[#permalink]
01 Mar 2007, 11:41
I didn't vote because the available choices are too limiting. Seriously, only IBankers and people will full scholarships have any chance of recovering their investment in 4 years.
As Rhyme mentioned, in addition to tuition you need to calculate the cost of 2 lost years (you can deduct whatever you make from a summer internship).
Also, I don't think anyone has mentioned that you cannot just add up your entire post-MBA salary and apply it towards the costs. You must figure the difference between pre-MBA and post-MBA compensation, and the difference is then applied to costs incurred in obtaining an MBA.
So, for example, it might look like:
Costs:
150k tuition, fees, travel, job search, new suits, etc.
150k Lost Salary (you actually only lost about 18 months of your life if you do an internship, not two full years).
Total to recoup: 300k
So, your first year out, if you take a good general management job, you might make 100k + 20k bonus. Compare that with a pre-MBA salary of 75k and you're 45k ahead. Deduct out taxes (because I don't believe student loans are tax deductible) and figure in any additional "necessary" costs of having an MBA, such as interest on loans, more expensive beer, meals, rent, car, etc., and that is how much you can apply to paying off the costs of an MBA - say 10-15K in this example.
The hope is, of course, that an MBA will set your career on a totally different track, so after 3 years in a general management job, you can be 50-75k per year ahead compared to no MBA. And hopefully, things will continue to improve after that.
So, I really think that given an average pool of costs and an average job, it will take most people at least 7-8 years to recoup the costs of an MBA. It's easy to see why a lot of people decide to take the big money from consulting or the bigger money from Ibanking for a few years after graduation, even though working conditions are not ideal in either case. They can't afford not to.