best places to start a business. She credits LBS for playing a big role in her startup success because it provided access to an experienced yet affordable network of talent.
Was the MBA worth the price tag? I suspect each one of these alums would answer that question with a resounding “YES!”
A well-known MBA admissions consultant, Barbara Coward is the founder of MBA 360 Admissions Consulting and Enrollment Strategies. She started working in B-school admissions in 1997, the same year that the film Titanic was released. As a former MBA admissions director at business schools in the U.K. and the U.S., she has evaluated and decided on hundreds of applications to full-time MBA and part-time executive MBA programs. You can follow her on Twitter.