“Is an MBA worth it?” is the 6-figure question that most people ask when they’re stuck mid-career. You’ve hit a plateau, or you just want to try something different.

In this post, I’ll answer the question of whether or not an MBA is worth it or not by analyzing:

• The expenses.
• The delta in income, as compared to expenses.
• The learning experience you’ll get with an MBA.
• Whether or not the credentials of an MBA is worth it.

Expense Analysis of MBAs

Costs are highlighted on this heavily optimistic and biased site here. I say it is skewed and bias because it’s a college website. Of course they’re incentivized to pump up the numbers of an MBA program. Note that they advertise the ‘average’ cost as opposed to median cost. This is naughty.

Don’t worry though, I gotchu. We’ll extract the real numbers here, even if their marketing is biased.

So, you care about the median. The average represents nothing, because nobody pays the average. The median represents paying more than 50% of the people, and less than 50% of people. Hence, median is saying you’re right in the middle of the pack as far as MBA expenses goes. This is what most people think of is the ‘average’. But it’s not. It’s the median.

So we’ll talk about median costs here. Taking right from their data:

95 students paid 0-$5,000 for their MBA

76 students paid $50,000-$100,000 for their MBA

30 students paid +$100,000 for their MBA

Of 201 students, your median is if you’re the 100^th student in the bracket. Ergo, you probably are going to paying a bit over $50K for an MBA. Notice nobody in that 201 sample pays the average, because there’s a huge gap from $5K to $50K. Not a single person in the group paid the advertised 33K average. And compare this BS $33K average with the realistic $50K+ you’ll pay at the median.

Their marketing antics just cost you $17K.

And even then, you should be careful with the $50K median. A lot of companies might only take MBAs from top schools (which means top dollar). Many applying don’t think it’s worth it to have an MBA in an average place. So realistically, you’re probably looking at $100K-$150K for an MBA.

Does The Income Of An MBA Make The Expenses Worth It?

According to this MBA-biased site, the median income with an MBA is $115K. This is a bit higher than $95K vs. direct industry hires.

The article talks about vs. bachelor hires as well but this doesn’t take into account the 2+ years of opportunity cost in income. And possible promotions, so that’s an invalid comparison.

Your expense for school is going to be about $50-125K, let’s say. Accounting for taxes in a metro area like NYC (this is where you’re most likely to find 6-figure jobs):

115K = $77.3K after tax.

95K = $65.6K after tax.

So, your delta vs. just joining the industry is going to be $11.3K (because the $20K advantage is taxed 50% at the higher brackets). So here’s the math:

• You earn $11.3K more per year with an MBA.
• You pay about $50K for a median MBA. But it’s unclear if only the top MBAs get jobs (i.e. if the highest tier MBA expenses maps to median MBA income). But let’s be optimistic here.
• You lose 2 years of income, at $65.6K.
• So the total amount to make up for is $65.6K*2 + $50K = $181.2K, optimistically if your MBA is only $50K.
• Realistically, you’re looking at $65.6K*2 + $125K = $256.2K.

At 11.3K, it’ll take you 16.4 years to breakeven on the cheap end. And 22.6 years to breakeven if you paid $125K for an MBA.

This is not even counting inflation. Realistically, it might take you 20-30 years to breakeven on the cheap end and probably 30-40 years on the more expensive end.

Keep in mind I sourced these stats from MBA websites, who have a direct conflict of interest and their stats are heavily biased towards convincing you to grab an MBA.

And even with those skewed stats, you’re still looking at a very poor investment.

From a financial standpoint, an MBA is not worth it at all. So let’s look at some intangibles for an MBA.

Learnings From An MBA

Mike Tyson had a quote:

Everyone has a plan until they get punched in the mouth.

MBA is pure theory. And pure speculation of how the real world works. In real business, it’s quite hard and there’s a lot of unpredictable things that happen all the time. The school of hard knocks and experience grants you much better knowledge about business than an MBA would.

An MBA can help you prevent some stupid mistakes, like pursuing products with no product-market fit. But a lot of the tiny details that actually drive revenues or losses can’t be learned outside of the real world.

Other words: MBAs provide an inferior education vs. executing in a real-world business. And it’s very expensive as well. Consider paying $100K for an MBA vs. $100K doing / testing your own businesses + free YouTube education. It’s clear from an instinctual standpoint that the latter is significantly more educational (and relevant).

One thing that an MBA program that might make it worth it is the networking. You might meet some very business-savvy people there and they might be extremely valuable connections.

So an MBA’s worth boils down to whether or not you can massively exploit networking there. If you can network with other MBA students and do some lucrative projects out of it, then an MBA could be worth it. If not, it’s probably not worth it.

But being able to network with other students in your program is remarkably high-risk. You might not meet anyone that good to begin with. And it seems like you can just ‘audit’ and attend programs for free to network with people. That way, you get the networking upside without the expense downside. Most universities don’t have security guards preventing you from attending classes, so you can just…go. And network. The only thing you won’t get is a very expensive piece of paper that says you have an MBA.

That expensive piece of paper could have value though, which I’ll cover next.

Career Opportunities For MBAs

It’s 2022 as I write this. And still, a lot of old-fashioned companies require you to have an MBA.

People like Elon Musk and other tech giants are starting to lean towards more open thinking: if you’ve got the fundamentals and real-life experience, it doesn’t matter if you’ve got a very expensive piece of paper. This sort of “open thinking” is propagating more and more into the mainstream, which is why I believe the old-fashioned requirements of an MBA will be phased out in the future.

Bare in mind though, you should still have an MBA if you don’t want to do your own business as experience. Nobody will just hire you for a biz dev role without any business experience and without an MBA.

So if you want to save money on an MBA because you don’t think that the piece of paper is worth an 1) inferior education, and 2) 6-figure expense, then you absolutely must do some business on your own, on the side. Here are some side-hustle ideas to exercise your entrepreneurial brain.

TLDR: Is An MBA Worth It?

Mostly, no.

Looking at the above, an MBA is worth it only if you satisfy all these requirements:

1. You don’t think MBAs will be phased out in the bizdev industry anytime soon.
2. You want to target careers that require an MBA degree.
3. You don’t want to do any side hustling to learn from the school of hard knocks.
4. You mostly want to get an MBA to gain the networking in your program. With an acknowledgement that you might not get anything out of your networking. And that you could probably network on campus, for free.
5. An MBA isn’t that much money for you and you don’t mind the 20-30 year opportunity cost and time-risk.

You might not be sure about points 1 and 2. And there’s a way to test this. One way to test market demand is to split test 2 resumes across a large amount of positions.

• Apply to roughly half of the positions with a resume without an MBA (i.e. your resume).
• Apply to the other half of the positions with an MBA (i.e. a made up resume with a made up MBA, but you also need to subtract 2 years experience from your work to account for opportunity cost. For example, if you’ve 6 years of experience, you’d modify your current position to only 4 years, with the most recent 2 years dedicated to an MBA).

And see if the latter gets your statistically significant more interviews.

Feel free to adjust statistical significance also based on your preference to work for that company as a filter. Example:

• You get 30 interviews from 100 positions applied with your resume without an MBA. You’d like to work for only 20 of them. Then, it’s really 20 out of 100 positions for your resume without an MBA.

• You get 80 interviews from 100 positions applied with your resume with an MBA. You’d only like to work for 5 of them. Then, it’s really 5 out of 100 positions for your resume with an MBA.

It’s your life and your career. Feel free to think outside the box and gather empirical data before committing 2 years of your life and 6-figures doing something that might be a waste of time / money.

But for MBAs it just seems like you could also just go with the obvious here: if you have to ask, it’s probably not worth it. That’ll probably save you tons of effort.