The Financial Review on Monday pointed out the inconvenient truth that for many business schools, their MBA programs “barely break even [while] others are massively out of pocket by the time mortar boards are donned and degrees handed out.”

While graduate business programs are costing elite institutions like Melbourne University $2.2 million annually, the costs to candidates appear to be far higher.

MBAs remain one of the most overrated concepts in education. That is not to say a Masters of Business Administration has no purpose, but rather, it is often undertaken for the wrong reasons, at great cost.

MBAs were originally created for those with scientific, engineering or mathematical backgrounds who, after five or 10 years in the workforce sought to move into more managerial roles. Undertaking an MBA makes a lot of sense for an engineer with five years technical experience seeking a commercial background. Similarly, in the United States, where a large proportion of under-graduate students complete broad liberal-arts degrees, an MBA serves a valuable purpose.

However, many Australian MBA candidates already have a background in business, a significant number had already obtained commerce or business degrees at an undergraduate level. A senior finance lecturer at a leading Australian university once told this writer than MBAs are virtually useless for those who already have commerce degrees. When your correspondent used to flick through old exam papers at the university library, it was quite noticeable that MBA exams bore a striking resemblance to first-year accounting or finance papers.

The cost of an MBA is substantial — in addition to the tuition (from $50,000 annually, but usually far more, especially in the United States), a candidate undertaking a full-time masters will need to take one or two years off work. Given that most MBA candidates are professionals with several years work experience, the cost would be upwards of several hundred thousand dollars (plus a delay in career progression). As any MBA graduate would tell you, that cost also needs to be adjusted to its present value for the full cost of the degree to be appreciated.

For candidates with commerce degrees, the real benefits of an MBA lies almost solely in telling people that one has an MBA. Unfortunately for those candidates, given the prevalence of graduate degrees, the value of an MBA has depreciated faster than a 7-Series BMW. There are of course exceptions to that rule, especially when an MBA is undertaken at a leading international school, like Harvard or Wharton or London School of Economics, where the networking benefits would most likely overcome the financial and time burden.

While for engineers or scientists, a masters of business administration may be an invaluable tool, for others, especially those already with a bachelor of commerce, and MBA is little more than a glorified year-long holiday from the real world.