Years ago the answer was obvious - getting an MBA was absolutely worth the cost. Not everyone had them, they were not as expensive, and the increase in salary from having the prestigious degree outweighed the negatives (e.g., spending time and money to further your education). Nowadays it’s not quite that simple. The cost of education has gone up, the job market has gotten worse, and it seems as if there are increasingly more people adding these initials to their credentials. So - what exactly are you in for?
Here are the costs of some of the top MBA programs in the country, some local programs, and some online MBA programs:
The University of Chicago, Booth School of Business - $116,969
Harvard Business School - $133,961
The Wharton School, University of Pennsylvania - $127,176
Georgetown University, McDonough School of Business - $102,650
University of Virginia, Darden School of Business - $99,800 (residents) $109,800 (non-residents)
University of Maryland, Robert H. Smith School of Business - $80,316 (residents) $94,896 (non-residents)
Arizona State University, W.P. Carey School of Business - $54,600
University of Florida, Hough Graduate School of Business - $54,307
The University of Texas at Dallas, Naveen Jindal School of Management - $43,142
Not only do you have to figure out how much you are willing to spend on earning this degree, but you also need to figure out how you will do it. A full-time MBA program may be completed faster than a part-time program, but you will often forgo salary while you are in school. Talk with your employer to find out what their policies are - they may offer flexibility when it comes to part-time programs and some even offer to help with covering some of tuition. You also need to know if you are obligated to then stay with that company for a certain number of years following completion of the MBA.
In 2010, Mark Johnston, Keith Whittingham, and Ronald Yeaple conducted a comprehensive research study of alumni from an AACSB-accredited business school consistently ranked in the Forbes Top 50 (but not one of the elite business schools such as Harvard or Stanford)4. This study, peer-reviewed in the Journal of Education for Business, included data from the following categories:
● Pre-MBA Pay (salary plus bonus) for the year before matriculating
● Post-MBA Starting Pay (salary plus bonus) when graduating
● Fifth Year Pay (salary plus bonus) received five years after graduating
The results were interesting and consistent with previous studies conducted. Post-MBA Starting Pay was up 50 percent over Pre-MBA Pay for full-time students (for example, if you were making $50,000 a year before starting your MBA, you could expect to make $75,000 a year upon graduation). By the end of the fifth year after graduating with an MBA, Fifth Year Pay was up 80 percent over Post-MBA Starting Pay. Continuing with that example, if you were earning $75,000 after graduating with your MBA, you could expect to earn $135,000 after five years on the job. Respondents also reported high levels of satisfaction with their decision to get an MBA, strongly agreeing with the statements “Your MBA degree has provided you with wider career choices” and “Your MBA was a good investment of time and money.” Check out Mr. Yeaple’s article for more details.
It is likely that pay increase is a huge motivator for most people to consider getting an MBA. But these numbers are not guaranteed, of course. If you make the decision to invest in an MBA, it’s a good idea to have a clear picture of where you want to go and what you want to be doing after graduation.
Another thing to consider is how long it will take you to pay back any loans you took out to cover tuition. That number will change depending on how much you needed for tuition, and your salary upon graduation. According to Forbes’ list of the top business schools5, students needed anywhere from three to five years to pay off tuition loans, at salaries ranging from $68,000-108,000 post-MBA.
3. Non-monetary Benefits
For most of us, getting an MBA is about more than just the credentials - it is about the hard and soft skills you are learning to advance your career6. These include, but are not limited to:
MBA programs also provide you with the opportunity to listen to and speak with top level executives at major companies. They allow you to network with people you may not have had access to before. Some programs have travel residencies, where you get to visit international companies and learn from their different styles, providing cultural opportunities as well. Mostly, you get to learn from people in the industry who can offer real-life stories and advice, and establish contacts that can be beneficial when job hunting.
Obviously this is not everything you need to think about when making the huge decision on whether to invest in getting an MBA, but it is certainly a start. I wouldn’t say making a decision like this is a no-brainer, but I may ask myself these questions:
- Where is my career headed and is that where I want it to go?
- Would an MBA provide more career options and choices?
- Do I need an MBA?
- Am I a better candidate with an MBA?
- Does my employer value the degree?
- Can I afford it right now (money and time)?
Circling back to that initial question - is it worth it? Well, that’s up to you and what you value.
By Kristin Maclay Brunett Marketing & Business Development Manager, Paley Rothman for the September/October 2014 Issue of the Capital Ideas Newsletter.