If you asked Dale Stephens, the 21-year-old author of Hacking Your Education, he would undoubtedly agree. In a highly provocative excerpt from the book recently published by The Wall Street Journal, Stephens forcefully declares that even if you were accepted into Harvard Business School, you should decline the offer.
Why? Stephens, a college dropout, says that you should take the $174,400 that it would cost to attend Harvard Business School and invest it in yourself. "Consider what you could do instead with that $174,400," he writes. "The first step should be to move to a part of the country that supports your interests. If that's film, move to Los Angeles. Technology, San Francisco. Oil, Houston. You could live decently in these cities for $3,000 per month. Over the course of two years, that still leaves you $100,000 to invest in yourself."
Frankly, he is full of crap.
For one thing, a Harvard MBA does not cost $174,400. The annual tuition is $51,200 and it is severely discounted for at least half the students. In fact, Harvard's average fellowship support per MBA student was $29,843 last year, essentially a 58.3 percent discount on that annual tuition. And the rest of the money that one would need to get a degree can easily be borrowed at relatively low interest rates. It's a similar story elsewhere. MBA has become the degree that cynics and publicity seekers love to bash. Yet, those three initials on a diploma are one of the most powerful and tried-and-true investments you could ever make in yourself. The vast majority of MBA graduates from the top 50 to 100 schools in the world double or triple their total pay thanks to the education they receive.
And you don't have to go to Harvard, Stanford or Wharton. At Notre Dame's Mendoza School, last year's MBA graduates landed average salaries that exceeded their pre-MBA pay by 149 percent. At the University of Minnesota's Carlson School, the increase was 132.2 percent, and at the University of North Carolina's Kenan-Flagler Business School, it was 122.2 percent, And these numbers exclude starting bonuses and other bennies that are often handed out to MBAs when hired.
At Harvard Business School, 3 of every 4 graduates last year reported getting a median signing bonus of $20,000 and 1 in 5 (21 percent) had median "other guaranteed compensation" of $25,230. Harvard MBAs lucky enough to collect all three (base, sign-on bonus and guaranteed comp) earned first-year median pay of $170,230. Not bad for a "worthless degree."
Interested in film? Go to UCLA's Anderson School where the MBA recruiters include Fox Entertainment, NBCUniversal, Paramount Pictures, Sony and Walt Disney. Those entertainment companies were among 148 firms that held recruitment events on UCLA's campus last year, not to mention the 1,105 job opportunities on the school's job boards.
What about technology? Among the biggest employers of MBAs are Apple, Google, Microsoft, Intel, Cisco, and Amazon.com. Each of those firms and many more in technology recruit at more than a dozen business schools each year.
What about oil? You should be thinking of going to the University of Texas at Austin where Chevron, ConocoPhillips, ExxonMobil, and Hess are among the top employers of MBAs for both internships and full-time jobs.
The immediate benefits of the degree are obvious. But then there is the enduring value of the network you inherit once you graduate. The very best schools boast powerful alumni networks that open all kinds of closed doors, from tip offs to plum jobs that are not advertised, to seed capital for a startup idea, to potential customers for your business. That certainly beats a cold call to someone on LinkedIn.
The data shows that the full cost of an MBA degree from a top 25 U.S. school -- including the lost of income from being in school for two years -- can be completely recouped within 3.1 (at schools such as the University of Iowa and Michigan State) to 3.8 years (Carnegie Mellon University).
Finally, education also provides something of a safety net in good times and bad. The research shows that the more education you have, the more likely you are to earn more money in a career and the less likely you are to be unemployed.
Stephens may not need an MBA to get a book contract and put up a website, but he won't be working at McKinsey, J.P. Morgan, Apple or Google anytime soon. A quality MBA program is a life-changing experience that builds self-confidence, communication skills, and a successful future. A worthless degree? I don't think so.
John A. Byrne is the editor-in-chief of PoetsandQuants.com and PoetsandQuantsforExecs.com. He created the first regularly published business school rankings for BusinessWeek in 1988.
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