Obtaining an MBA degree requires a significant amount of investment. You’re not only spending money but investing a large amount of time and effort into it.
While preparing for your MBA, it is important to critically access if the benefits of enrolling in a graduate business school outweigh the costs, according to experts. Your current financial capabilities and commitments are key factors to consider before determining whether applying for an MBA is the right choice for you.
According to experts, one great way to weigh the short-term financial benefits of an MBA is to research the average salary of recent graduates of business schools and compare that figure with the average number of student loan debt.
Of all the ranked business schools that provided salary figures in the U.S. News Best Business Schools ranking, the average starting salary among 2018 graduates from full-time MBA programs was $87,683.88. While for 2018 graduates of full-time MBA program at the ranked business schools, the average debt burden was $51,671.90.
For schools that provided both salary and debt figures, the average salary for MBA graduates was $86,253.72—167% higher than the average debt burden at those schools.
Mike Catania, the founder of the coupon website PromotionCode.org and a student in the executive MBA program at the University of California—Los Angeles Anderson School of Management, noted that one of the major reasons he chose to attend business school was a strong desire to expand his network.
“I got exactly what I wanted – access to brilliant classmates and faculty that I would never have encountered on my own,” he noted. “It’s difficult to ascribe a value to that, but I look at it as only temporarily intangible – the relationships forged over the next few years will positively affect my opportunities as an entrepreneur moving forward.”
According to a financial ROI report on MBA published by Quacquarelli Symonds—a higher education data, consulting and research company—within 10 years of earning an MBA degree, the average MBA graduates from either a U.S. or international business school had an estimated ROI of $390,751—even after deducting tuition and opportunity costs of attending an MBA program. The report also went further to show that the average decade-long ROI of an MBA graduate from the Stanford University Graduate School of Business is higher than $1 million.
While the financial benefit of an MBA degree is a huge factor to consider, experts also note that there are other non-financial factors to consider, such as if getting the degree would either facilitate career change or accelerate career advancement.
“Often candidates have a career progression in mind – ask whether people who have followed that path have been helped by an MBA,” said Mark W. Nelson, the dean of Cornell University’s Samuel Curtis Johnson Graduate School of Management. “Also, consider your personal opportunities for growth. What do you want to work on? Consider how an MBA would help you develop those capabilities.”
For example, with the future of data analyticslooking bright for data scientists, getting an MBA might be what you need to boost your chances of landing a great job.
Another important thing to consider when deciding to pursue an MBA degree is your current lifestyle. It is a venture that requires serious commitments, said Catania.
“It’s just going to eat up so much of your time, and all of the (business) schools make it abundantly clear that this is on par with a job,” he adds.
Also, Nelson noted that an MBA is best suited for individuals who want to begin a major change in their career path. “An MBA is a good path when candidates are looking for a career switch or a significant career advancement,” he said.
However, Elissa Sangster, CEO of the Forté Foundation—a non-profit organization with a mission to increase the representation of women in business schools and corporate leadership positions—warns that an MBA is not necessary for every type of business career.
“You could trick yourself into thinking you need to go and pursue an MBA because, if you’re going to run a yoga studio or you’re going to … open up a car wash or run a food truck, those are all businesses,” she said.
“Getting an expensive MBA degree may not be a smart financial decision for someone who wants to run a small local business, while it could be a strategic move for someone who hopes to start or manage a large, influential corporation.”
According to Phil Strazzulla, an entrepreneur and the founder of two companies in the software sector – Select Software Reviews and NextWave Hire – who earned an MBA from Harvard Business School, he noted that while it is a chance worth taking, it is one that needs to be carefully analysed.
“Chances are, if you’re thinking about getting an MBA, you are an analytically rigorous person who’s done the analysis on whether it makes sense to pay now for future gains in salary,” he said. “And, if you go to a top school, it undoubtedly is. However, the other way I’d recommend thinking about your decision is how it’ll impact your overall happiness.”
Furthermore, SiqiMou, the co-founder and CEO of the tech-driven beauty company HelloAva who earned an MBA degree from Stanford, notes that one of the key advantages of attending a high-quality business school is that it provides exposure to a wide array of career opportunities.
“I would say the advantage of coming to one of these relatively prestigious business schools is that you have a lot of options that are open to you,” she said. “You can go back into finance or consulting types of jobs, or you can also start something yourself.”
Bachenheimer, a clinical professor of management at Pace University’s Lubin School of Business in New York City, added that an MBA provides project-based learning activities that allow students to practice solving real business problems.
“An MBA can be much more than the knowledge and skills acquired through coursework; it can truly expand you and your world,” he said.