Opportunity Cost

A very simplified analysis of the price of BSchool (financially at least):

Assume for a moment you and your Significant Other both work. You're in your mid/late 20's and live in a big city. You were lucky enough to graduate college with no debt, and you grabbed a good job where you've stayed since graduation. You rent your apartment and neither of you owns a car. For simplicity say you make a combined $200,000 per year (gross, including 401(k) match & etc.) You each live on $60,000 per year which means you save $80,000 combined.

And now you're both considering applying to top BSchools. What's the true cost if you both go?

(One year all-in $75,000) * (2 people) * (2 years) = $300,000
(Foregone savings $80,000) * (2 years) = $160,000
Foregone 2 years' work experience = ignored for simplicity
Total = $460,000

Let's invest that for 35 years and say you make 7% = FV(.07,35,0,460000) = $4,911,227.48

Woah. Actually let's go with "Holy Shit".

It's sobering to think you're going to be 30 years old with a $4,900,000 gap to make up. That's a pretty large increase in earnings needed in order to make BSchool worth while (financially).