"I could save for retirement, pay for childcare, or pay my student loans. It was an easy choice. Retirement lost."
On this episode, Micah reads Part 4 of his book "Rethink the MBA", and counts up all of the things that make business school so expensive, including trips to Antarctica, an extra year of unnecessary classes, and giving up on future career opportunities in favor of paying off student loans.
This episode includes the following chapters from Micah's book, Rethink the MBA, Why Business School is Riskier Than You Think:
PART 4: COUNT THE CHIPS
Chapter 11: Table Stakes
Micah compares the card game of poker to getting an MBA. In poker, the money you need to sit down at the table is called "table stakes". In business school, the table stakes are 2 years of time and $200,000 before you can bet on your future career path. It takes a lot of money to play the MBA game.
Chapter 12: Our Strange American Ways
Micah asks a simple question: why do graduates of INSEAD, a top business school in France, spend only 1 year in class to get their MBA, while Americans are stuck with 2 years of classes? Are professors with French accents that good, or are b-schools more concerned with giving up money by shortening the time it takes to get an MBA, than the fact that students have to pay for an extra year of classes?
Chapter 13: MBA Living Expenses
Micah talks about the expenses b-school students may have to pay that have nothing to do with food and shelter, but have a lot to do eating at expensive restaurants, taking trips to poker tournaments, and chasing "once in a lifetime" travel opportunities around the world.
Chapter 14: Levering Up
There is a hidden cost to business school: the interest expense of your student loans. Students vary widely in the amount of debt they need, so b-schools don't mention this cost on their websites. This cost can substantially increase the money you'll pay for an MBA.
Chapter 15: Opportunity Cost
Most people ignore the opportunity cost of leaving the workforce for 2 years. However, the lost savings and experience are worth factoring into your decision whether or not to get an MBA.
Chapter 16: Disappearing Paycheck
Micah talks about the hard choices he's had to make over the years as he watches his extra post-MBA salary go towards student loans instead of retirement savings. Failing to figure out your "break even salary" after business school is a huge mistake that Micah explains how you can avoid.
Chapter 17: A Patek, a P85, and a Popo
Micah puts the cost of business school in perspective, by exploring 3 crazy ways you could spend your money, aside from getting an MBA. Start packing your bags for a luxury vacation to Bali while you listen to the show...
Chapter 18: Experience
Micah warns students about leaving their careers to get an MBA right around the time when their careers are just starting to grow, and cautions people about leaving high growth industries (like Tech) for 2 years that may seem like a lifetime when you get back into the job market.
Chapter 19: Serendipity
Finally, Micah explains how difficult it is to measure the cost from being unable to explore new and interesting career opportunities. Why? Student loans must be paid before taking a salary cut to chase high reward, but low paying jobs. In his view, this is one of the most expensive aspects of getting an MBA, even if you can't measure it.