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Tuesday, August 13, 2013

7 Reasons Why an MBA is the Stupidest Investment - an IU News & Talk Guest Post

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IU News & Talk Guest Post
by Bella



Is the MBA just another meaningless three letter acronym, or is the cachet still worth it?
Getting an MBA can set you back thousands of dollars, but starting your own company in the Internet age can cost as little as a couple of hundred dollars—spare change compared to even the cheapest of MBA programs. And while being an MBA graduate still has a certain cachet in industry, entrepreneurial college dropouts like Steve Jobs and Mark Zuckerberg did just fine without. There is, however, one minor problem with starting your own company that cannot be overlooked. Startups never have been nor ever will be a guaranteed success. That MBA on your CV might not distinguish you from your peers as much as it once did, but they aren’t all bad.

Here’s the Bad News

1). They Aren’t Cheap
The cost has been skyrocketing: MBA students enrolling in 2012 paid 62% more for their degree than those who started in 2005, according to the Financial Times’ Global MBA rankings. The average rate for the 51 two-year U.S. degrees started in 2012 was $106,000. Top schools like Harvard run around $175,000 and more. And you probably will not save money by going to Asia for your MBA anymore: an MBA from the Hong Kong University of Science and Technology more than quadrupled in price from 2000 to 2012.

2). And You Can Expect a Lot of Debt
You’ll likely have more debt than any MBAs in the past: in 2007, average student loan debt for those with graduate degrees and under 35 was $55,594; in 2010, it was $81,758, according to the Wall Street Journal.

3). But Companies Don’t Want to Pay More
Despite the rise in fees, the companies hiring don’t want to pay MBAs any more than they did before, and in most cases they’re paying less: At 186 schools analyzed by Payscale.com, pay fell at 62% of the schools from 2007 to 2012.

4). Then There’s the Fact You Might Earn More Doing Something Else
If you’re in it for return on time and investment in your first year out of school, you could be better off doing something else. The average starting salary for an MBA grad in 2012 was $46,630, according to Payscale.com. Or you could take a 10-week course for $12,200 with Dev Bootcamp (no experience necessary) and learn to code. 88% of the program’s graduates make an average $79,000 a year as their starting salary.

5). Because an MBA is Nothing Special
You will not be part of a small clique anymore. You will not be as special. Compared to the 2000-2001 school year, schools in the U.S. gave out 74% more degrees in 2010 (126,214 to be exact).

6). Not to Mention Your Choice of School
Not all MBAs are created equal: while a Harvard or LBS degree means you have a 90% or more chance of find work, this is not what you can expect even from the better-known schools. In 2012, 23% of University of Southern California MBAs were still looking for work three months after graduation.
7.) Or What You Could Have Done with All That Cash
If you’re getting an MBA because you want to start a new business, the odds are you’ll change your mind by the time you graduate with $150,000 in debt looming over you. That’s some serious startup capital that could be used otherwise, and don’t forget the two years  you’ll spend studying instead of working on your company.

The Good News
It’s not all doom and gloom in MBAville. In fact, despite all the above, these might convince you to go for it.

1). An MBA from the Right School = Work
You will get work, if you get your MBA from a reputable school: in 2012, 92% of London Business School grads found work within three months. Out of Harvard MBAs, 95% landed a job within the first three months.
2). And Heaps of Cash
If you’re in one of the top 10 schools, you’ll be rolling in money: three years after graduation, Stanford grads are making almost $195,000, Harvard MBAs make $187,000 and Wharton alumni make $181,000. Graduates from the top 50 schools make 50% more their first year than before starting business school – and they pay doubles over the next five years.
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