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# What is The average time to recover $$investment in MBA  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics ### What is The average time to recover$$$investment in MBA • 3% [7] • 6% [13] • 22% [44] • 54% [106] • 12% [25] Author Message TAGS: ### Hide Tags Director Joined: 09 Jan 2007 Posts: 707 Followers: 1 Kudos [?]: 14 [0], given: 0 ### Show Tags 02 Mar 2007, 07:47 aaudetat wrote: Mark4124 wrote: Making 50k in the US is a joke... I would expect the opportunity cost to be at least 100k for nearly all US applicants. Until I got my big bad raise this fall, our household income was around$45k. Only now are we finally breaking through the $50k mark, but not by a lot. BTW - we're homeowners and don't feel pinched. Nope, very little art on my walls, but we have no credit card debt. And we're not living off our parents at all. There are a lot of people out there who don't make tons of money - many of whom do it on purpose. Ithaca is filled with simple-livers -- people who decided that growing a garden, spending time with their kids, and avoiding that burgeoning ulcer was more important that making gads of money. These are people with PhDs who simply opted out of the rat race. Now I doubt that many of these folks are applying to business school - or would ever event want to. The opportunity cost might very well be closer to$100k, once you've thrown out international applicants. But as for the non-MBA types out there, if you don't live in NYC or have a passel of kids, I wouldn't say that living on $50k in the US is a joke. If you're already making 100K, then going back to school would probably be a bad decision. Full-time, that is. Coming out of b school, (non IB and MC) average salary is less than 100K. Manager Joined: 08 Feb 2007 Posts: 82 Followers: 1 Kudos [?]: 1 [0], given: 0 ### Show Tags 02 Mar 2007, 07:48 venky1979 wrote: Dont the figures look reasonable atleast for top 5 colleges ??? Yeah, top 5 *only* ... people out of Chicago and Columbia don't make any money.... Director Joined: 10 Aug 2006 Posts: 665 Followers: 2 Kudos [?]: 7 [0], given: 0 ### Show Tags 02 Mar 2007, 07:53 gogetter wrote: venky1979 wrote: Dont the figures look reasonable atleast for top 5 colleges ??? Yeah, top 5 *only* ... people out of Chicago and Columbia don't make any money.... You may be you save 150K in say 5 years if from H/S/W and say around 120K if from Kell/Mit/chic/columbia/Berekeley and the numbers drop steadily I mean going back to the original question doest it look reasonable that u are debt free by end of 3.5 years in top 5 and increase to 6 years as u go down the ranking??? I expect a plateau un the trends in the elite and trans elite becuse these schools offer scholarships to offset the costs SVP Joined: 24 Aug 2006 Posts: 2130 Followers: 3 Kudos [?]: 145 [0], given: 0 ### Show Tags 02 Mar 2007, 10:30 I wouldn't count opportunity cost, it is bogus. Why would you include two years salary when you're not working during those two years? The only debt you incur is the bottom line. If you slum it, you can pay off the 80k within a few years and you're golden. Of course, that's if you're single or attached to someone who is independent. Director Joined: 05 Apr 2006 Posts: 727 Followers: 2 Kudos [?]: 9 [0], given: 0 ### Show Tags 02 Mar 2007, 10:40 I said 50k is easy to make. I said the opportunity cost should be at least 100k. B-school is 2yrs, not one... 2 X 50k = 100k I never said anywhere that I was making, or I expected that everyone would be making 100k... Read what I wrote people. I said the opportunity cost for b-school... THATS 2yrs of lost salary... not 1. SVP Joined: 31 Jul 2006 Posts: 2302 Schools: Darden Followers: 44 Kudos [?]: 475 [0], given: 0 ### Show Tags 02 Mar 2007, 10:47 venky1979 wrote: Hypothetical case of a MC from top 7 B-school salaru in 1000 USD Year Net Anual Salary Year1 100 Year2 160 Year3 210 Year4 260 Year5 320 Total = 1050 USD Now we will progressively reduce the costs With 40% decutions Tax etc 630 150K average Salary Forgone 480 150K MBA Tution + living cost 330 180K Living Expenses for 5 years in US 150 So End of 5 years he has made 150K USD Dont the figures look reasonable atleast for top 5 colleges ??? Your numbers only show salary forgone during the 2 years of business school. You are assuming that people would make$0 without an MBA during the 5 years afterwards. Assuming that they have reasonable jobs, and earn reasonable raises for work experience, the different would be much lower.
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02 Mar 2007, 11:47
gmatclb wrote:
aaudetat wrote:
Mark4124 wrote:
Making 50k in the US is a joke... I would expect the opportunity cost to be at least 100k for nearly all US applicants.

Until I got my big bad raise this fall, our household income was around $45k. Only now are we finally breaking through the$50k mark, but not by a lot. BTW - we're homeowners and don't feel pinched. Nope, very little art on my walls, but we have no credit card debt. And we're not living off our parents at all.

There are a lot of people out there who don't make tons of money - many of whom do it on purpose. Ithaca is filled with simple-livers -- people who decided that growing a garden, spending time with their kids, and avoiding that burgeoning ulcer was more important that making gads of money. These are people with PhDs who simply opted out of the rat race.

Now I doubt that many of these folks are applying to business school - or would ever event want to. The opportunity cost might very well be closer to $100k, once you've thrown out international applicants. But as for the non-MBA types out there, if you don't live in NYC or have a passel of kids, I wouldn't say that living on$50k in the US is a joke.

If you're already making 100K, then going back to school would probably be a bad decision. Full-time, that is.

Coming out of b school, (non IB and MC) average salary is less than 100K.

I would disagree. It really depends on what you want to do. A lot of US based engineers pull down near 100, and I myself pull down about that figure.

I know that when I go to school I wont be making that much more than I am now - but there are a few key differences.

1) I'll change industry. Out of IT. COMPLETELY. That alone is worth it to me.

2) The options and long term earnings potential I will have so far exceed those in my current industry its not even funny.

So, in your case, if you make $100K its not worth it. In my case, it is. The lost income is a b1tch sure - all told I'll loose out$200K in salary and $100K in tuition, for what will amount to a$10K salary increase. My payback period, if you look at it that way, is 30 years.

Year 5: Manager II - $175K VP Joined: 20 Sep 2005 Posts: 1018 Followers: 3 Kudos [?]: 36 [0], given: 0 ### Show Tags 02 Mar 2007, 11:56 I totally agree. Perhaps most importantly I want to attend university again, be a student, feel young and generally get away from the drudgery of a 9-6 life for a couple of years. Director Joined: 28 Jun 2006 Posts: 958 Followers: 1 Kudos [?]: 81 [0], given: 0 ### Show Tags 02 Mar 2007, 11:57 I think the best way to calculate how long it takes for an MBA to pay for itself is to project income and expenses for two scenarios: (1) The path you would follow if you did not go to business school (2) The path you would follow if you went to business school. For those two scenarios if you calculate income and subtract expenses for each year, many years into the future, at the point where scenario 2 gives you a higher number, it can be said that that is the point where an MBA has been paid off. Director Joined: 10 Aug 2006 Posts: 665 Followers: 2 Kudos [?]: 7 [0], given: 0 ### Show Tags 02 Mar 2007, 12:07 pelihu wrote: venky1979 wrote: Hypothetical case of a MC from top 7 B-school salaru in 1000 USD Year Net Anual Salary Year1 100 Year2 160 Year3 210 Year4 260 Year5 320 Total = 1050 USD Now we will progressively reduce the costs With 40% decutions Tax etc 630 150K average Salary Forgone 480 150K MBA Tution + living cost 330 180K Living Expenses for 5 years in US 150 So End of 5 years he has made 150K USD Dont the figures look reasonable atleast for top 5 colleges ??? Your numbers only show salary forgone during the 2 years of business school. You are assuming that people would make$0 without an MBA during the 5 years afterwards. Assuming that they have reasonable jobs, and earn reasonable raises for work experience, the different would be much lower.

You are right

But I am not considering difference in life with without MBA
I am interested in costs of paying of loans
I am considering loss of salary in thoise two years as you are jobless and without an income. Note MBA does not just give you a Job. It gives you better opportunities in the field u wanna be which is not true or very difficult if you do not have a MBA. So this part of the benefit cannot be weighed in Money

Year 5: Manager II - $175K whoops eye opener rhyme but I gt this data from a careers in consulting website where the salary projection for IVY league MBA is 200K + in 3 years. so I assumed some data on calculations Manager Joined: 08 Feb 2007 Posts: 82 Followers: 1 Kudos [?]: 1 [0], given: 0 ### Show Tags 02 Mar 2007, 12:42 venky1979 wrote: You may be you save 150K in say 5 years if from H/S/W and say around 120K if from Kell/Mit/chic/columbia/Berekeley and the numbers drop steadily I mean going back to the original question doest it look reasonable that u are debt free by end of 3.5 years in top 5 and increase to 6 years as u go down the ranking??? I expect a plateau un the trends in the elite and trans elite because these schools offer scholarships to offset the costs ok we are getting ridiculous. Unless your debt is$3,000 there is no YEARLY difference in payoff between Top 5 and Top 7.. because the average salary difference is only $3,000, not even a drop in the$150,000 debt bucket.

Lets take a look:

Overall BW RANK - School - 05 average starting salary and bonus

2 STANFORD $117,456 3 PENN$116,882
1 HARVARD $116,730 9 DARTMOUTH$116,380
7 COLUMBIA $113,184 6 UCHICAGO$113,024
4 MIT $112,632 5 NORTHWESTERN$110,435
13 NYU $108,790 12 UMICH$108,231
14 UVA $107,546 8 UC BERKELEY$105,848
11 DUKE $104,081 17 CORNELL$104,010
20 UNC-CH $100,272 15 YALE$100,108
10 UCLA $100,004 36 GEORGETOWN$99,768

As you can see, even the difference between #1 and #10 is less than $10,000. Bottom line, you will be measuring the difference in pay-off rates in *weeks* not years if you are applying to any of the top schools. GMAT Club Legend Affiliations: HHonors Diamond, BGS Honor Society Joined: 05 Apr 2006 Posts: 5926 Schools: Chicago (Booth) - Class of 2009 GMAT 1: 730 Q45 V45 WE: Business Development (Consumer Products) Followers: 321 Kudos [?]: 2085 [0], given: 7 ### Show Tags 02 Mar 2007, 12:45 venky1979 wrote: rhyme wrote: venky1979 wrote: Hypothetical case of a MC from top 7 B-school salaru in 1000 USD Year Net Anual Salary Year1 100 Year2 160 Year3 210 Year4 260 Year5 320 Total = 1050 USD Now we will progressively reduce the costs With 40% decutions Tax etc 630 150K average Salary Forgone 480 150K MBA Tution + living cost 330 180K Living Expenses for 5 years in US 150 So End of 5 years he has made 150K USD Dont the figures look reasonable atleast for top 5 colleges ??? Your numbers are insane. You don't get 60,000 raises per year. Nowhere near it. Here's a more reasonable table taken from actual salaries at a consulting firm where I worked. SA I is typical post MBA starting role. Year 1: Senior Associate I - 105K Year 2: Senior Associate II - 115K Year 3: Senior Associate III and IV - 135K (assuming a quick promotion) Year 4: Manager -$150K (could get here by year 3 if a top performer)
Year 5: Manager II - $175K whoops eye opener rhyme but I gt this data from a careers in consulting website where the salary projection for IVY league MBA is 200K + in 3 years. so I assumed some data on calculations Well, I hope you are right cause that suonds great. But I doubt it. The average salary for GSB grads 3 years post graduation was$143K - that sounds more in line with what I'd expect.
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02 Mar 2007, 14:39
kidderek wrote:
I wouldn't count opportunity cost, it is bogus. Why would you include two years salary when you're not working during those two years?

I second this. I think some of us will agree that even if the MBA's effect was neutral from an ecomonical point of view, we would go anyway for several other reasons, including, but not limited to, not working for 2 years.

Cheers. L.
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02 Mar 2007, 15:57
Let's not forget that we have a lot of international applicants here. For them, the possibility of post MBA employment in the US and possibly a green card later, it is absolutely PRICELESS. It is their chance of a lifetime.
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02 Mar 2007, 16:40
cbreeze wrote:
Let's not forget that we have a lot of international applicants here. For them, the possibility of post MBA employment in the US and possibly a green card later, it is absolutely PRICELESS. It is their chance of a lifetime.

Maybe you meant for SOME of them, the possibility of post MBA(...)? I'm an international and please count me out of that group.

I do, however, acknowledge that the prospect of working in the US (or Western Europe) may be the main or sole motivation for some applicants.

Yet, for some other international applicants, the fact that getting a US MBA will not make financial sense unless you are willing to spend at least 5-10 yrs away from home, is actually a deterrent. I have lots of friends with good credentials who'd love to go for a US based MBA. But when they factor in the "being away from home" issue, they prefer to go for the local options. I've met several GMAT takers with 700+ scores who prefer to stay home and never apply to any US or European school.

Other internationals get full sponsorship from their employers, so there's no actual cost for them. And the opportunity cost in this case is debateable, since you'd probably would not want to reject a sponsorship offer unless you are willing to quit.

Cheers. L.
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02 Mar 2007, 17:05
OK, I stand corrected. I should have put "For SOME" , but I bet there are lots of "SOME".
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02 Mar 2007, 17:10
cbreeze wrote:
OK, I stand corrected. I should have put "For SOME" , but I bet there are lots of "SOME".

I guess you are right. There are probably lots of "SOME".
02 Mar 2007, 17:10

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