Brett Chang graduated from the University of Toronto in 2013 with an undergraduate degree in history and political science. Six years later he was ready for a career change, and assumed a masters of business administration degree was the best way to make that transition.
“I wasn’t really sure at the time exactly what I wanted to do, I just had this feeling that it would be good to build up my quantitative chops, my finance chops,” he says.
Chang’s application was accepted by four different business school programs, but ultimately he chose none of them.
“When I looked at the price tag of the education, when I really weighed what I would be gaining for that cost, and the opportunity cost of my time. I felt like I could gain as much, I could earn as much, doing something else.”
With the cost of an MBA and Executive MBA on the rise, and with more low-cost alternatives to traditional business education readily available, the value of an MBA isn’t as obvious as it once was.
According to Statistics Canada, the average cost of tuition for an MBA program in Canada is almost $30,000, while EMBAs cost an average of more $50,000 in the 2020-2021 school year, but fees vary between institutions. Tuition at three of Canada’s top business schools – the University of Toronto’s Rotman School of Management, Western University’s Ivey Business School, and McGill’s Desautels Faculty of Management – range from $83,000 to $95,000 for Canadian residents.
Instead of pursuing an MBA, Chang launched a media company called The Peak, which boasts a newsletter and daily podcast with roughly 45,000 subscribers. “For an entrepreneur, the skills that you learn there, many of them do not impact the outcome of your business, and that is ultimately why I didn’t pursue it,” he says.
The MBA program has long been considered the most direct pathway into a leadership position, but there are now a variety of lower-cost alternatives that can be as valuable to students in certain circumstances.
“Beyond the obvious platforms – like Coursera, EdX and Udemy, all of those tools that will allow you to develop those skills [online] – the more traditional brick-and-mortar universities are also doing some of these [non-MBA business programs], because they understand that some of your longer-term offerings, the MBAs and EMBAs, are not necessary for career progression,” says Teo Salgado, founder of VerveSmith, an independent educational consultant and admissions counselling provider.
Salgado says that many clients discover they can achieve similar career results by earning a lower-cost credential, such as a project management certificate, masters of finance or Chartered Financial Analyst designation.
“If a student really thinks through what their motivations are, what their goal is, and surveys the landscape to see if there are other options for them that may not be the MBA, I think students can make better decisions,” he says.
Salgado adds that some industries also value the credential more than others. According to a 2020 study by the Ivey School of Business, 31 per cent of its alumni are now employed by financial intuitions, 12 per cent work in the consulting field, and 10 per cent are employed in the technology sector. No other industry employed more than six per cent of its graduates.
“If they’re coming from industries where the return on investment might not be the best, I will ask them to take a look up the ladder in their organization or at an organization that they’re hoping to work at in the future, take a look at who is in the leadership positions that they aspire to, and see what kind of education they’ve had,” advises Salgado.
The one situation that typically results in the lowest return on investment is enrolling in an MBA program prior to acquiring any significant work experience.
“A lot of employers will say, ‘great, instead of four years of school you now have six years of school, but you still don’t have any work experience, you’re still an entry-level candidate,’ and they’ll pay you like an entry level candidate,” says David Pullara, a marketing consultant and marketing instructor for the Schulich School of Business at York University. “The MBA is like a multiplier, but if you have zero work experience, zero times anything is zero.”
Pullara, whose salary bump after earning an MBA from Schulich in 2008 was greater than the cost of tuition, says MBA programs are best suited for those who want to take their existing career to the next level, in an industry that puts a premium on that education.
“For some people an MBA is a complete waste of time, and for some people it’s the best thing they could have ever done,” he says. “One of the most important things they teach in business school is that the answer is usually, ‘it depends.’”