This past weekend, the roommate I’ve had since moving to the DC area moved out.
While I’ll be sad to see him go as he was my closest friend down here and a good roommate, I’m happy for him as he moves on to the next opportunity in his life.
He was able to find another (seemingly) nice guy to take the remainder of his lease, so fingers crossed he turns out alright.
So what’s the big move? He’s heading back to school.
By back to school, I mean he’s putting his career on pause and enrolling into a full time MBA program.
A full time MBA program can be incredibly rewarding, and there are many good things that can come out of that. However, there’s also several major drawbacks.
Let’s get into some of the pros and cons of pursuing a full time MBA program from the perspective of my roommate and I (through the many discussions we’ve had on the topic).
This is specifically for an MBA program, though I am sure there are similarities across other grad degree platforms as well.
What is an MBA?
Firstly, it’s important to explain what an MBA program is for those who don’t know.
MBA stands for Master of Business Administration.
There are full time programs and part time programs; the main difference being part time programs are ones in which you take classes on the weekends or after your regular job.
This is a popular post-Bachelor’s degree for those either looking to get into the business world, or further advance their career within the business world.
A common strategy is to get a Bachelor’s degree, enter the workforce for several years, and then apply for an MBA program.
The application process is tough, requiring several steps. First you need to take the GMAT which is a qualifying test (think SAT). Then you’ll need to update your resume, get recommendation letters, write university specific essays, visit campuses and set up interviews/information sessions, fill out the application… it’s a lot of effort.
In addition, the top MBA programs have microscopic acceptance rates, meaning the competition is fierce.
The typical full time program lasts two years in which most students would get a relevant paid internship the summer between the two years.
My roommate did very well on the GMAT, had a solid resume and aced his interviews, and thus was able to get into a top-10 MBA program, which is an awesome accomplishment.
It was throughout this whole process that we discussed the pros and cons of pursuing a full time MBA, and when it would and wouldn’t make sense to pursue one.
Here’s what we came up with:
Getting an MBA has the potential to jumpstart your career.
Whether you are looking to switch professions or advance in your current field, getting that degree can seriously help.
Some people tend to plateau in their careers in their late 20s/early 30s, and an MBA degree is a good way to get you to that next level.
Upon graduating, your earnings have the potential to increase as well.
Of 2017 graduates from the top 10 MBA programs, the average combined salary and bonus was over $150,000.
Not just top 10 but even into getting into a top 50 MBA program can lead to a salary and bonus north of $100,000 which can be a major step up depending on your current salary.
Grow Your Network
In general, people that attend an MBA program are highly motivated individuals. Being able to meet, make friends with and learn from other people like this can lead to many positive future outcomes.
You never know when a relationship you’ve made can help you out finding a new job or providing you with an opportunity that wouldn’t have been there otherwise.
In addition, many schools have a committed alumni network that can help you get the foot in the door for other future opportunities.
The advantages of growing your professional network through an MBA program can be incredibly rewarding.
Learn Valuable Business Skills
For those enrolling in an MBA program for a change of careers, the skills you will learn as part of an MBA program are essential.
If you’re ever looking to start your own business the things you will learn here can potentially be the difference of whether it will be successful or not.
Not to mention, the personal development you experience can be incredibly rewarding as well.
This is the big one… A full time MBA can be expensive. How expensive?
How about up to $200,000 expensive.
That’s an insane amount of money for a two year program. Granted, at the top schools you can expect a very high salary coming out, but going into $200,000 in debt just sounds crazy.
Not only is the two year program expensive, but the entire process along the way is expensive too.
GMAT Books: $200+ (books to study for GMAT test, some hire a tutor for over $1,000 to help get the maximum score).
GMAT exam: $250 each time (many take it several times to get the highest score).
Applications: Varies, but most school charge over $200 just to apply.
Visiting the campus to show interest prior to applying is almost essential, which is all paid for on your own as well.
My roommate is expecting to take out nearly $160,000-$180,000 in student loans in order to attend. He estimates he also spent nearly $3,000 on the entire application process as well.
The quality between different MBA programs is also a huge differentiator. The difference between the top 10 programs and the bottom 10 programs is drastic.
Anywhere in between can be a mixed bag. The networking aspect, quality of jobs you can get afterwards and overall experience really depend on the school that you attend.
While a school that “only” costs $60,000-$80,000 to attend and is lower ranking may be much cheaper, you have to consider what you are getting with that degree and whether it’s worth it or not.
The amount of time is takes to complete your degree must also be considered. Most full time programs are at least two years.
That’s two full years of not earning a salary and relevant work experience.
You could potentially be using that time to earn more money in your current career, or start up a side hustle that brings in even more money.
It’s also a huge commitment while back in school to continuously be networking and preparing for internships, interviews and studies.
Is a Full Time MBA Worth It?
With most of the Pros and Cons listed above, is a full time MBA program worth it?
Despite already having a pretty good salary (just below six figures), my roommate certainly thinks so.
He reasoned that with the earnings potential of those top degrees, and minimizing lifestyle inflation, he’d be able to pay the student loans off fairly quickly in a few years. From there he’d have an extremely high salary to quickly increase his wealth and be in a better spot than he would be had he not gone.
He did agree that if he was not able to get into a top 15 program, it probably would not have been worth it to him, simply because the earnings potential right out of school would not be as high.
With that logic it’s tough to argue against that line of thinking, and for his situation I actually agree with him.
Prior to discovering FIRE (Financial Independence, Retiring Early), that was actually my own plan as well.
However, if I was in his situation now, I actually would choose the opposite and not attend full time business school.
So what’s the difference?
My roommate plans on a “traditional” retirement (in his 60s), while I’m seeking to retire early (30’s is the goal!).
The longer you work, the more the full time MBA makes sense, as you’d have many more years of higher earnings to make up for the debt you go into.
For me, on my journey to FIRE, taking two years off of work and going into all that debt would likely only delay the process, despite the future higher earnings.
Especially as I already earn a decent income, I think my time would be better spent working on increasing my current income as well as generating other passive income streams, and avoiding that debt.
It’s certainly a personal decision, and even for those pursuing FIRE it may make sense to actually attend.
The decision can be a tough one, but it’s definitely one that a lot of thought must be put into prior to going.
After all, $100,000 to $200,000 in student loan debt is not something to take lightly.
Have you ever considered going back to school to get an MBA or other post-undergrad degree? Was it worth it? If you already have, going back in time would you make the same choice? How much does the MBA process differ from other Post-Graduate degrees?