by Brian DeChesare Comments (8)

Is an MBA Worth It? The Top 3 Reasons to Do the Degree

Is an MBA Worth It?

If you ever want to trigger an entire community, go to an MBA-related subreddit and ask whether “an MBA is worth it.”

You’ll get a wide range of responses, but most will be some variation of: “Yes, of course it’s worth it because I did it / I am doing it currently.”

I wrote this article because I’m more of a neutral, 3rd party observer.

I never did an MBA, but plenty of friends and acquaintances have, and so have many students and coaching clients.

So, I’ve seen when the degree is useful and not so useful over the past 15+ years.

As always, I will start with the short version:

Is an MBA Worth It? The Short Version

Here we go:

  • The MBA degree – even from top schools – has become more expensive and less useful over the past few decades (2000 onward).
  • If you attend a top school in the U.S., you will pay $200 – $300K in tuition and living expenses and give up your current compensation for two years. So, it must boost your cumulative earnings by hundreds of thousands of dollars over the next 5 – 10 years to be worthwhile.
  • The three best reasons to do an MBA are 1) Making a big career change quickly, especially into finance and consulting roles; 2) Getting promoted at your company if they require an MBA for advancement; and 3) Getting work permission in the U.S. as an international candidate (or making another, similar geographic change).
  • “OK” reasons include 1) Getting forced out of a job and using an MBA to recruit for other, similar roles; 2) Gaining more credibility and a wider network if you went to a lesser-known university; and 3) Making a career transition where the degree boosts your chances, even if it’s not strictly required.
  • Bad reasons include “networking,” “learning about business,” “taking a break from work,” or using it for implausible career transitions (e.g., no pre-MBA finance experience to private equity).

Introduction and Starting Assumptions

This article focuses on full-time MBA programs in the U.S.

The dynamics are totally different in places like India, where (for example), a degree at one of the top Indian Institutes of Management (IIMs) leads to Analyst roles in investment banking.

Part-time, executive, and online MBA programs also differ, offering advantages and disadvantages over traditional ones.

For example, the opportunity cost is lower for executive programs because you can keep your current job, but it’s also more difficult to make a dramatic career change.

These are interesting topics but discussing them would turn this article into a novella, so we might revisit them in future coverage.

Finally, I assume that you must pay for the degree personally, which means student loans that need to be repaid.

If your wealthy family is paying for the degree or your company is paying for it, these “Is it worth it?” questions are pointless.

What Has Changed with the “Is an MBA Worth It?” Question?

MBA applications fell substantially at the top ~10 programs between 2016 and 2023.

This is partially because the degrees have become more expensive, but there are other factors:

1) Appeal of Career Changes – I would argue this has decreased because many “Big Tech” jobs also pay very well, even if you’re not an engineer. Do you want to give up $300 – $500K at a tech company just to have a shot at working longer hours as an investment banking associate for lower pay?

Things are less frothy outside of Big Tech, but getting lucrative jobs in other fields is still possible without an MBA.

 2) Networking / Knowledge Benefits – You can learn pretty much anything in the top MBA programs independently via online courses and training programs, and there are dozens of ways to build a network (events, conferences, meetups, social media, incubators, rotational training programs, etc.).

I could go on, but the point is that MBAs offer fewer unique advantages than they used to.

Is an MBA Worth It? Good Reasons to Do It

In my view, there are three good reasons to do an expensive, full-time MBA program:

1) You Want to Make a Big Career Change, Especially into Finance or Consulting

We cover this scenario in the MBA recruiting article.

Your chances of getting into investment banking directly from a completely unrelated full-time role are very low – unless you do a top MBA program.

“Completely unrelated full-time role” means something like marketing, medicine, engineering, non-profits, journalism, or insurance sales.

If you’ve worked in one of these fields for 3 – 5 years after university, a top-ranked MBA is your most plausible path into banking or consulting.

It must be a top-ranked program because it’s only useful if firms arrive on campus specifically to recruit students.

If you are interested in other, less competitive business/finance roles, you don’t necessarily need to attend a top program.

For example, you could win corporate finance, strategy, or business development roles at many normal companies via mid-ranked MBA programs.

2) The MBA Degree is Required at Your Company or is a Promotion Prerequisite

This scenario has become less common, but some old-school firms still require or “greatly recommend” an MBA to advance above a certain level.

If this is your scenario, there’s a strong case for getting the degree because you can calculate the ROI and payback period based on the extra amount you earn over 5 – 10 years.

If your firm pays for the degree, it’s an even easier case because the cost is much lower.

3) You Need to Get Work Permission in the U.S. (or Make a Major Geographic Switch)

All international students know about the OPT program for STEM majors at the undergraduate level, but it also exists for MBA programs.

You could potentially work at a large company, push for a transfer to the U.S., and skip the MBA, but there are some downsides:

  1. It may be quite difficult to do this in practice, as it depends on the current visa environment and your company’s hiring needs.
  2. You’ll be on a restrictive work visa that requires you to keep working at the same company to stay in the country.

You’ll have more options if you go through the OPT program, and you can even get an H-1B visa and green card eventually (sponsorship will be required here).

Is an MBA Worth It? “OK Reasons” to Do It

There are some “middling” reasons to pursue an MBA as well.

The issue with most of these is that the ROI is unclear because you don’t necessarily need the degree; it just improves your chances or makes the process faster.

1) You Get Forced Out of Your Company But Want to Remain in the Industry

This is very common in private equity: You might enter as an Associate, work for a few years, but then be told directly or indirectly that you cannot advance any further.

You don’t want to take time off or leave the industry, so you do an MBA and try your luck at other PE firms.

Personally, I don’t think this is a great use case because you could just interview around as your current role is winding down, but some people swear by it.

2) You Need to Gain Credibility or Build a Wider Network

Finance is still quite an elitist industry, and if you went to a non-target or semi-target university, people may not always take you seriously.

Attending a top business school could boost your credibility and give you access to a wider network (as you don’t have access to nearly as many alumni if you went to a lower-ranked university).

3) You May Not “Need” an MBA to Change Careers, But It Could Improve Your Odds

For example, maybe you’ve worked in corporate finance at a normal company, Big 4 transaction services, or corporate development.

In these cases, you don’t necessarily need an MBA to move into investment banking because you’ve already worked in a related field.

However, the degree will still boost your odds, especially if you’ve worked for 5 – 10 years or your undergraduate university wasn’t great.

Is an MBA Worth It? Bad Reasons to Do It

Many of these reasons fall into the “Not worth the price tag” category.

Others are in the “An MBA won’t help” category.

1) “Networking” / Meeting Your Spouse / Learning Business or Finance / “Figuring Out Your Life” / Taking a Break from Work

The issue here is that there are much cheaper methods for accomplishing each goal.

If you’re trying to figure out your life… take a break and do it.

Yes, a resume gap will hurt a bit, but if you have solid work experience over several years, it’s not a big deal outside the most competitive jobs.

As for “learning business or finance,” there are books, online courses, group classes, 1-on-1 tutoring, and dozens of other options.

I also put general “networking” into this category because it’s tough to use as your main justification for an MBA.

One possible exception might be the case above, where your previous background might constrain your network/credibility.

2) Implausible Career Transitions

Changing careers is one of the best reasons to do an MBA, but it can also be one of the worst if your plans are implausible.

The two most common examples we see are:

You Have No Finance Experience But You’re Targeting Private Equity Roles

Most investment bankers with experience at the top banks do not get into private equity… so why would a PE firm take a chance hiring someone with even less experience?

You will not be competitive for these roles unless you have highly relevant pre-MBA experience, which immediately rules out most career changers.

There is still a pathway into private equity following an MBA, but you’ll need to work in banking first to build up transaction experience.

You’re Targeting Banking or Consulting Roles But Are Not Attending a Top MBA

These highly competitive industries recruit primarily out of the top ~10 MBA programs*, so don’t even bother unless you can get into one of them.

*NOTE: I am referring here to “investment banking or management consulting at the top firms, such as the bulge brackets or MBB.” You can win IB/MC roles at smaller firms, “non-investment” banking roles, and other types of consulting rules from lower-ranked MBA programs, but the quality of these roles varies widely.

If you cannot do that but still have your heart set on an MBA, you’ll have to consider other options, such as corporate finance and strategy roles.

Final Thoughts on Whether an MBA is Worth It

I’ve seen some people argue that deciding to get an MBA is a complex, multi-step process that requires months of deliberation.

But I disagree with this and think they’re making a mountain out of a molehill.

It may take months to research different career options and pick one to pursue, but the “Apply or do not apply for an MBA” decision should be simple.

You should do it if you need to make a big career change, you need it to win a promotion, or you need it to work in the U.S. as a non-citizen/resident.

If you’re not in one of these categories, the degree’s utility ranges from “Not useful” to “Maybe useful, but think carefully about the costs.”

And if you really can’t decide, leave a comment below with your situation (bonus points if it doesn’t fit into anything above).

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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Comments

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  1. Maybe it fits into one of the above, but I’ll let you decide. I’ve been in implementation consulting and now am a software developer for the software I implemented. I want to elevate into technical team management and then, if it makes sense, into a CTO/CDO role.

    When I look at LinkedIns of people managers, product managers, project managers, and scrum masters (all roles that interest me) they all have MBAs, so getting an MBA seems like the right move. I liked consulting, too, so a degree that levels me up in that area feels like a bonus even though it’s not my primary aim.

    Curious to hear your thoughts,

    1. So I’ll preface this by saying that this site does not focus on tech, and I have very little firsthand experience in the industry (worked at a big tech company briefly a long time ago but have not even stepped into an office for the past ~15 years…).

      But from everything I know about these types of product/project management roles, an MBA seems unnecessary if you already have a pathway into them from your current job. Getting an MBA to get into product management makes sense for non-technical people who want to pivot into tech, but it makes less sense if you’re already doing engineering/development or something closely related like implementation consulting. So, I don’t think it gives you much direct help.

      You could make the argument that an MBA better positions you for a CTO/CDO role in the future, but I’m not sure that’s a great reason to do the degree because you normally want to see a short payback period (within 5-10 years). And I think you would need more time than that to reach the CTO role at large companies.

      But, again, this is not my focus area, so I’ll leave it for anyone else who knows more about it to respond with better advice here.

  2. Hi Brian, great article as usual. My situation is hopefully normal. Having learned most of my skills in financial modelling from your free BIWS materials, I think you are the best person to give me advice on this. Personally I really would love to do an MBA even if it is not at a top university as my ambition to keep teaching into my 60s is will be very possible as having a masters is a requirement for most higher education learning institutions. As of late, South Africa has increasingly become a difficult place to raise capital for businesses and projects alike – my role as business strategist at a corporate advisory firm, has been filled with hard graft for about 3 years now. This has compelled me to seek other low paying jobs to supplement my income to survive. Running a business has always been my first and end goal and to be the college professor with real world business experience. That is what helps me stand out. I am an Honours in Economics graduate from a non-target university and have taken every opportunity to learn all the skills I would need to operate as a generalist advisor for businesses seeking to raise capital.

    I currently work 2 jobs (Internal Sales Agent & Business Strategist). I have assisted 2 people to get into MBA programs in Europe but fear my age (35 years next year Feb 2025) will prevent me from doing so. The paid options I have had to abandon due to not having enough money for them. Also my credit is not great so it is hard to adequately qualify for the student loans. I hold no equity at the company I work at now and that motivates me even more to do an MBA as I can also look at relocating for better options abroad. SA has the highest unemployment rate in the world and if I can use the move to provide for my family then it will be all the better for me.

    My passion is in setting up a business that can help e train many South Africans to the point of starting their own businesses and trying to tackle the negative situation that is of swathes of my fellow countrymen being without a job. Perhaps with an MBA, I can make for a better case of investing in South African startups, low to middle market companies that can generate them market beating returns but also realize true South African ingenuity from local inventors.

    My experience has been: Economics Tutor > Junior Lecturer > Corporate Finance Analyst > Independent Contractor (Lecturing) > Business Strategist. Luckily, I dont have much tying me down (e.g., mortgage payments, student loans, etc.) but my family who I desperately am motivated to provide for.

    1. So the key problem here seems to be that you are based in South Africa, which is a terrible market for pretty much everything. If you can get into an MBA program that will let you leave the country and find better work elsewhere, you should do it, even if it’s not a top program. I don’t really think your age will be an issue if you’re using the MBA to win non-IB/PE-type roles, as they care much less about age in other fields of finance, entrepreneurship, education, etc.

      I’m not sure I would recommend doing an MBA if your goal is to work as a professor or do education in general, but if it can help you leave the country, it makes sense. I’m not sure how much potential there is to help the SA population, though, because if the government is completely dysfunctional, there’s only so much you can do.

  3. Hi Brian,

    Thanks for the well written article here. I have been debating on whether or not and MBA is the right move for me for a while now. I went to a top 10 university for undergrad, did energy IB for 2 years as an analyst after that, and pivoted to a strategic finance role at a late stage unicorn SAAS tech startup (where I’m currently at now). I originally and still want to work in the tech industry, but couldn’t get placed in TMT when I was in banking and no tech PE firm gave me the time of day. So I’m interested in a few options currently, which is either going towards tech investing or moving more towards a Product role/skillset (thinking Product management or Manager of Operations type roles at tech firms). I’m wondering if a top tier MBA makes sense for me or if I could achieve either one of those possible career positions without the significant cost. I’m only 2.5 years into my career post grad so it’s still a bit early, but it has been on my mind lately

    1. I don’t really think a top MBA will help you at this point. You already have the IB experience, so you could probably still apply to any role that has that as a pre-requisite, and you have startup finance experience, so you could probably move into any product/operations role in tech.

      Maybe it would give you a marginal boost for PE/HF roles, but you’d still be competing against people with direct PE/HF/GE experience before the MBA program.

      I guess it might help you win a TMT IB Associate role, which you could then leverage for a buy-side exit, but that seems like a very expensive way to get there when you could probably just interview for IB roles again within the next 1-2 years if you want to return.

  4. Non-target undergraduate 3.9gpa
    5 years back office operations experience
    Want to transition to IB
    Worried about my work experience when recruiting if I get into/go to top 10

    1. I think you can probably get into IB, assuming you can get into one of the top MBA programs (which I am not sure of, as we don’t cover MBA admissions). But I would strongly recommend aiming for some type of pre-MBA internship to boost your chances – as they may not entirely believe your story if you spent 5 years in a back-office role. If that’s not an option, maybe see if you can move into a more relevant job first before doing the MBA?

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