Is MBA Worth It? The Guide to Your Decision

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Is MBA worth it? In general, the answer is a no. 10 – 20 years ago, an MBA was worth it because there were less people who held the degree. These days, more and more job applicants are flooded with MBA graduates and the number is increasing every year.

Today, nearly 200,000 students per year are graduating with an MBA degree. With numbers like that, the advanced degree is worth less every single year because of simple supply and demand. In fact, there are MBA graduates who are making LESS salary than me. And I don’t hold an MBA.

One of my coworkers got an MBA while they had a job. After the program, they expected to get paid more. Did they actually get paid more? Absolutely not. The company just said good job and that was it. There was no additional compensation or awards related to getting an advanced degree.

One of my friends in his late 20’s makes $300,000 per year. He doesn’t hold any MBA and he doesn’t hold any certifications either. There are MBAs graduating with six figures of student loan debt only to be making a fraction of my friend was making.

Is MBA worth it? These days, it’s worth less and less. Sure, if you go to a top 10 business school, then maybe it’s worth it. However, if not, then it’s just not worth it. You can easily get $200,000 jobs just as a Bachelor’s degree holder that MBA graduates are struggling to get.

Is MBA Worth It? What’s the Purpose?

There are distinct answers to the question should I get an MBA that I answer. There are numerous purposes for getting an MBA, as outlined below. There’s no point in spending multiple six figures worth of money just to end up not fulfilling your goals and/or purpose.

1) Get a Better Job

Is MBA worth it? It can get you a better job.
MBAs can open doors.

The number one reason of MBA students is because they want to get a better job. They are miserable at their current jobs and want a change of pace. Is this really a good reason? Is MBA worth it because it gets you a good job? What’s the difference between getting a good job 2 years after an MBA program.

Versus getting a good job 2 years after you’ve been working? Because you want to avoid misery? Nearly half of employees are dissatisfied with their jobs. There’s no guarantee that the new job after an MBA will be better than the old job. I left a miserable job before. The new job turned out to be even worse.

Regardless of whether you have an MBA or whether you don’t have an MBA, you’re still going to have to go through an interview process. You’re still going to have to network, negotiate, and sell yourself regardless. Why would you want to go through that process by tacking on multiple six figures worth of debt?

2) Networking Opportunities

Another purpose would be for the social capital aspect of getting an MBA. Some of the smartest and brightest minds will get an MBA and pour in money in order to secure their future. Some colleges, like Stanford, have some of the best alumni centers and connections in the entire world.

However, not every MBA degree is like that. Is MBA worth it for the networking opportunities? For the very select few. Most alumni’s are busy themselves and can’t spend the time it takes to give to you. There’s also a way for you to network with others on your own free time.

There’s nothing stopping you form going on LinkedIn, reaching out and sending a cold email, and then building a connection that way. It may be old fashioned but it works. There’s also a way for you to ask your coworkers if they know of anyone. There’s always a way.

3) Entrepreneurship

Is MBA worth it? They have good entrepreneurship programs.
Some entrepreneurs were born from an MBA.

The last of the reasons why people get an MBA is because they want to pursue entrepreneurship. Many colleges are now doing entrepreneurship programs for business students. They host events around where they bring in celebrity speakers and/or host events where they can present their ideas to current students.

Back in the college I attended, Mark Cuban spoke at one of the entrepreneurship events. Colleges have connections that other people just don’t have.

Many well known entrepreneurs actually started at a big college, as well. They met their cofounders as they happened to be their roommate. Whatever it is, entrepreneurship has been bred from many MBA students. Is MBA worth it to pursue for entrepreneurship?

Absolutely. The colleges have programs that isn’t available to many others who are starting out without any support system or network in place. However, at the end of the day, it’s going to be up to you to make the business be successful. The college is not going to do it for you.

Is MBA Worth It? The Pros

So now, let’s go over the pros of getting an MBA.

1) Networking

Some of the brightest people you’ll meet is from people who are pursuing an MBA. The people you meet will be unparalleled because those are the people who also spend six figures of money in order to get an education. They are highly motivated in bettering their future and want the best going forward.

When you have that much of a buy-in, people are motivated in order to propel their lives forward. The networking opportunities that comes with an MBA can’t be ignored. Yes, you can network and pursue those contacts yourself. However, that’s harder to do if you don’t have a connection with the contact.

It’s much easier to say, “hey you want to that school for an MBA? Me too!” The personal connection is just a lot easier. Is MBA worth it from a networking standpoint? It could be, but there’s no guarantee and it will be completely dependent on what you make of it.

2) Higher Earnings Potential

There are MBAs who earn considerably more than their Bachelor’s degree counterpart. However, there are times when MBAs earn less even after having an MBA. I saw a job posting on LinkedIn where they required an MBA for a job that paid $80,000.

$80,000 was what I was getting paid 1 year after undergraduate school. It’s what undergrads are getting paid these days. Getting an MBA is always a risk because the opportunities to say no and decline jobs is less than if you already had a job in the first place. Is MBA worth it to get a higher earnings potential?

It can be, but it’s always a risk. The ones who are successful do very well. Some MBA graduates were getting $200k jobs and even $300k jobs for the very select few. It can absolutely catapult you to financial success faster and better than any other way out there.

3) Less Stress than a 9 – 5

For some, getting an MBA is almost a 2-year vacation. I thought I had it hard in college. However, I know just how little I knew. A 9-5 is mountain times more stressful than going to school and getting good grades. With school, you have the ability to do whatever you want whenever you want.

With a job, you always have to be in the office. Maybe not by a certain time but you have to be working every single day. With college, it’s optional. If you don’t want to go to class, then it’s completely fine to skip. In fact, there’s always a way for you to skip class and still get good grades.

That means that it’s completely less stressful than having a 9-5. A full time job is stressful because if you don’t produce, you don’t get a bad grade and feel bad. You lose your job and your livelihood. Potentially barring you from putting food on the table.

Is MBA Worth it? The Cons

So now that we went over the pros, the cons are always there as well.

1) Underperforming the S&P 500

Is MBA worth it?  It may underperform stocks.
You want to financially come out ahead.

The costs to getting an MBA is NOT insignificant. Not only do you have to pay close to $100,000 in tuition, you forgo your salary for an additional two years. That’s about $300,000, if you were making a $100,000 per year in salary. Not even including benefits such as insurance, 401k matching, and the like.

$300,000 invested in the S&P 500 yields approximately $21,000 per year at a 7% yearly rate. It’ll take a long time to recoup the original $300,000 investment PLUS the additional $21,000 per year that you should have made in investment returns.

If you make an additional $100k per year due to the MBA, it’ll take approximately 4 years, at a minimum, to recoup your investment.

And that’s IF you can increase your income by an additional $100,000 per year. Which isn’t an easy feat to do, by any means. Is MBA worth it from a financial standpoint? The financial breakeven time it takes to get one and break even afterwards says that it’s not.

2) Not Realizing Earnings Potential

Not every MBA graduate successfully secures a $200k+ job. Some actually don’t even get a job offer after graduation. It’s a huge risk because that could always happen. It’s not always sunshine, rainbows, and unicorns. We could be going through a bad bear market in which companies freeze hiring.

That isn’t theoretical, it actually happens. Can you imagine the MBA graduates who graduated in 2008? Some had job offers cancelled and rescinded. Multiple six figures worth of loans only to be rejected later down the road. That doesn’t sound like a smart decision.

is MBA worth it? It can be but that doesn’t mean it’s risk free. Every decision in life comes with some form of risk. We accept some risks more than others. However, that doesn’t mean that the risk should be ignored. Make sure you can realize the earnings potential because it matters.

3) Opportunity Cost

The two years that you don’t earn money is not insignificant. More than the money, it’s 2 years of additional on the job training that you miss out on. In those 2 years, you could actually have a promotion during it as well! Which means you miss out on even more income.

The relationships you build by working alongside your coworkers can disappear as well. The opportunity cost of getting an MBA is very significant. It’s not cheap and it comes at a steep cost. You’re almost out of the game for two years by going through an MBA program.

Some companies might actually see that as someone who has one foot out the door and was checked out for 2 years. If you have a well paying career already, it doesn’t make logical sense to try to go for more by going through an MBA. It makes more sense to stay in the game and try to get more in salary.

Is MBA Worth It? Generally Not

Some people have made good use of their advanced business degrees. However, it’s generally not worth it get an MBA if you already have a good job. Just take a look at this post of the most illogical reason to get an MBA. The person was earning $600,000 per year and chose to get an MBA anyway.

He forgo’d $1.2 MILLION dollars, plus the chance of getting a raise, just to get an MBA. That doesn’t make financial sense because there could always be a bear market two years down the road. He could actually be earning less than $600,000 after business school. It’s always a possibility.

A bird in the hand is worth two in the bush. If you already have a job that you generally enjoy and are getting paid pretty well, then it doesn’t make sense to pursue higher education. It’s going to put you out of the game. No matter how bad the game may seem, it’s still better to be in it than be out of it.

It’s how we put food on the table, it’s how we make a living for ourselves. It’s how we try to reach financial independence. The person who always chases to be better instead of being happy with what they have will regret it later down the road. They will never be satisfied.

Is MBA worth it? It can be but it’s generally not. There are exceptions to the rule and there’s someone who made lucrative career decisions because of an MBA. However, it’s riskier than people are thinking it will be and it certainly might not be smooth sailing all of the time.

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