Is Getting an MBA Worth It?


People traditionally flock to grad school when the economy makes finding a decent job an acrobatic challenge.
However–when you factor in the monetary- and opportunity costs, (barring the notion that higher education fulfills a wild passion of yours) is grad school really worth it?

Author and Harvard Business Review writer Scott Berkun explores the question vis-a-vis MBAs. He says getting one in the traditional way costs more than the average American’s annual wage. Meanwhile, Internet-based MBAs (Personal MBAs, or PMBAs) are practically free.

(The PMBA is) a web 2.0, Internet based, self-driven program, that focuses on a $1400 reading list of 70 books with web forums, discussion groups and coaching.

I bet many MBAs are over-valued, and the Personal MBA (free, except for books which are available at your public library) is undervalued. The big gap is in recruiting: the PMBA program provides no system for Google, McKinley and Microsoft to recruit PMBA’s best students, and has no track record of “graduates” (there is no degree) entering the workforce to earn a reputation for the program. But if they did, they’d soon attract interest from recruiting corporations, and develop prestige, two big reasons folks want to go to well respected business schools.

If you’re business-minded, you want a cost-efficient education. And if you’re business-minded, you want to network. The way things stand, you can’t have both. Berkun highlights the fact that if you’re truly business-minded, you’ll find a way to bridge the gap between the cost benefits of a PMBA and the networking advantages of a traditional one:

For any entrepreneurs out there: Business 101 is to exploit these kinds of gaps. Find a a way to split the difference between a PMBA and an MBA, and you’ll make a fortune. An easy one is exit exams. Imagine an exam that tests people as they graduate (not when they enter), where PMBA’ers can compete against folks with traditional MBAs. I’m no fan of standardized tests, but that doesn’t mean there isn’t a business opportunity here. Maybe PMBA will do it itself (unlikely, given their manifesto) and dare Wharton and Harvard grads to participate. Who knows.

These days, MBAs almost seem as risky as self-educating and starting your own business. If you don’t have a specific career in mind–consultant, for example–what’s the point?

If you don’t have an MBA, would you get one? If you do–was it worth it?

  • NashEntLaw

    I’ve been pondering this very question . . . been practicing law for about 5 years. When I was in school, I started the joint JD/MBA program but was too anxious to get out to finish the last year for the MBA. I see so many schools offering MBA programs, and so many people graduating with the degree, it hardly seems worth the investment (personally, I’m looking to move in-house someday).

  • I think it depends on what you are looking to accomplish. Before I enrolled in a MBA program I would decide where I wanted my career to take me.

    The MBA prepares you for a life as a corporate executive. Does this fit your overall goals? Are you willing to make the personal and family sacrifices this career path requires? If so a MBA may be a good investment. Then again you need to consider how long it will take to recoup the money and time required. Chances are that it may not be worth it.

    Are you looking to branch out on your own? If so don’t waste your time or money. Most college based business programs are designed by academics who have little real world experience. Formal education won’t help you start and run a successful business.

  • Rob

    I do have an MBA and it was very worth it. disclaimer – if anything sounds funny it’s because I’m ill right now and drowning in cough medicine :)

    Can you learn the same material without going to a formal MBA program? Yes. Is the quality of the material and it’s presentation, the interaction with seasoned professors and classmates going to be as high quality? Probably not.

    There are two other white elephants in the room here that make a PMBA nearly worthless in the real world….

    1) Much of what you get with your MBA is the alumni association and the network of fellow grads. Looking for a partner, funding, a job – simple truth is that working your alumni network is extremely powerful.

    2) When I can put MBA Wake Forest University on my resume, that carries clout – whether it should or not is another debate…the fact is, that it does. If I were instead to say, completed JoeBob’s PMBA 2.0 at, well…you get the idea. (which was hinted at in the article)

    I did the night class thing. It was a huge sacrifice for me and the whole family. But work picked up most of the tab so there was nearly no opportunity cost involved. Check with your employer – a lot of them have education reimbursement policies that aren’t widely advertised.

    End result? I’m making 40%+ more than I was 4 years ago and hold a VP position. Worth it? Every minute I spent on it, absolutely.

  • It depends. Is getting a lobotomy worth it?

  • Some slog to rise to the position of top executives, some do mba.

    Which one would you choose?

    PR Head,

  • I agree that MBA can prepare for your corporate executive positions one day, but it also can teach you a lot about managing small businesses. Finances, marketing, advertising, HR, people management, even entrepreneurship are definitely discussed in depth in your MBA program. Even if you’re going on your own one day and starting your own business – Rob said it right that the network you gain is really important. And that’s useful in corporations, entrepeneurships, volunteer work, or drinking buddies.

  • Let’s do some calculations: According to Business Week, The average cost for a 2-year MBA at a Top 10 b-school has nearly doubled since 1998, jumping from an average of $52,000 in 1998 to almost $95,000 in 2008. Meanwhile, the differential between pre- and post-MBA salaries has narrowed. Ten years ago, the average jump in median salary after earning an MBA from a Top 10 school was about $51,000. Now that number is just under $39,000. Based on these numbers, it would now take almost 2.5 years at the increased salary to cover b-school costs vs. 1 year ten years ago. Taking into account opportunity cost (i.e., lost salary during business school), the total cost today grows to ~$242 thousand vs. $149 thousand a decade ago. Again, based on the incremental salary gains, a current MBA would need 6.3 years to pay back the total cost of a Top 10 MBA vs. a 2.9 year payback a decade ago.

    Therefore, I don’t think an MBA is worth it.

  • Kevin

    GMAT MBA Prep:

    “a current MBA would need 6.3 years to pay back the total cost of a Top 10 MBA vs. a 2.9 year payback a decade ago.”

    Doesn’t that prove that getting an MBA isn’t as great as it used to be, but after the payback is reached, you’ll still have that differential over the course of your entire lifetime? Thus, I would expect total lifetime earnings to be higher for Top 10 MBA graduates than non-MBA or non-top 10 MBA graduates.

  • Working for the Man

    There is only one answer, educational is personal, and you should do it for yourself, not a job. Stop thinking career, there is no career, you are a number and are competing against the same number of opportunities internally, 1 or 2 at this level, of MBA and experienced qualified canidates . There are more “Blue Collared” millionaires than corporate millionaires. Your only visited by the reality of television and the earnings of CEO’s. There are so many VP’s/Director level positions in Corporate American they are middle management. Come on I have seen it, $110K to $150K, plus 1000 shares of stock options, and a car allowance. The stock options only mean something if they go up, look at the reality of the “Stock Market” and tell me do you think this means anything, outside of telling your friends to make you look like a big shot. Well, I don’t have my MBA, work for a Fortune 250 company, make $130K a year in base. In a good year, make $170K with bonus, and hold a good position. I have seen the executive packages and unless my base rises to $180K to $200K plus it just does not pencil out, and let me tell all of the perspective MBA student, you only get your MBA to make over $100K, in you are not pursuing a specialized MBA in Finace or the hard sciences, that is the “Holy Grail”, but there are just not that many next level position to drive the salary I have stated.

    I find it histerical the payback scenario even from a Top 10 school. Again, outside of the “Wall Street” jobs there are just not that many even $125K Corporate Jobs. Think about it, do you really think you are going to work 160 hours a month and make $150K, if you are fortunate to do so, not bad money at $78hr, but if you work like myself and other mid level to senior positions at $150K a year working 65 hrs to 70 hrs a week more normal in these position, you will earn $45 an hour. You can be an electrician, plumber, etc and make that wage.

    I have been told to go get my MBA, what does it really get me, more hours and an executive package, as well as being one step closer to the door, and really not making anything more at this point. I have been selectively searching to take that next step, and the $150K plus jobs are scarcly minimal.

    Do it for yourself, I have seen so many failures of supposed MBA talent, they are all “yes” man and are action item drive with no execution. They are to worried about protecting themselves and exposing there piers, been in those high level exec meeting. What a joke, it you are sensable and come with the facts it should be a roundtable for productive outcomes working together as a executive team rather a perceived finger pointing session. These individual, and I have been around quite a few leaders are so lackluser, the only reason they are in the position, is they are a friend of a friend. They are your Top 10 MBA’er, I can train a chimp to do what they do and he/she will execute.

    Oh, and talk about soft skin and emotionally driven, these teams are the biggest violators.

    There is no team in Corporate American, and no friends, dont let them sell you on this Corporate Kool Aid and all the other little corpoarte words that their MBA make around the company.

    Here is the Corporate thought of the century, ” The weak and talentless” get promoted. Perfect example, look at GE exec’s leaving a war zone at the companies that they led for a short period. No rationalized or innovation in their business accumen or strategic or tactical initiatives.

    Look for small emerging technologically advanced companies that will be acquired or specialize in Finance. An MBA in corporate american will not get you what you think it will.

    I apologize for the spelling mistakes and gramatics


    My MBA students and I made a music video about “Gettin’ my MBA”. Please check it out.