The purpose of this post is to spare someone the mental anguish of considering an eMBA, in my case, from The University of Texas. I attended a couple of information sessions and sat through a marketing class. The cost is around $180k-$200k, inclusive of travel for the mandatory vacations.
To estimate the NPV of the degree, I used the current borrowing rate of 7.8% (I recently obtained a Sallie Mae loan at this rate) and forecasted a $25,000 increase to my current salary over an anticipated 25 years of work, which gets me to age 65. The average salary after graduation is somewhere between $160-$180, but varies significantly. In addition to this DCF, I reviewed 20-30 career trajectories for people who have obtained the UT eMBA. It was at this time that I realized it was not worth the money, but I continued with the analysis anyway, which I'm sharing here.
The results of this simple LinkedIn review were that a lot of the candidates obtained a job while in the program, which they continued when they graduated. For those not "self-employed," there was no discernible difference in career pre- and post-MBA. Several people hadn't worked in the 12-24 months since their graduation.
The simple DCF model resulted in an MBA value, for me, of $115,000, which is below the cost, so I had no intention of attending. My model did not account for the value of my time, and I estimated that to be around $400/day (which is what I'd have to be paid to lose a weekend day). When that is factored in, the value declined to around $90,000. This model also doesn't account for the stress and professional inflexibility of higher personal leverage.
Toward the end of Round 4, two people from the UT eMBA program reached out to encourage me to apply. I went ahead and applied because I had a fee waiver and was not admitted. My candid interview with the program administrator did me no favors, and I did not put as much time into the application as I did applying to a program at Harvard, where I am currently enrolled.
For those curious, the cost per day was $1,700 at UT and $2,200 at Harvard ($5/minute), a 25% increase. I felt that Harvard was easily 25% "better" than UT, and my program is shorter, so my cost is less (I enrolled in H before receiving the rejection from UT).
The value of an MBA is personal. If you are currently unemployed, or unemployable, any MBA program that gets you a job is worth it. For me, it was worth -$90,000, so my decision was relatively easy.
Lastly, I'd caution against the natural forces that affect decision-making. The more you invest in your MBA journey, the harder it is not to go. MBA programs know this, which is probably why they have so many interviews, information sessions, counselors, etc. I was initially disappointed with my derived value because, after mentally committing to a program, it was hard to pull back.
This analysis does not apply to traditional MBAs, which cost less and provide better placement opportunities. I hope this helps someone decide if an MBA is right for you, or at the very least, provides a framework to analyze the programs unemotionally.
Based on the most helpful WSO content, the value of an Executive MBA (eMBA) program, such as the one at the University of Texas, is highly subjective and depends on individual circumstances, career goals, and financial considerations. Here are the key takeaways from your analysis and similar discussions:
Cost vs. Value Analysis:
Career Trajectories:
Program Comparisons:
Personal Considerations:
Cautionary Notes:
Ultimately, your analysis highlights the importance of conducting a thorough, unemotional evaluation of the costs and benefits of an MBA program, tailored to your unique circumstances and career goals.
Sources: MBA Costs $500,000 -- Worth It?, Current Value of MBA for Highly Successful Young Professionals
Sed quia quis dolor sit officia pariatur. Quia velit deserunt quod fugit vel dolorem eum. Autem reiciendis sit non neque. A inventore nam harum dolor.
Et minus repudiandae ipsum iste libero sint at. Officia eius quasi sit.
Dolores illo mollitia eligendi quo aperiam nostrum odio a. Dolores aut et quam optio totam libero officiis facilis. Provident sequi sequi in. Necessitatibus laboriosam non quia dolorem quos ut.
Similique id velit libero et aut commodi et. Et molestiae qui id aut voluptate. Velit est sit natus placeat sapiente delectus at. Ab unde fugiat fugit eveniet.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...