How much does the MBA cost? Will an MBA salary make up for it? What’s the value of an MBA? And is an MBA worth it?
We’re back! This week Angela Guido talks MBA value in 2022 and what the place of an MBA in a fast-changing world. We’ve designed this episode to be the BEST POSSIBLE VIDEO for those now wondering if business school is right for them.
That’s right, it’s everything you need to know to answer the question of whether you want to go to business school, all in just 15 minutes. Yes, 15 minutes. It’s our longest MBA Monday for a reason, so make yourself a coffee, check out our new set, and get comfortable for a whole new year of free, no-nonsense advice about how to get into business school.
Prefer to read? Here’s the transcript:
Hello. Welcome back to MBA Monday. It's been, oh so many Mondays since I was here with you on YouTube talking about getting into business school. But MBA Monday is back for season three. What is MBA Monday, you ask? The best place to come to get no-nonsense advice about how to apply and get into business school while having a good time and not being a douche. I'm Angela Guido, the founder of Career Protocol, the web's most refreshing destination for career guidance and MBA application insights and coaching. Today I'm talking about Is an MBA Worth It in 2022?
What Does An MBA Cost In 2022?
It's a perennially controversial question whether an MBA is worth it or not, especially because the cost of the MBA continues to rise at death-defying speeds year after year, while the post-MBA salaries that one can expect to make are not increasing with as much velocity. So if you check out this awesome article in Poets & Quants (our favorite source for MBA-related data) titled “What It Now Costs to Get An MBA at a Top Business School”, you can see that programs in the top 10 or top 20, if you include what the school states as the two-year tuition and room and board and extra fees costs, you're looking at a total price tag of prices in the realm of $230,000. Some of them are a bit cheaper. Washington Foster, for example, is only $177,000. Northwestern is $223,000. University of Texas is $160,000. You want to take these numbers with a grain of salt because historically schools have understated the room and board cost. The tuition cost, of course, is published. But what it costs to live in LA or to live in Austin is a bit subjective and if you go by the school's numbers, basically you have to eat tuna fish and not travel the whole time, if you're actually going to live in the cost that they recommend for room and board. So, whatever the schools say is the total all-in cost, you can assume that you probably need to tack on another 10 or 20K. So if you read between the lines, if you do that little math, we're talking about $250,000. A quarter of a million dollars to complete your MBA at a full-time residential MBA program in the United States.
Is the Post-MBA Salary Worth It?
If you are looking at post-MBA salaries, you can see that, while they have increased in the last few years, in the last decade, steadily, the jobs that pay $250,000 immediately post MBA are few and far between. More likely you're going to be in the mid-hundreds, not quite up to $200,000, if you include all your bonuses, et cetera. So you'll have to do your own calculation about how to amortize the cost of your MBA and how to pay off those loans as quickly as possible. If you live incredibly frugally in the years after your MBA, you should be able to pay down that debt pretty quickly if you're getting a standard 100, 150, 160K post-MBA job. Here's a quote from the Director of Financial Services at the Booth School of Business when I was a student. She said, “If you live like a CEO when you're a student, you're going to live like a student when you're a CEO.”, and that for sure is true. The more profligate you are during your MBA, the more you're going to have to tighten your belt post MBA to pay off that MBA debt. But this is just simple math, simple budgeting, simple personal finance management. I really encourage you to think very carefully about how you're going to fund the MBA, where you're going to get the money from, and then make a plan to pay it off if you decide to go to business school. That's just part of the process.
Another important input into the calculation of how much the MBA costs are student loan interest rates. This is a really important thing to consider as you’re factoring in the cost of the MBA is how much interest are banks going to charge you to finance your MBA, and student loan interest rates within the US fluctuate pretty regularly. You can find charts online. In 2022, it looks like those interest rates are going to be on the lower side. So that might be a tick in favor of yes, the MBA is worth it in 2022. But do your own research, do your own math, and figure out exactly how much the MBA is actually going to cost you in real dollars, and then how long it's going to take you to pay that off at the expected salary you are going to make, or that you expect to make post MBA.
The Nonmonetary Value Of An MBA
So we've talked about the costs. The costs are high. Your post-MBA salary will be lower than the price you paid for the full MBA. But that's only part of the equation of whether or not the MBA is worth it for you. To understand the value you're going to get out of the MBA is a very personal question. People have different needs and expectations for their career. You should really only be applying to business school if it's going to give you something in your career that you can't get any other way. Or if you could get it another way, it would just take too much time, it would be too difficult, the MBA is a fast track to achieving your career dreams. And for those of you for whom the MBA is a fast track to achieving your career dreams, it's going to be worth it. Year after year people apply to business school, they make that investment, and they're incredibly glad that they did. In fact, if you notice the arguments about should you or should you not get an MBA, you'll find that most of the people arguing that you shouldn't get an MBA don't have an MBA. And many of them are selling MBA substitute programs, that's really an important thing to note. And the people who are telling you that you should get an MBA mostly have an MBA. Maybe this is just telling us about human psychology and the confirmation bias, but maybe it's also telling you that the people who go in knowing what they want and go for it are actually happy with their choice, and the people who avoid it and find their own way are happy with that choice. The choice ultimately is up to you in my very next video – come back next week, be sure to subscribe so you get the notifications, turn that bell on – I'm going to talk about who should and who shouldn't get an MBA. We talk to hundreds of people at Career Protocol about their career dreams and their MBA ambitions and it turns out that in some percentage of those calls, we actually spend the time not talking about our services, but trying to talk the candidate out of applying to business school because they're going for the wrong reasons and it's plain to see that an MBA is not going to help them achieve what they really want in their career. So come back next week for a really detailed description of who should and shouldn't apply to business school. But for now, let's just leave it at this: if the MBA gives you access to something that either you can't get any other way or you could get another way, but it would take you a lot more time and energy, then it's probably worth considering going to business school despite the high cost.
But Elon Musk Says That MBAs Suck?
Well, not in so many words. I believe one of the exact quotes was “MBA graduates may be good at PowerPoint, but they don't know how things work.”. Let’s address that. Let’s tackle directly what the naysayers are saying about the MBA and see if it affects your decision to apply to business school. So this quote, honestly, I don't really understand because during my MBA, PowerPoint was never taught. It was never used. We never once brought PowerPoint into the conversation. I was trained on the ground the hard way to learn PowerPoint at BCG. Maybe things have changed since my day. Admittedly, it's been a while, so it could well be that PowerPoint is taught directly in MBA programs, but to my knowledge, that comment actually doesn't resonate because PowerPoint is a hard skill that MBA programs typically expect that you either are bringing in or that you're going to learn yourself on the side. Let's talk about the second part of this quote, “…they don't know how things work.”. Scathing comment, But let's look at that. I'm going to pair that with another quote from this very same interview. He says that “MBAs want to parachute into leadership… they want to parachute into being the boss instead of working their way up and learning it.”. He says that “MBAs do not have the experience it takes to run a successful company or create a good product.”. So a lot of people throw these quotes around as arguments against the MBA. But if you really think about what an MBA is and what it’s for, these comments are not damning at all. These comments are just speaking to what the MBA actually teaches you versus what it doesn’t. Just think logically. Business school is for people – at least we're talking about full-time, top 20 top 50 programs – they're mostly designed for people who are in the first four to six years of their career, people who have virtually no experience running anything, never mind running a business or creating a whole product. People who've made progress, who've worked hard, who've had an impact, but who are still in the very nascent stages of developing their own leadership style, their own business thinking skills, and their own ability to make things happen in the world. The MBA never promises to be a magic wand. It's not about magically transforming you into an entrepreneur or a CEO. In fact, if you're going into business school with that expectation, stop right now. You're one of the people who should not be applying to business school, because that's not really what the MBA is about. What the MBA is actually about is training you not to be a CEO or an entrepreneur in most cases, but rather to be a middle manager. The MBA came about in the early 1900s. Corporations had ballooned into many tiered organizations with factory assembly lines, managers, and people at the top, and what they realized is that they needed skilled people in the middle to manage both downward and upward. And there are a set of skills that are required to be an effective manager. Those skills include: understanding all the different parts of the business, understanding how marketing works, how the supply chain works, how operations, finance, strategy, how it all fits together to inform the success of a business. It also includes the ability to manage organizations of people, to create culture, and to get people collaborating towards a shared vision. These are skills that the MBA will teach you. If you've been a consultant or a teacher, regardless of the background you're coming from, the MBA is kind of a two-year baptism into the entire language of business. It teaches you how businesses work, how all the different functions fit together, and it begins to give you the tools to define your own leadership style. I personally believe that leadership, in the sense that we mean it in 2022, can't really be taught in a classroom. And on this point, I agree with Elon Musk. Being a great leader is about creating useful things. It's about solving problems, it's about caring about others, and it's about bringing others along with you. It's about empowering the leadership of others. This skill can't really be taught in a classroom. You can only learn it on the court, on the job, actually working with people in a real environment, trying to solve real problems. So let's take a step back and re-examine the validity of Elon Musk's quote, I've been pontificating for a while now. Essentially, he's right. The MBA doesn't qualify you to be a CEO, to run a company, or to create products. It qualifies you to begin to lead within a company and to make things happen post MBA. You're still going to have to work your way up. You're still going to have to work hard and lead effectively and manage people well. And on every day of the job that you get post MBA, hopefully you're going to be developing those skills and learning them. This is part of why people love to go into management consulting, because it's the most accelerated learning path for on-the-job training of all of these skills. Check out our because it'll make sense now why I'm saying it.
An MBA Isn’t A Magic Wand, But It Can Help Pave The Way To Dream Roles
So let me come back to my original point, which is the decision about whether the MBA is worth it is going to be personal to you. Now you have a sense that it's not going to magically transform you into a CEO or an entrepreneur. It's going to give you a leg up so that you can then continue to build your way up in your career to the roles that will make your dreams come true. The decision to pursue an MBA or not is a very personal one. So, one of the most important things that you can do for yourself in the journey to apply, before you submit your applications or even begin tackling the essays, is dig really deeply into your career game plan. We have many videos on this channel about . And the reason we are constantly yammering on about the career game plan is because it not only will help you answer the question of whether an MBA is worth it for you, it will also build the foundation for an inspiring MBA application package. You want to think of the MBA like a train ticket. There's no point in buying a train ticket if you're not headed to a specific destination. Schools are not going to sell you a ticket to their program if they don't believe that you're going somewhere that you can get to, that you want to go, and that they can help you arrive at. So, focus on your career game plan in the next several months. Really ask yourselves the hard questions about what you want in your career and how much the MBA is going to help you get there, and then answer the question for yourself, is an MBA is worth it for you in 2022? If it is, and even if it isn't, you can find me right here every Monday on MBA Monday. Bye!
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