Skip the MBA

I went to the mat a couple times arguing that going to college is not a bad idea (if you are good at academics and want to go), mostly in response to Bearing's post secondary education series. (Unfortunately, just as we were about to get into it about college with Erin and Mark when they came to visit, we all had to stop and put the kids down, and then we never got back to the topic.) However, I think one has to be a lot more cautious about one's decision to go on to a graduate program, especially in an area that's strictly credentialing such as an MBA. Megan McArgle has a post up that I much agree with making the point that getting an MBA is usually a waste of money if you're not getting it at one of the top schools:

The article is crammed with sad anecdotes. But when you dig into it, I'm not sure how much of this is news. Almost all the discussion is of third-tier regional schools. It was a commonplace when I was applying to business school, way back in 1999, that there wasn't much point in getting an MBA unless you could get into a top-tier school; the degree simply wouldn't repay the investment of time and money. That clearly hasn't changed, but I'm not sure there's much evidence that it's gotten worse, either--except in the sense that more people are getting degrees of questionable value.

For graduates with minimal experience—three years or less—median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined.

It's not unusual for starting pay to fall during a weak economy. What this really highlights is what business schools rarely tell you when they're selling you on their school: students with weak experience and lower-tier degrees aren't getting the six figure salaries that people associate with an MBA. Students with more experience do better--but need the credential less. The high-paying employers that people hope to wow with their degrees don't recruit very far down the prestige ladder....

The last two decades have witnessed an aggressive expansion of graduate programs, particularly in areas like business and law. Schools love them because they're cash cows: low cost, high price. But they don't provide good value to their graduates. When young people ask me whether they should get an MBA, I give them the same advice that I got in the late 1990s: unless you can get into a top 10* (or have a very specific job that you know you can get by attending a regional program), then don't. You're too likely to end up with massive debt and no very good prospects for paying it.

Hell, I did go to a top school, and nonetheless, through a series of unfortunate events, faced a long spell of unemployment that ended when I accepted a job that left me personally rewarded, but financially somewhat desperate. And there are many, many more people in that situation whose degrees come from third-tier schools with little in the way of name recognition or alumni networks. That's why I always urge people to think very, very hard before they decide to go to professional school. It was no fun at all paying high five-figure debt on a low five-figure salary. I don't recommend the experience to anyone else.

I have a bit of a prejudice against MBAs since I move in a career niche where many of my peers have them, and so, reactionary that I am (and certainly past any point of being able to go back and get an MBA) I tend to deprecate MBAs in favor of experience. (That, and there's nothing quite as annoying as a straight-out-of-B-School new hire who is convinced that "how we learned it in business school" is invariably more important to know than how things work in one's individual company.)

However, prejudice aside, this point about only going to business school if one can get into one of the very top ones definitely aligns with my experience. Perhaps the only exception would be if your company is willing to pay for you to get an MBA at a local second or third tier school. If all you're having to lay out for the degree is some time and effort, getting the credential at the company's expense may be worth it to you.