Why Graduate Degrees Are a Rip Off: Crunching the Numbers Submitted by G.E. Miller on Thursday, 21 January 2010Why Graduate Degrees Are a Rip Off: Crunching the Numbers
Ablang
Submitted by G.E. Miller on Thursday, 21 January 2010
This one should fire you up one way or the other. I’ve been in many a
heated debate about this very topic before. So let’s have some fun
with it. I’m going to come out and say it – I HATE GRADUATE DEGREES.
My hatred for them can be boiled down into three main reasons:
1. I hate how much they cost.
2. I hate the implicit pressure that comes from corporate America
for people to slave away to earn that piece of paper if they want to
get promoted and have a future career in management (even though those
with further hands on experience typically excel in comparison).
3. I hate that I have seen those in management positions with an
MBA perform at levels far below their much less numerous sub-MBA
peers. Seemingly, that extra education did absolutely nothing for
their real world skills – and actually probably added a little bit of
complacency and entitlement in a lot of cases.
This is coming from someone who had a glorious undergrad experience,
excelled academically to the tune of a 3.96/4.0 GPA from a major
university, and appreciates the doors that my bachelor degree opened
for me (above and beyond what a high school diploma ever could have).
With my work experience and educational background, I am fairly
confident that I could get into a top 10 MBA program. But I have ZERO
desire to because of the above reasons.
Before you cave in to rat race pressure, you’re going to want to
crunch some numbers yourself and do some background research. I’ve
decided to crunch some numbers here as a guideline for you. I fully
admit that these numbers are not applicable to everyone, but I have
not gone out of my way to skew them to favor my argument. Feel free to
run your own and share them in the comments.
Crunching the Numbers on an MBA – Will it Pay Off?
Let’s make these assumptions:
According to a recent Wall Street Journal article, the average salary
of a full-time worker with a bachelor’s degree is $50,900. Those with
a master’s degree averaged $61,300.
If I were to go to business school, I personally would be looking to
get an MBA at a top 10 business school – which would cost me about
$95,000 in tuition alone, according to Investopedia.
Then there’s the opportunity cost of an MBA: In other words. The lost
income during the two plus years you are going to school full time.
Let’s just take the average annual bachelor’s degree salary and double
that, which would equate to $101,800 (for me, it’s more than that) –
but I’m trying to be conservative here.
Oh, but let’s not forget books, room and board, and other peripheral
costs. Those could add up to another $50K fairly quickly.
The final math would look like this:
Tuition ($98K ) + Opportunity cost of lost wages ($102K) + Room/board/
tuition/other ($50K) = $250K
$250K?? That’s crazy!! Yes, but it’s even crazier when you factor in
the cost of the student loans, if you were to use them. Here’s what
that mess might look like.
Loan Balance: $98,000.00
Adjusted Loan Balance: $98,000.00
Loan Interest Rate: 6.80%
Loan Fees: 0.00%
Loan Term: 25 years
Minimum Payment: $50.00
Monthly Loan Payment: $680.19
Number of Payments: 300
Cumulative Payments: $204,057.52
Total Interest Paid: $106,057.52
How Long Would it Take to Make your Money Back on a Graduate Degree?
Well, if we’re going by the WSJ averages above, we’re looking at an
average annual salary increase of $10,400 with the grad degree. At
these numbers, it would take you nearly 25 years to make your money
back on your initial investment (I’ll be kind and leave out the cost
of the loans). And that is IF you find a job right away upon
graduation AND they are willing to pay you a premium for that piece of
paper.
What age would that put you at? Well, considering the average grad
student starts at 28 and takes two years to finish, on average, grad
students wouldn’t make back their investment until age 55 (again,
factoring in zero in loan cost). Factoring in the cost of the loans?
Well… yeah, you’d be able to apply for social security in retirement.
I don’t know about you, but I hope to be retired long before then on
my measly bachelor’s degree wages.
Grad School Discussion:
* Have you gone? Can you speak to the numbers I ran in this
article?
* Did you run your own numbers? What did you come up with?
* Still excited about grad school after reading this? Tell me why
I’m an idiot.
* Take the poll!
Is Grad School Worth the Money?
* Absolutely!
* No Way!
Bob F
If money is the only reason for getting the degree, you may be right. There are
lots of other reasons. Plenty of scientists get advanced degrees because that is
their love. If MBA's are the only advanced degree you know of, you are living in
a hole.
Bill
If I was doing the hiring, you would have the job!
(Just need to get it past the "human resources" types...)
"Ablang" wrote in message
Gary Heston
>Why Graduate Degrees Are a Rip Off: Crunching the Numbers
>Submitted by G.E. Miller on Thursday, 21 January 2010
>According to a recent Wall Street Journal article, the average salary
>of a full-time worker with a bachelor�s degree is $50,900. Those with
>a master�s degree averaged $61,300.
[ ... ]
>Tuition ($98K ) + Opportunity cost of lost wages ($102K) + Room/board/
>tuition/other ($50K) = $250K
[ ... ]
>How Long Would it Take to Make your Money Back on a Graduate Degree?
>Well, if we�re going by the WSJ averages above, we�re looking at an
>average annual salary increase of $10,400 with the grad degree. At
>these numbers, it would take you nearly 25 years to make your money
>back on your initial investment (I�ll be kind and leave out the cost
>of the loans). [ ... ]
Sorry, you missed a minor issue--that $10,400 is pre-tax; after tax
money available to actually pay toward the cost would be about $6,760,
assuming an aggregate tax rate of about 35% (income, FICA, etc.).
That changes the payback period to the 37 year range.
Gary
--
Gary Heston ghe...@hiwaay.net http://www.thebreastcancersite.com/
"It's kind of hard to rally 'round a math class."
Paul "Bear" Bryant
h
"Bill" <billnoma...@yahoo.com> wrote in message
news:7s1dgq...@mid.individual.net...
>
> Then there's the opportunity cost of an MBA: In other words. The lost
> income during the two plus years you are going to school full time.
> Let's just take the average annual bachelor's degree salary and double
> that, which would equate to $101,800 (for me, it's more than that) -
> but I'm trying to be conservative here.
>
Or, like most of us, you continue to WORK full time while you go to school
full time. 2 years and finished. Geez, you never considered that option,
huh?
Les Cargill
That's probably appropriate for an MBA. For a discipline which is
about something other than social signaling, it might not be.
--
Les Cargill
tmclone
news:hji5i9$9c7$1...@news.eternal-september.org...
LIBRARY
science), writing a ton of papers, and 9 hours of class time every
week. It
meant working or studying 16 hours a day for pretty much 730 days in a
row,
but certainly do-able.
Of course, I got my MLS in the early 80s, before the "interweb", in
the early days of "online searching". I suspect there's a lot more
online options now. I'll bet it's much easier to work full time and
while going to school full time these days..
Les Cargill
> Les Cargill" <lcarg...@comcast.net> wrote in message
> news:hji5i9$9c7$1...@news.eternal-september.org...
>> h wrote:
>>> "Bill" <billnoma...@yahoo.com> wrote in message
>>> news:7s1dgq...@mid.individual.net...
>>>
>>>> Then there's the opportunity cost of an MBA: In other words. The lost
>>>> income during the two plus years you are going to school full time.
>>>> Let's just take the average annual bachelor's degree salary and double
>>>> that, which would equate to $101,800 (for me, it's more than that) -
>>>> but I'm trying to be conservative here.
>>>>
>>> Or, like most of us, you continue to WORK full time while you go to
>>> school full time. 2 years and finished. Geez, you never considered that
>>> option, huh?
>>
>> That's probably appropriate for an MBA. For a discipline which is
>> about something other than social signaling, it might not be.
>>
> Wrong. Mine was an MLS, requiring hours in the library (masters of
> LIBRARY
> science), writing a ton of papers, and 9 hours of class time every
> week. It
> meant working or studying 16 hours a day for pretty much 730 days in a
> row,
> but certainly do-able.
>
Purely as a business decision, if you can't pay for
the MS based on heavily subsidized financing available now,
how is it worth it, unless it's just a personal goal?
Oh, it's the whole "I did 730 days straight of 16
hour days." thing again.
So social signaling. Again. Definitionally. Better
living through masochism. :) Which *does* map well to
superior time management skills. Which, in my experience,
comes at the expense of analytic skills, because you can't
do both.
> Of course, I got my MLS in the early 80s, before the "interweb", in
> the early days of "online searching". I suspect there's a lot more
> online options now. I'll bet it's much easier to work full time and
> while going to school full time these days..
It depends on where you work. And, to be fair, it's probably de riguer
for anyone who wants to be taken seriously as a librarian - many of
the ones I've worked with were PhDs.
--
Les Cargill
h
requirement. I certainly didn't get a masters because I was a masochist, it
was a JOB REQUIREMENT for my chosen career. And as far as equating good time
management skills with a lack of analytical skills, that just proves you're
an idiot who is biased against advanced degrees. Perhaps you were unable to
get one in the field you really wanted? PLONK!
Les Cargill
Huh. You missed the smiley, eh?
> it
> was a JOB REQUIREMENT for my chosen career. And as far as equating
... correlating... people who are pushed towards time management jobs
suffer atrophy of analytic skills. It's just the way it is...
> good time
> management skills with a lack of analytical skills, that just proves you're
> an idiot who is biased against advanced degrees. Perhaps you were unable to
> get one in the field you really wanted? PLONK!
>
>
No, I gradually got enough school before gradual school, and was easily
able to self-educate beyond that.
--
Les Cargill
Napoleon
wrote:
>Is Grad School Worth the Money?
> * Absolutely!
> * No Way!
In this economy, no degree is worth it. Go ahead and rack up
35,000-40,000 per year for an undergrad degree (if mommy and daddy
aren't paying for it), and then see what type of job you get. I'm sure
you'll be able to pay off that quarter of million dollar loan
(basically a mortgage with no house), and still live comfortably. Yup.
And this is coming from someone who has two advanced degrees above a
bachelors. I wish I had known. But, America still "spins" the idea
that you need a college education to "make it." That's crap. Look at
our illegal alien friends, they come here, work, pool their money,
start or buy businesses, and are way ahead of us American citizens
still toiling away in schools and racking up student loans. College
education, that is so 90's.
Lou
"Napoleon" <ana...@666yes.net> wrote in message
news:pp8rl5t35u79vbpm6...@4ax.com...
> On Sat, 23 Jan 2010 06:21:51 -0800 (PST), Ablang <ron...@gmail.com>
> wrote:
>
>
> >Is Grad School Worth the Money?
> > * Absolutely!
> > * No Way!
>
> In this economy, no degree is worth it. Go ahead and rack up
(snip)
Some people seem to think that unless you pay top dollar for whatever, it
isn't worth it. I'm sure there are some schools that cost that much, and
I'm equally sure that some fields of endeavor, or some organizations,
require a degree from those schools. But a couple of years in a community
college and two more at State U. don't cost anywhere near that much, and
depending on what you've chosen to study, can be well worth while.
> But, America still "spins" the idea
> that you need a college education to "make it." That's crap. Look at
> our illegal alien friends, they come here, work, pool their money,
> start or buy businesses, and are way ahead of us American citizens
> still toiling away in schools and racking up student loans.
(snip)
Then the solution is obvious, isn't it? It's never (well, until you're over
60 or 70 years old, maybe) to start working and start or buy a business,
etc. You can do that whether you have a degree or not.