A while ago, Doctor S did a post on the cost of a Harvard MBA, and that got my brain ticking… (and clearly in his post’s comments, I went off on a tangent)
Basic numbers from Harvard (assuming a single person, not a married one with a family)
- Tuition $46,150
- University Health Services Fee $1,126
- Blue Cross/Blue Shield (12 months) $1,714
- Program Support Fee $4,450
- Room & Utilities (9 months) $10,800
- Board, Personal, Other (9 months) $12,360
Oh.. but SH*T!!!!
They only estimated room and board for 9 months. For 3 months we’ve gotta jack up that number with a couple more thousand because you MAY get a job and you may decide not to.
This also doesn’t include vacations, extra fun “stuff” you may do with your buddies… you know what I mean.
These amounts sound low to me, even by my standards. I’m skeptical that rent can only be $1200 a month, and even if it is.. board and other “personal” expenses are only $1373 a month?
Hmm… I somehow doubt that. Call me silly but people usually like to go out, do things with their buddies, vacation, buy a laptop for class, go on student council and attend events, buy other materials… that stuff adds up.
Anyway, to add on the 3 months here’s what it costs, using the same formulas as above:
- Room & Utilities (3 months) $3600
- Board, Personal, Other (3 months) $4120
ACTUAL Total for 1 full, 12-month year at Harvard: $84,320
A program is 2 years, so you’re looking at: $168,640 for the tuition, room & board.
Now, let’s talk about forgoing your salary for the 2 years.
Assuming you had a pretty good job before, and you netted about $65,000 in cash each year, you need to add that ish to that amount too!
$84,320 + $130,000 ($65,000 in lost net income for 2 years) = $214,320
That’s just for basic living, tuition, and forgoing your salary. A Harvard MBA will cost you almost a quarter of a million (realistically speaking…)
But if you have a dependent (one child), the number actually jacks up an extra $13,833 to $228,153
SO WHAT ARE YOU SAYING?
I am not saying that an MBA is not worth it.An MBA, heck an MBA from HARVARD really opens doors, there is no question about that. And the contacts you make there as your classmates, as well as the prestige of such a degree is not lost on me.
But the real question is: Will it open the right doors for you?
I’m just saying you better run some realistic numbers and hop on the reality train before you go for one, even if it’s a once-in-a-lifetime opportunity to be accepted into Harvard after busting out an amazing GMAT score (Graduate Management Admission Test).
As for me, I don’t see ANY value in an MBA in the industry I’m in.
It’s seriously undervalued and .. kind of BS if someone puts it on their card like “John Doe, MBA”
We kind of laugh when we see stuff like that on other people’s cards. We’re like: And you ended up working HERE?, but they take the ribbing in good stride.
For me, unless you work in the Finance/Accounting department of the IT world, it’s great asset to be certified as an accountant.. but generally speaking you don’t have any use for any certification other than in the IT fields you’re in.
So for me in IT? Total waste of time.
I have NEVER had someone say: you HAVE to get your MBA to work here.
I’m sure clients would feel reassured and maybe sleep better at night paying that kind of cash per hour for a consultant, but in the end for IT, it’s more about experience rather than education.
An MBA gets paid the same amount per hour as me, if we have the same level of experience.
And that’s the truth.
I’d personally NEVER do it unless it was….
A) required by the company for an executive role
B) paid for in full by my company/corporation
C) living expenses 100% reimbursed
D) given some sort of salary (100% would be nice) by the company because they wanted it
E) has an actual sustainable value in the industry I’m working inI know it’s helpful in other general business areas.. but in IT, you’re better off spending your money on getting your Cisco certifications or something.
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Kelly
on Dec 12th, 2009
@ 11:11 PM:
Thank you for this article. I have always ponder about whether to pursue a graduate degree. Some of my friends did and I think it's more for the prestige of having an advance degree than to use them to advance their career. Your article really makes me want to sit down and analyze the cost effectiveness of getting a graduate degree. I don't want to make the same mistake again as I did for undergrad where I didn't think carefully about my major. By the way, love you site!
GMAT MBA Prep
on Jan 2nd, 2010
@ 2:08 AM:
Let’s do some calculations: According to Business Week, The average cost for a 2-year MBA at a Top 10 b-school has nearly doubled since 1998, jumping from an average of $52,000 in 1998 to almost $95,000 in 2008. Meanwhile, the differential between pre- and post-MBA salaries has narrowed. Ten years ago, the average jump in median salary after earning an MBA from a Top 10 school was about $51,000. Now that number is just under $39,000. Based on these numbers, it would now take almost 2.5 years at the increased salary to cover b-school costs vs. 1 year ten years ago. Taking into account opportunity cost (i.e., lost salary during business school), the total cost today grows to ~$242 thousand vs. $149 thousand a decade ago. Again, based on the incremental salary gains, a current MBA would need 6.3 years to pay back the total cost of a Top 10 MBA vs. a 2.9 year payback a decade ago.
Therefore, I don’t think an MBA is worth it.
FB @ FabulouslyBroke.com
on Jan 3rd, 2010
@ 9:31 AM:
Wow, thank you for your very thorough calculations.
For me, it isn’t worth it at all. but I find it interesting that your site promotes GMAT & MBA Prep.
Peter
on Feb 15th, 2010
@ 9:49 PM:
Dude one Qs, Do u really have an MBA from Harvard?
FB @ FabulouslyBroke.com
on Feb 15th, 2010
@ 6:14 PM:
When did I ever say that?
Milan
on Feb 20th, 2010
@ 6:20 PM:
I think that what you need are heavy duty literacy and numeracy skills. Its a good idea to combine foreign langugaes with some sort of logical training like engineering or maths. In addition to that you need a lot of real life exposure.