What is The average time to recover $$$ investment in MBA

Couple of reasons I would be suspicious of these "average salary" numbers...

1. Are they base reported salaries...? I don't know how many people I have spoken to on Wall St who make 100k base and get hundreds of thousands in bonus. Their base salaries are a fraction of total compensation.

2. Ok... what about corporate finance people and old industry people? As someone who speaks to a couple of hundred such people every week about their incentive stock plans, I can tell you right now that if you are not considering these plans than you are not seeing the forest for the trees either. RSAs, RSUs, stock options, value appreciation rights, blah, blah, blah... Money all over the place and none of it is salary.

These numbers don't even begin to touch total compensation. Even if you were to say report taxable income rather then salary (which would be reflective of RSA vesting and option exercise... for the execs you wouldn't be looking at things like defered comp plans, options that you can exercise into non-qual defered comp plans, etc...

These numbers can stir some braincells perhaps, but trust me... there will be more money out there in all sorts of non-salaried ways that you are probably not recieving now.

Even I would Love to second this as it would reduce the payback time of MBA )

Compensation at higher levels is a lot beyond reported gross salaries. If I were to calculate ROI based on a linear progression, I should not even be bothering to do MBA because of the so called "opportunity costs"

A few things are intangible - like the experience, alumni network, and simple the fact that we may want to do it for the knowledge. One of the other factors that is completely missing from ROI calculations is "opportunities." How would you calculate payback of starting a successful business with a few good classmates? How would you calculate returns on being able to do well in your business, marketing or account management job because you had good contacts from your alumni in higher positions in your target companies?

A lot of monetary calculations are hidden - and some are discontinuities (stock grants, profit payouts, bonuses, perks, chances to work in tax-free regions and so on). If we were all to look at a good MBA returns purely based of annual gross salary increases, it would not make sense to a lot of us.

I believe in my case payback will take 4-5 years.

Wow back from the dead...almost 4 years later. I will let you know in 4 more years how my loans are doing haha.

2 yrs is awesome...i am sure u got good schol at Chi...

$0 scholarship unfortunately.

in light of that 2 yrs pyback sound amazing...

rhyme - i have sent u a pm...request u to pls chk the same whenever u have some time...

Now need to do some calculation after going through this

The thing with all the payback is really simple. You get your mba and graduate at lets just say 30 for simplicity (implies starting @ 28). You will most likely work for the next 20-30 years and that still would be retiring before the "norm" of 65. If it takes you even 10 years to payback the MBA.. the additional 10-20 years of increased opportunity and salary that will most likely come with your MBA will all be "gravy". While lots will argue you can achieve the same overtime with just your undergrad... I would argue that to an extent outside banking. My current company (Fortune 20) doesn't require MBA's for progression or promotion to senior management or executive levels, however, the pay difference between two people doing the same job... one with mba and one without... is around 20K/year. So, assuming I was staying here after mba (I plan on heading consulting), I would be looking at a roughly 20K/year * 30 years or 600K of just pure "salary" difference. When bonus % is calculated off a larger base, that of course starts to add up. Let's say 25%.. that's an additional 5K or 150K over the same period.

True value of MBA for me is career switching. I've done the corporate finance grind and realized it wasn't for me... now I want to leverage it and add that MBA to make myself competitive in the areas I want to work. I do think with discipline and moderate spending habits I should be able to make a 5 year payback (assuming 150K total debt).... if I was in IB at a BB.. I expect you can handle that in 3.

Just my thoughts on the topic... your mileage will vary.

Well, for monetary compensation we all can more or less agree on uniform system of measurements.
I am wondering how to estimate non-monetary values, i.e. how happy are career switchers with their new opportunities? The problem of any forum is that you only read success stories, i.e. 'Took GMAT after 10 min preparation and got 790', 'Got IB job after attending Alaska Fish and Management university' etc. It'll be interesting to hear impressions of ex-students (Rhyme, Riverripper) on how are their classmates doing? How many are happy with their jobs? How many got promotions? Etc - all the soft benefits (or losses) of having an MBA.

Danke schon

Hi rhyme,
Just curious-are all these stats based on 2 year pre-MBA salary?

Well, until Rhyme replies:

These are stats based on your pre-MBA salary. If you matriculate in 2013, then the number being talked about here is the salary you earn in 2013. That (+ expected raises) would be your opportunity cost for the 2 years that you are studying.

P.S: These are random numbers and not from some employment report.

jumsumtak-Thansk for the response!

I know rhyme talked about pre-MBA salary here...what I wanted to clarify is that whether these data represent 2 year or 1 year pre-MBA salary...!

So,from your reply I suppose that this data go with 2 year pre-MBA salary in general...

BTW,$20,000 in 2 year for Indian IT back in 2007(as rhyme posted about then)-quite accurate on an average I would say

Just wanted to add my 2 cents on this thread.
I have been working for almost 8 years and make a very good income even by US standards. Mentally I have done the whole financial analysis and it probably will take me 5-6 years to break even (we are BOTH doing MBAs and both from top 10) .
But after working in a corporate environment for this long, in two top companies I strongly feel this is a good time for me to go back to school and broaden my perspective and skill set. Going to B-school is a stepping stone in the right direction for me and it will make me happy in the long term. I might not be rich at 35, but if I am happy and am doing what I like that makes more sense to me. The very question of how soon you would break even is a tough one and though we all want to do an analysis before we take the plunge into a top MBA program, I am sure none of us will let the answer to this question be the main reason behind our decision.

Good luck to everyone!

If the bachelor degree is of 4 years in hons the MBA would only be of 1.5 years but if the graduation done is of 2 years ,the MBA would be of 3.5 years.

Bob |Optimum Expense Recovery and Consulting