Grad degrees = straight liabilities

So this whole debt ceiling thing got me thinking: grad degrees are straight liabilities. All these students loans have pushed up the debt ceiling for bullshit degrees that are largely useless. Then we the taxpayers have to pick up the tab with grants and all the other bullshit. Then most people wind up paying off a fuck ton of debt instead of buying house or using debt more wisely. You learn skills on the job - save your money. And companies have online classes you can take for all types of actual hard skills.

Even worse is when you date one of those elite housewives who quit the workforce after 2 years from graduating with their fancy t-14 JD / MBA / master’s in xyz etc. Now you got to pay off that debt and she got that heavy depreciation with age past 24 (Leonardo thx for your wisdom).

And now we almost defaulted on our debt. Would be a complete domino effect of financial catastrophe if that happened (or when it does happen rather).

 

I’m talking about grad degrees specifically. Target undergrad is still helpful but not 100% necessary as you can pivot into finance as a non target.

Think about how many non targets go to MBA to break into high finance and still fail. Now you are a non target (best case scenario have become half non target) with loads of additional debt and still no high finance job. The chances are not in your favor as IB prefers undergrad and work experience..

You’re better off pivoting your way “closer to front office” through jobs like Big Four accounting or consulting, FP&A, etc. Also — I’d rather hire someone who takes this route and can speak to the modeling skills they’ve taken the initiative to learn over some useless post MBA grad who has close to zero hard skills. Before PE, we actually took a handful of people like that at my BB who lateraled as experienced hires.

And that’s not even considering masters in liberal studies programs that churn out grads who were just as useless as before. Instead of dropping $100k, take some online modeling / coding classes or something. Get a CFA. Network.

Last point is that my post is aimed towards the point I’m making in my last paragraph: tacking on more debt for useless degrees — which applies for to people more generally not only those aiming for finance.

Our current education system is failing people and if you refuse to acknowledge that you are part of the problem.

But yeah bro go get that “fancy” masters in liberal studies from Harvard Extension School. Or that masters in journalism from Columbia…from taking a simple trip to Starbucks proves that these useless degrees only do a good job at making “edUcaTed” baristas…

 

yeah, it happens that you'll get into a bad undergrad and then it's difficult to get any decent finance job. you could argue you can try to hop jobs and try to end up in a place you wanna be, but it doesn't always work. get back to school lets you apply to jobs through campus pipeline and to positions designed for students. and it's not super difficult to get into a Master of Finance program at a school like Duke/UVA/Michigan State/WashU or MBA at a top20-30 business school, so that can be a way to pivot your career. and its cost of $100k isn't much if you manage to land a decent job. if you don't then yeah, it'll suck.

 
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I mean the obvious hole in your logic are two pretty high paying fields; law and medicine. You cannot play in either field without a Masters degree.

Therefore, I think it makes the most sense to focus on MBAs, as it appears that's what you're primarily targeting. We can save PhDs in astrophysics and Masters in Education for a separate debate, unless these are also umbrellaed in your original post.

Generally, MBAs actually provide a lot of value for non-business majors to lateral into new fields, and the ROI can be pretty strong. I cant tell you how many engineers I know who graduated from a T-10 MBA program to instantly make 2-3x their original salary. These people have a low probability of defaulting, and therefore their student loans can be categorized as low risk liabilities. 

So who exactly are you referring to? The Accountant making 50k a year paying $150k for a Wayne State MBA? I mean sure, those folks may be higher risk liabilities, but I would still bet their probability of defaulting is fairly low. They will likely graduate and get some job making ~100-150k and will be positioned well enough to repay their loans. 

Next, take the elite housewives example. These women usually marry high-powered men who clear 200-300k a year pre-marriage, as in late 20s. Surely these women have almost zero risk of default? They are the one percenters, who have the absolute lowest risk of default. 

So who is it that is taking out MBA loans that is at such a high risk of default? I could see this argument being made for undergrad (a subject beaten to death on WSO), or superfluous Masters (education, philosophy, arts, etc.), but an MBA?

Look, I have always believed experience trumps education but your argument just isnt making a lot of sense. 

 
Deal Team Six

I mean the obvious hole in your logic are two pretty high paying fields; law and medicine. You cannot play in either field without a Masters degree.

Therefore, I think it makes the most sense to focus on MBAs, as it appears that's what you're primarily targeting. We can save PhDs in astrophysics and Masters in Education for a separate debate, unless these are also umbrellaed in your original post. MBAs actually provide a lot of value for non-business majors to lateral into new fields, and the ROI can be pretty strong. I cant tell you how many engineers I know who graduated from a T-10 MBA program to instantly make 2-3x their original salary. These people have a low probability of defaulting, and are pretty low risk liabilities. 

So who exactly are you referring to? The Accountant making 50k a year paying $150k for a Wayne State MBA? I mean sure, those folks may be higher risk liabilities, but I would still bet their probability of defaulting is fairly low. They will likely graduate and get some job making ~100-150k and will be positioned well enough to repay their loans. 

Next, take the elite housewives example. These women usually marry high-powered men who clear 200-300k a year pre-marriage, as in late 20s. Surely these women have almost zero risk of default? They are the one percenters, who have the absolute lowest risk of default. 

So who is it that is taking out MBA loans that is at such a high risk of default? I could see this argument being made for undergrad (a subject beaten to death on WSO), or superfluous Masters (education, philosophy, arts, etc.), but an MBA?

Look, I have always believed experience trumps education but your argument just isnt making a lot of sense. 

What are your thoughts on STEM-related graduate degrees?  

 

I am not knowledgeable enough to comment on the underlying value of Masters degrees for STEM. If I were to guess, Id likely make a fool of myself.

I do feel comfortable stating that STEM UG degrees holds among the highest values of any major. Anecdotally, I have a friend with parents who told their children their college would be paid for in full only if they majored in STEM. All of their children (there were 4 in total) were clearing six figures a few years out of school, and all of them went into SWE or Consulting. STEM breeds smart problem solvers, which excel in the work force. STEM requires grit, and is the perfect foundation for the real world. 

However, I have no conceptual understanding of how Masters' in STEM advances earning power or promotion timelines, but I think it is a good prompt. 

 

As someone who was on track to tack on a 5th year Masters to my mechanical engineering degree I can offer some insight into STEM masters degrees. First, STEM is a huge umbrella term, and a masters in computer science probably isn't the same conversation as one in theoretical physics which isn't the same as microbiology. There will be different industry standards, etc. Some research jobs in biotech will probably require a masters, but a lot of coding jobs just look for bachelors, that kind of thing. 

For my field, you do not need a masters degree to work in engineering and get a decent job, but it really helps, and is pretty much the standard if you want to get your PE stamp. Plus, a lot of programs let you start the program in your senior year of college and just do a 5 year program so you lop off a year of grad school expense. 

 

Another point to add is that the Wayne State MBA will still very likely receive a promotion and move from $70k/year to $120k/yr and move into a managerial role post MBA even if he ends up staying at the same accounting firm. Every manager I’ve reported to has an MBA or a specialized management degree, with many of them receiving the promotion soon after getting the degree.

While some firms are moving away from the MBA and willing to internally promote undergrads, you have to generally be an extremely strong performer and could potentially run into difficulties if you lose your job or decide to switch jobs. So even for those people, an MBA acts like an insurance policy. 

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MBAs actually provide a lot of value for non-business majors to lateral into new fields, and the ROI can be pretty strong. I cant tell you how many engineers I know who graduated from a T-10 MBA program to instantly make 2-3x their original salary. 

This is all anyone needs to know. The only two reasons you should be getting an MBA is to transition industry or function. Example 1: You work in marketing for an architecture firm but you want to move into real estate asset management, you get an MBA to transition function. Example 2: You work in sales and you want to work in entertainment marketing, you get an MBA to transition industry. Example 3: You work at a non-profit and want to do consulting at an MBB, you get an MBA to transition both industry and function. These are all real examples of people I know from my MBA program, all of whom ended up with successful jobs and are more than able to cover their debt. (Example 4: I went from construction management to real estate development, so change in industry (function is project management for both)).

And as for the salary, My salary went from $71k to $160k, total comp, after the MBA, and it's now at $230k+ only three years after. I'm doing just fine on my debt service, and the MBA is honestly probably the only way I'd be able to afford a house in the city I live in. 

 

Before WWI, Congress had to approve each debt issuance. During WWI, they instead just set an amount that the Treasury could raise so they wouldn't have to approve all of them. It was initially intended to facilitate an increase in the capacity of US Treasury borrowing instead of constraining it. 

This is the reason that only the US and Denmark have such a practice because the weakness of American federal government (compared to the states) before the 20th Century is relatively unique. 

 

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