This past week, a co-worker of mine had her last day at work. She was leaving the company to attend business school. While I was happy for her, it got me thinking about my own experience applying to business school and my eventual decision not to attend. Many people I know have attended business school. I often tell people that I am the only one of my Princeton friends who did not get some sort of higher-level degree. It is absolutely true, no exceptions.
So you would think that someone like myself, ambitious and smart, would have done like my friends and gotten an MBA. But things for me were never that simple. So I decided to outline why I think someone contemplating going to business school should perhaps think twice about making a decision like this.
First off, let me give you a brief account of my own decision. I only applied to two MBA programs. Harvard and Stanford. These are two of the top four business schools and the hardest to get into (Penn and Northwestern being the other two). The chance of success is quite small. While this may seem crazy on my part I definitely had my reasons. Like most things, it came down to money.
At the time I applied to B-Schools I was already making six-figures. The average starting salary now for a Harvard MBA is $120,000. When I applied five years ago it was even less, averaging right about what I made. So just do the math. Attending a top-tier business school will cost you somewhere in the ballpark of $200,000 for two years. You add that to the opportunity cost of someone like me (lost salary) and now you are looking at something close to a cost of $400,000. Yikes! Now consider that on average, I could not expect to make more money upon graduation. How would I ever make up the $400,000 difference? The numbers get even worse at less prestigious universities. Their graduates can expect to earn less. So now you see why I did not apply to other schools.
So if I am not going to go to make more money, the only other reason I would go is to get a job I might otherwise not be able to get without an MBA. I have two potential career paths. I either want to start my own business or I want to be an executive at a large technology company. The goals are similar in that I want to be the boss at a high growth and exciting technology company. The paths are only different in the risk I'm willing to take to get there. Do I need an MBA to do either of these two things? Not really, but it would have made it slightly easier.
Starting my own business obviously does not require an MBA. However, getting one has two advantages. First, I would focus on classes in entrepreneurship. Even today, I'm not totally sure where I should start if I really wanted to start my own business. How would I go about making a business plan? How would I get funding? What are the pitfalls I should avoid? Second, it is all about the network. It is a very big reason to go get an MBA. The circle of friends and colleagues you will encounter will go well beyond your two years at school. These are the people you will count on to tell you of new opportunities or help you get your own business off the ground.
But when I looked at it, the benefits just did not outweigh the cost. If I was realistic, I thought I could get where I wanted to be without having to put everything on hold for two years. Here is a dirty little secret of the top MBA programs. Those who are most likely to attend are often the people who probably need it the least. It is a strange situation in that you have to show the schools why you need to attend their schools to achieve your goals but you have to be the type of person who can succeed given almost any circumstance. How is that for irony?
In any case, the bottom line is that you should not get an MBA if it does not actually make any financial sense to do it. Just do the math.
Lifetime incremental increase in salary > Cost of MBA + Lost Income
Keep in mind that it is the incremental increase you could not have gotten if you did not go get your MBA. If you did not get your degree, you would still get raises at your current profession. So you have to think of the total amount of money you could gain above and beyond what you would normally be able to do.
For completeness, here are some other reasons not to go get an MBA. These are actual reasons I have heard given.
- You don't know what else to do
- Everyone else you know, friends and family, have an advanced degree
- You are tired of working and just want a two year break
- Might as well, you don't have a job currently
- It is expected of you
- You want to move across the country and your parents will foot the bill for school