should i get an mba? let orgtheory make the choice

My cousin likes asking me if he should get an MBA because I say “not a good idea for a lot of people.” The advice goes against the credentialism rampant in our society. What’s the reasoning? Here it goes. For the sake of discussion, let’s say you make $50k/year. Then:

• the total cost of an MBA = tuition + expenses +opportunity cost
• total costs from a leading institution, like Stanford, is: $76k
• For two years = $160k (let’s round it out)
• opportunity cots = $100k (lost income)
• total costs = $260,000

Now, we’re treating this like a business decision. Let’s use this bank calculator. At 6% over 15 years, you need to earn an extra $2,190 per month. In other words, you need increase your before tax monthly income by this amount to justify the MBA. That’s about $25,000 *extra* per year.

Here’s the subtle part, graduates from leading MBA programs can easily make this amount. Many make back some of it during summer internships. However, few graduates from the bulk of lower ranked business schools will get this huge pay boost (50% in this hypothetical case).

Ultimately, you should get an MBA if:

• you are going to a highly ranked program which channels you into highly paid management positions (usually top 20 or 30 programs),
• you are making very little salary now, so opportunity costs are low
• somebody else will pay for your tuition/expenses, like your current company
• the program is lower priced (Haas is only $50k a year)

Otherwise, I’d think very carefully before signing up for more education.