A Master’s in Business Administration … is it worth the time and financial investment? The answer to that question is both yes and no. While that answer is murky, it is also very sound. Here’s why a Master of Business (MBA) program might or might not work well for you.
Students focusing on business administration and management have an important choice to make beyond graduation. Should they pursue an MBA, a Master of Business Administration? Or should they focus more on getting out into the workforce? Assuming they qualify for the program, will their income really be better for it? Bottom line: Is an MBA worth it?
The answer is a little different for everyone, depending on your plans and career goals. To make the decision easier, let’s take a look at how to tell if an MBA degree is a good choice, and what factors are the most important to keep in mind!
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Time and Cost Investment
First, let’s look at what an MBA requires—both time and money. On a standard track, an MBA takes around two years to complete. Post University’s standard track program is designed to take 26 months to complete. Yes, it is possible to also have a job during this time and many students choose to do this, but your attention (and schedule) will still be divided. Other students may choose to fast track an MBA in a shorter period of time, but this could make it more difficult to begin and advance a career.
Costs, too, can vary. Costhelper reports that an MBA costs between $40,000 and $120,000 for tuition and fees. The wide range shows just how much differentiation there is in MBA programs from universities, including how many credits it takes to complete the program, where you live, if it offers concentrations, online components, and more. Factor in these costs, along when the costs of living, when calculating how expensive it will be to earn your MBA.
Keep in mind there are a variety of ways to pay for an MBA, including some scholarships and a variety of loan programs. These can cover or delay payments and may be an important part of your overall plan, but it can also come with hidden costs. In 2018, the average business student had around $51,671.90 of debt to pay off in the coming years, including any applicable interest.
Now the obvious question is: Will an MBA help earn enough compensation to make that time and expense worth it? Let’s look at some numbers:
- Payscale reports that an MBA earns an average salary of $85,000
- Starting salaries for managers are significant less, usually around $50,000 to $60,000.
- According a 2016 report, 93% of surveyed MBA students would still pursue an MBA knowing all they know today—a sign they are satisfied with their career path.
Remember, the business administration market can be very challenging, and salaries depend on what industry and what position a graduate is able to find. A job is not guaranteed just because you have an MBA—an MBA may make the chance of getting an interview higher, but it’s not a lock for any particular position.
Due to the costs involved, an MBA is usually only worthwhile if the student is planning to work at a management level in a business field. If you aren’t planning on working in business leadership, then an MBA is rarely worth the cost. Others pursue an MBA with the goal of starting their own company, although this naturally carries risks of its own.
Return on Investment for Business School
As you can see, it’s difficult to give a final number when you take into account the risks of entering the job market, what sort of job you may get, long-term loan payments, and other data. However, researchers and schools have chosen a method to account for a lot of this variance, usually called “10-year ROI.” This simply asks what the return on investment is after 10 years of having an MBA. The number is important, because this is typically enough time to find a desired job or promotion, create a loan payment plans, and so on.
Top MBA reports that the average global 10-year ROI of an MBA is $390,751, which is significantly more than the average MBA program costs. Average payback time for an MBA program in North America tends to be around 55 months according to this same study.
The Princeton Review actually looks at 10-year ROI from a few different schools to see how it can change. For example, at the Arizona State University Carey School of Business (ranked 25th in the nation), the program costs $68,000 and the 10-year ROI is 250%.
While 10-year ROI can be a useful measurement, it’s important to remember that it doesn’t take into account any life decisions beyond getting an MBA and a salary. If you decide to move to a location where the cost of living is much higher, or decide to start a family, you will have additional costs that will impact your ability to pay back student loans, etc.
Competition and Specialties
We mentioned that the MBA market can be challenging, and there are good reasons for that. In the 2000s and 2010s students with all kinds of MBAs flooded the market. MBAs thus started losing some of their value and employers began looking at other factors instead. The market has since started to correct in two important ways: Fewer students are getting MBAs (which makes them more valuable once again) and MBAs are focusing more on specialties, areas of focus that are extremely useful when aiming for a certain job.
Post University, for example, offers a variety of concentrations for students with specific goals. Those who choose a concentration in Entrepreneurship, for example, will be better equipped to start a successful business. Those with a concentration in Healthcare Systems Leadership will be qualified in the fast-growing field of healthcare organization and technology. Marketing concentrations obviously favor marketing management, Finance concentrations are great for financial analysts, and so on. These specialties can have a significant impact on the salaries that graduates can expect, which makes them a very important decision!
Additional Factors You Should Know When Looking at MBAs
- Signing Bonuses: Some management positions offer signing bonuses, which are useful for paying down student loans, etc. However, jobs with good signing bonuses can be extremely competitive.
- Professional Contacts: Not all the value of an MBA is immediately tangible. Many alumni say some of the best value comes from professional contacts made with peers and leaders met along the way.
- MBA Programs: Always show where your MBA came from. There’s a vast amount of difference between a respected program and the other end of the spectrum: Employers will want to know.
- Location: Where you work will also affect your salary! You may want to compare salaries for a position in several different cities to get a better idea for your own personal career path.
- Future Uncertainty: The private sector can be an uncertain place. There’s no guarantee that salaries will remain at stated levels, or that demand for a particular job will stay high. It’s okay to have backup plans, too!
Bottom line: Is an MBA worth it? Yes, but you must go after the jobs that make this degree worthwhile.