Masters information (MBA/GRE)

[JS]

With a median income of almost $200,000 a year from the University of Chicago, I don't see how you can argue with the stats.

For the record, I am a fan of getting a decent MBA, and I strongly believe in networking and making your own luck. But since you asked, I can easily show you how one can "argue with the stats" in this case with regards to median incomes and starting salaries.

1. For starters, all of the median incomes a school publishes are heavily biased, because the school publishes them. There is obvious incentive to make those numbers as high as possible to dupe people into thinking that every one who pays $170K for their MBA will automatically walk out the door with a $200K job.

2. These numbers are gathered through surveys of alumni from the school. Say, for example, that there was hefty unemployment among MBAs at said school. Do you think the unemployed will respond to the surveys and write back to the school that their salary is $0? That would heavily skew the median. Reality is that a very large percentage does not respond to the surveys either because they are unemployed, or are perhaps working menial jobs making average money that they don't feel is worthy, literally, to write home about. Either way, the numbers will be rigged on the high side.

3. By definition, median is the number that can be found by lining up all the salaries and "picking the middle one." There are a lot of ways that can be very deceiving and misleading. The salary breakdown could easily have 49 graduates making $70K, 1 person making $200K, and 49 people making $1M. That would put the median salary at $200K. This, of course, doesn't include all of the $0 salaries that probably weren't reported.

4. Even if the distribution of salaries did look like my previous example. How/where did the 49 alum making $1M make their money? Did they have "normal" salaries of $70K before going to Booth and then their salaries jumped to $1M the day they graduated? Or did they perhaps inherit Daddy's company or Daddy's connections to get promoted? Or were they just superstars before they even started business school, and they just continued on their upward path regardless of getting the MBA? I always have had heartburn when people talk about median salaries, because they honestly believe that there is a chance that they will automatically start at that median salary simply by graduating from said school.

5. What time frame is the data from? Does it include alums who graduated 60 years ago and have had a long, successful career building up their business or salary? If their high salaries were included in the mix, that sure as hell would skew the numbers pretty good. Matter of fact, a lot of recent graduates would have to make much less than the median in order to balance out the high-earners in the calculations.

6. Are the numbers being reported even accurate? Let's say, for example, that all respondents of the survey came back saying they made $200K/year. Do you think Chicago verifies that by asking for tax returns, W-2s, or other evidence? What if those numbers were inflated to make the respondents feel good or something?

7. Is that private sector only, or does it include public jobs?

I will bet my MBA, along with a years salary, that if 10 random Air Force dudes all went to the University of Chicago at age 31, they would not all be starting at jobs paying $200K after graduating with the MBA. I think you will have fast-burners who will succeed anyway, and you have people who get an advanced degree to try and compensate for a lack of talent in the "real world" of business. Either way, there will be major disparities in income between graduates from the same MBA program.

Remember, there are lies, damn lies, and statistics. I used to say that I could debunk, throw enough doubt into, or make irrelevant most every statistic. Now, I can confidently say that I can make irreverent or debunk all statistics out there. I have given that challenge to a lot of friends, and so far I have not been proven wrong. My point is that you have to be very skeptical when looking at these average starting salaries and such coming from these expensive schools.

One more story. There was an article in the NY Times a while back (too lazy to try and look it up) about a bunch of lawyers who graduated from a mid-level law school. Of course, the "average starting salary" was something like $90K or something. Plus there were some very questionable statistics about the 90% employment rates of the law schools graduates. Of course, of the 2/3 of the class that were lucky enough to find jobs, most were for like $40K, part-time, or didn't require a law degree. The graduates corresponded with each other and the math just didn't add up. With a little digging, it was obvious the school used classic statistical deception with the numbers - included a few high-salary law partners in the numbers but somehow excluded all the unemployed or entry-level jobs or some crap. And what did the load of recent-graduate, blood-sucking, scumbag lawyers do in return???? Yup, they sued the law school. Classic.

Actually, here is a followup to the original NY Times article.

Edited February 4, 2013 by JS

[Whitman]

MBA or creative writing degree? Holy wall of text Batman!

Edited February 4, 2013 by Whitman

[pcola]

Takeaway: People with "top-tier" MBAs like to write. Noted.

[JS]

Wow. Looking back at it, that is a shit-ton of text. Sorry, but I thought there were some good points in there.

For the record, my MBA is from a "bottom-tier," not a top-tier. But I do believe that writing skills are indeed important either way.

[pcola]

Wow. Looking back at it, that is a shit-ton of text. Sorry, but I thought there were some good points in there.

For the record, my MBA is from a "bottom-tier," not a top-tier. But I do believe that writing skills are indeed important either way.

There were. I was just giving you guys shit for a brevity fail. And they are important. I just don't like to do it all that much (which is why my degrees are engineering.)

[Shakey]

Remember, there are lies, damn lies, and statistics. I used to say that I could debunk, throw enough doubt into, or make irrelevant most every statistic. Now, I can confidently say that I can make irreverent or debunk all statistics out there. I have given that challenge to a lot of friends, and so far I have not been proven wrong.

So you are saying you are 100% successful in your debunkery? Can you now argue against THAT statistic? ;)

[Square]

I'm at a top MBA program now after switching out of AD into the guard as a traditional guy.

The $200,000/yr figure is aggressive for a recent grad. Not saying that it doesn't happen... it certainly does, but the folks who're pulling that down at one year out of school are probably getting most of that as performance based compensation and are working in financial services. The really high salaried recent MBA grad is normally someone who's going into very high-end financial services firm, and those firms as a general rule have as their target hire someone who worked for a high-end financial services firm prior to b-school.

I'm job searching now and expect that for the type of company I'm looking at for my salary to land in the range of 100-150K. I'd say that's about average for my peers for a first job out of b-school and not going to an investment bank or private equity firm or into investment management. Even for the folks going into banking, they're not making much more for the first couple years, but their salary growth is (right now anyway, who knows where the industry is going) significant, especially if they're able to parlay their banking job into a PE job. In the meantime lifestyle in banking is notoriously shitty.

I guess my point is, and has been mentioned further down this thread, that salary data pumped out by schools can be skewed, but not just by a desire to make the school and degree seem more desirable--it's also that the salary stats are pulled up by jobs that the average former USAF-type would have a really, really hard time landing.

In my opinion, it is not about what you do with the degree while on active duty but what you can do with after you get out. With a median income of almost $200,000 a year from the University of Chicago, I don't see how you can argue with the stats. The career services Booth graduates have for alumni is among the best.

It would be nice to do 20 years in the Air Force, do ten more years on the outside getting almost $200,000 a year, and then retire without a care in the world.

Edited February 5, 2013 by Square

[kaleb283]

Would an AACSB accredited school that is on the cheap (University of South Dakota) be considered more attractive to employers than just a regionally accredited school with a higher tuition rate?

[Square]

Would an AACSB accredited school that is on the cheap (University of South Dakota) be considered more attractive to employers than just a regionally accredited school with a higher tuition rate?

If I'm understanding you correctly, you're asking if tuition is used by employers to determine the quality of the program? I'm thinking no. From what I've heard--and I'm far from an authority--for the most part business schools are nationally kind of ranked into top two or three, then the next cluster is like down through top ten, then there's another cluster down through the top ~20, then the rest. The numbers I'm quoting aren't exact, but you get the idea.

The next consideration then would be if a particular school has a specific geographic or progamatic reason to stand out. What I mean is that UT Austin is overall a good school, but not in the top ten. If, however, you wanted to work in oil and gas then it would move up the curve, if you wanted to end up in silicon valley maybe it'd be harder to get your resume looked at.

You need to keep in mind that the value of this MBA thing has an educational component, but then there's also the network component. So maybe SD would be a great option if you wanted to hang around in SD, or maybe there's coursework there that caters to those who're going to focus on the natural gas industry. If not, then the degree would be likely held in the same regard as another program.

Edit to add: I've never been in on hiring decisions looking at resumes of MBA grads. You might be better served asking some folks who work in HR.

Edited February 6, 2013 by Square

[theat6bisasham]

I get the feeling that the 150k+ a year harvard MBA guys all did something PRIOR to going to get their MBA, and are simply making a touch and go at the school and back to their same company or similar at least. More of a stepping stone than a 'hey I just done graduated now I get paid a gizillion bucks'...

[HU&W]

Would an AACSB accredited school that is on the cheap (University of South Dakota) be considered more attractive to employers than just a regionally accredited school with a higher tuition rate?

Short answer - yes.

Numerous chats with hiring folks in industry have led me to define the following generalized categories for MBA. Employers have a generalized expectation for the outcomes of hiring a graduate from each level. They correlate well with Square's comments. Caveat: I am AD and not an HR guy in industry.

1. Top tier

2. Top 25

3. AACSB Accredited

4. Non-AACSB Accredited, but regionally accredited

5. Non accredited for-profit

Nobody cares how much tuition you paid. Your financial records don't go on the transcript.

ETA: there may be specializations or networking opportunities that a non-AACSB or a for-profit provides that could change things up. Go with whatever works for you.

Edited February 6, 2013 by HU&W

[JS]

So you are saying you are 100% successful in your debunkery? Can you now argue against THAT statistic? ;)

Yup - most of my arguments about statistics are subjective, so some would claim that they are not debunked, thus putting my success rate at around 95% or so. Either way, the only true statistic I have ever come across and have not been able to debunk is that fact that over 80% of all statistics are just made up on the spot anyway.

[JS]

The next consideration then would be if a particular school has a specific geographic or progamatic reason to stand out. What I mean is that UT Austin is overall a good school, but not in the top ten. If, however, you wanted to work in oil and gas then it would move up the curve, if you wanted to end up in silicon valley maybe it'd be harder to get your resume looked at.

You need to keep in mind that the value of this MBA thing has an educational component, but then there's also the network component. So maybe SD would be a great option if you wanted to hang around in SD, or maybe there's coursework there that caters to those who're going to focus on the natural gas industry. If not, then the degree would be likely held in the same regard as another program.

Good points. That's what I was getting at when I was arguing with my buddy about how "worthless" our local, state school MBAs were. What he was really trying to say was that he was actually worthless, in that he didn't have any work experience or a job. Most everyone else in the program was working full time and going to MBA classes at night to better their already good jobs. We had a lot of IT consultants, engineers from the power company and phone company, a few banking types from the banks with headquarters in the city, and we also had the occasional doctor, nurse, and audiologist. The thing they all had in common was they were moving up in their technical career fields and wanted to learn more about the business and management side of things, hence the desire for an MBA. That's why my buddy swears by the top-10 programs, because he had nothing else to fall back on and was hoping to land some mythical 6-figure job with his MBA, even though he had zero experience. The rest of us were happy to go part-time, have our employers pay for the already inexpensive degree, and further our careers.

But in the end, if you are mediocre, with little or no prior meaningful work experience, and you just happen to get into Wharton due to a high GMAT score or some connection, you will not walk directly into a $145K/year job upon graduation simply because that is what the statistics say is the average starting salary for a Wharton MBA.

So the bottom line, in my opinion, is that Air Force officers fall somewhere in between needing to leverage the graduate degree to get in the door versus using prior experience as leverage. Let's face it, 10 or 20 years of "officership" experience for a typical Air Force aviator is probably not going to carry a lot of weight if you want to jump right into engineering management for Texas Instruments in Dallas, or start as a product marketing manager at Coke in Atlanta or something. You might be able to leverage the Air Force experience slightly, but in the end, I tend to lean toward thinking that you should try and get a decent degree as opposed to one from Toro University University if you are not planning on doing the airline or government job thing.

In my opinion, it is not about what you do with the degree while on active duty but what you can do with after you get out. With a median income of almost $200,000 a year from the University of Chicago, I don't see how you can argue with the stats. The career services Booth graduates have for alumni is among the best.

Here's a good article on how deceptive the median starting salary can be. One guy started at $350K out of Wharton, another started at $25K. The median was $110K.

[MilitaryToFinance]

I get the feeling that the 150k+ a year harvard MBA guys all did something PRIOR to going to get their MBA, and are simply making a touch and go at the school and back to their same company or similar at least. More of a stepping stone than a 'hey I just done graduated now I get paid a gizillion bucks'...

Very few students at M7 schools go back to their original employer. Occasionally somebody from the M/B/B consulting firms will get sponsored to a top tier MBA but it is rare these days. In banking if they like you that much they'll direct promote to Associate without the MBA because they don't want to lose you for 2 years and fork over the money. And if you leave a buyside firm you will rarely go back to that same company because they only care about making money and they will fill your spot as soon as you leave for school. Now those people who leave a bulge bracket bank or consulting firm might go back to the same company or a similar company after school but there is no guarantee of a job.

That being said, in terms of the salary amounts $150k doesn't require previous experience in those fields. Starting pay for Associates at bulge bracket banks is basically the same across the street, $125k base salary and ~$80k performance bonus, and does not require previous banking experience. Obviously the performance bonus will vary but last year for first year associates the range was $65k-212k, so even at the low end your total pay was $190k. Consulting firms also hire people with no consulting experience right out of top tier MBA programs with fairly standardized pay scales. Current pay is about $125k base salary but bonuses are usually between $25-50k.

You are correct though for those huge numbers you hear, like the guy from Wharton's 2012 class who had a $200k signing bonus or the Stanford grad in 2012 who's pay package was over $500k. That requires previous experience. Those are the people going to buyside firms getting huge performance based bonuses. Pay at those firms is highly negotiable and if you show you are worth it they will pay you absurd amounts of money. But in order to have that worth you need previous work experience on the buy-side which none of us will have. I'm a huge proponent of getting a top MBA, in fact that is why I separated from the AF, but don't look at the numbers and think you can go to Harvard and land a private equity job at KKR making $300k just because you're smart and went to Harvard.

[xaarman]

Purely for the uninformed, what kind of hours/lifestyle are you expected to work for those numbers?

[MilitaryToFinance]

Investment Banking is by far the worst. Analysts will work 80-100 hours a week, Associates(after MBA) don't usually work the 100 hour weeks but 80 hours isn't that unusual. It depends a lot on how your VP and MD are. Consulting the hours are more like 60 a week but you will be on the road all week, ie leave Monday morning, fly home Friday evening, for the majority of your weeks. The buy-side roles, like hedge funds and private equity you actually have much better hours to go along with the better pay. That's why they are so competitive. Most folks I've talked to in private equity usually work 60 hour weeks, weekend work isn't that common. Hedge funds you really can't say because it varies so much depending on the type and size of the fund and what your role is in that fund.

[Square]

Purely for the uninformed, what kind of hours/lifestyle are you expected to work for those numbers?

This is the issue. Banker's hours are bad. mappleby hit it on the head in terms of expected input... what's also bad is that a lot of those hours are completely out of the control of the individual. Banking is a client service industry, so your time committment can change at the whim of that client, or those in the firm structure above you who're in closer contact to the client. Stories of waiting around until the wee hours of the morning in order to do happy to glad changes to powerpoint decks, or revise punctuation in a document are not uncommon.

I should also caveat that by saying we're refering to the big guys on wall street (Goldman, JP Morgan, etc). I'm told some of the smaller, more boutique firms have a little better lifestyle, but that's a matter of degrees.

Not that the grass is always greener... if you're founding your own company you're a slave to that enterprise as well.

[xaarman]

Thank you much for the explanation. Really, 100 hours a week? Wow... Surely there has to be a happy medium, somewhere!

[Karl Hungus]

So... how many of you are going to pay out of your own pocket (or blow your GI Bill, while that still exists...) for a bullshit, worthless masters degree to get promoted in this sinking ship of an organization? LOL

DoD urges ‘significant’ tuition assistance cuts

The Air Force is considering whether to curtail tuition assistance after the Defense Department told all of the services to consider cutting funding for the program, officials said.

The Army and Marine Corps have both decided to suspend their tuition assistance programs. Soldiers and Marines can finish the current semester, but the services are not allowing new enrollments.

Each service is responsible for funding and administering its tuition assistance program, said Defense Department spokesman Lt. Cmdr. Nathan Christensen.

“This week, DOD’s comptroller issued guidance indicating that the services should consider significant reductions in funding new tuition assistance applicants, effective immediately and for the duration of the current fiscal situation,” Christensen said in an email.

The Air Force has not yet decided whether to make any reductions in funding for tuition assistance, said service spokeswoman Capt. Candice Ismirle. Officials expect to have a decision in the next week or so, she said.

The Navy has also not yet decided whether to reduce its TA funding.

[sky_king]

Please God, cut TA for master's degrees. Maybe they'll get masked, people can stop working on masters at work, and they can focus on little things... like their job.

[Guest one]

People would just end up having to pay out of pocket or wasting their GI BILL to catch up to those who already have their Master's degree. Even if they do cut TA, it would only be temporary in nature and would be very inconvenient for those if us currently working on our graduate degree.

[Skitzo]

How about we start by eliminating TA for a second masters for international relations.

[C-21.Pilot]

What? You can get TA for a international Masters? I've never heard of that....didn't use the search function either.

[JS]

How about we start by eliminating TA for a second masters for international relations.

Ha ha. Actually, the policy is that you can use it for a 2nd master's in IR or a 2nd master's in a foreign language. Two masters is going to be the gold standard to make captain in a few years.

[Disco_Nav963]

Ha ha. Actually, the policy is that you can use it for a 2nd master's in IR or a 2nd master's in a foreign language. Two masters is going to be the gold standard to make captain in a few years.

No joke. I know a late-rated captain that voluntarily got a second Masters degree because he thought it would help make up for his not being an instructor by the time his board met.