Is an MBA worth it?

I've recently hired my second employee, a newly-graduated technical writer who aspires to one day run his own business. He's proactive, punctual, hardworking and very capable. The mentor in me wants to make sure he has a great career ahead of him. So imagine my alarm when I heard him say, “Yeah, I'm thinking about going for an MBA in a few years.” As the holder of not one but two MBAs (it's a long story), I have a somewhat negative view of the degree. An MBA often costs a lot of money and provides very little return. However, as I began to consider how to tell my new employee that his plan was flawed, I also began to reevaluate my view of the MBA.

Note: MBA stands for Masters of Business Administration. It's a two year graduate degree that is held up as the “must have” for any executive or mid-level manager hoping to one day become an executive. The top business schools tout their MBA programs as a must-have for any career-oriented person, promising fast-track promotions, higher salaries, better networks, and a whole host of other benefits. Oddly enough, very few of these schools actually talk about the quality of their curriculum — but that's a whole other story.

So, if I'm going to be honest with my employee, I first need to be honest with myself. Was the MBA worth it? Or was it a big waste of money? Was there a flaw to the program itself? Or was I to blame for not taking advantage of what was offered me?

ROI Analysis

I first tried to do this calculation in purely financial terms. Take the cost of an MBA and the average return per year and see if the return on investment (or ROI) makes sense. Unfortunately, both costs and returns vary widely. For example:

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