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What if there was a way to increase your earning potential by $ 3 million or more over the course of your lifetime? While this might sound like a pipe dream, it could be achievable. According to a 2021 survey by the Graduate Management Admission Council (GMAC), people with a master’s degree in business administration (MBA) are expected to earn $ 3 million more over 35 years than those with a baccalaureate.
But not everyone with an MBA will have increased income or better career prospects. It depends entirely on variables such as the field selected, the university awarding the degree and the cost of the program. Is an MBA worth it? The answer is based on your unique situation, but here are some things to consider.
What you need to know about obtaining an MBA
Attending a business school is a common choice. But MBA programs are selective and, if you are accepted, the programs are rigorous. Before you shell out your money, there are a few things you should know about MBAs.
What typical MBA programs involve
MBA programs are generally time consuming and labor intensive. If you’re enrolled in a traditional two-year program, the first year can be overwhelming. You will cover basic topics such as finance, accounting, organizational behavior, economics, and marketing. You can complete some elective courses to sharpen your focus.
Many business school students aggressively pursue summer business associate programs. They can pay quite well and can lead to full time positions. These programs can be very competitive, and the application process can begin almost immediately after starting your first year as an MBA student.
The second year of an MBA program is usually less intensive, but it usually involves many elective courses in your area of specialization. It enables many professional networks and developments, helping you to find a job after graduation.
Time to get a degree
Most MBA programs last two years if you are enrolled full-time. There are accelerated programs that can take less, typically around 12 months. Executive MBA programs, where students work and take classes in the evenings or on weekends, can take significantly longer.
Costs of MBA programs
The cost of the best schools ranged from around $ 55,000 to over $ 161,000 for two-year programs in 2021. Factors affecting costs include location, prestige and whether the school is public or private. For example, Stanford University is the top ranked business school for 2021. Its annual cost was $ 74,706, or over $ 147,000 for its entire program. But attending a public school with discounts for state residents could cut costs significantly.
Benefits of the MBA degree
If you are considering entering a business school, you might be wondering if getting an MBA is worth it. Here are some potential benefits of obtaining an MBA.
According to GMAC, employers planned to offer a median base salary of $ 115,000 for new hires with MBAs in 2021, compared to a median of $ 65,000 for those with a bachelor’s degree. Additionally, many companies hiring new MBAs in the United States offer signing bonuses. The median signing bonus is $ 10,500, a big plus.
People with an MBA have increased potential for career advancement. The outlook for managerial positions is expected to grow by around 9% by 2030, according to the Bureau of Labor Statistics. MBAs can be put on the fast track for promotions in many different fields, including accounting and marketing.
Networking is an important and lasting benefit of business school. During your stay as a student, you will meet many other like-minded professionals. After graduating, you can also access your school’s alumni network. With so many business relationships built on personal relationships, this can be a major advantage for an MBA.
Disadvantages of an MBA
While an MBA can be useful in the careers of many people, it is not necessary, or even beneficial, for everyone. Here are a few drawbacks to keep in mind.
Since the cost of an MBA can reach six figures, paying for a graduate program can be difficult. You will likely need to use student loans to cover at least some of the costs. Graduate loans can have high interest rates, and getting into debt can be a heavy burden.
Absence of necessity
Not all fields require an MBA to advance in your career. While an MBA can be particularly useful if you work in finance for a large corporation, other areas such as marketing or working in the nonprofit sector may not generate as much income with an MBA. Instead, it can further increase your student loan debt.
Not all programs are seen the same
Interest in online MBA programs is high, especially after the pandemic forced students and employees to work remotely. Yet some companies are placing more emphasis on in-person learning.
The majority of corporate recruiters view online MBA programs with skepticism. According to the GMAC survey, only 34% of respondents agreed that their organization places equal value on graduates of online and in-person programs.
If you are hoping to work in a large organization or in a highly competitive industry, you may have to shell out the jackpot for a prestigious program.
Alternatives to MBAs
If you’re looking to change careers or get promoted, an MBA isn’t the only option. There are other ways that can be effective:
While not a complete replacement for traditional MBA programs, a mini (or micro) MBA can be a good choice for someone looking to broaden their skills and develop their professional networks. In a mini MBA program, you can complete the courses in less than a year. They aren’t as intensive or in-depth as traditional MBAs, but the programs can give you a good overview of fundamental business topics at a lower cost.
If you want a new career or improve your credentials, another option is to get a certification instead of a full degree. You might be surprised at the specific types of certifications available for your industry. For example:
- Chartered Financial Analyst (CFA): A CFA is a distinction awarded by the CFA Institute to financial analysts after successfully passing exams in economics, ethics, and accounting.
- Lean Six Sigma: Lean Six Sigma is a method of reducing waste, improving performance, and increasing business efficiency. There are several certifications that can be obtained, with a Lean Six Sigma black belt being the most advanced certification available.
Memberships in professional associations
Joining a professional association, such as the Public Relations Society of America or the American Accounting Association, can be a worthwhile investment. Membership fees are much cheaper than business schools, and you can network with professionals in your industry and attend conferences to build new professional relationships.
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Is an MBA worth it?
There isn’t one right answer for everyone as to whether an MBA is worth it. However, 87% of MBA graduates reported a positive ROI, so this could be the tool you need to accelerate your career and increase your salary. Before handing over your hard-earned money, research the degree requirements for your target level and speak to experienced professionals in the industry you desire to see what kind of education they see as necessary for progress.