Editor’s Note: Forbes Advisor may earn a commission on sales made through affiliate links on this page, but this does not affect the opinions or ratings of our editors.
What if there was a way to increase your earning potential in your life by $ 3 million or more? Even if that sounds like a pipe dream, it might be doable. According to a 2021 Graduate Management Admission Council (GMAC) survey, those with a Masters of Business Administration (MBA) are expected to earn $ 3 million more than those with a bachelor’s degree over a 35-year period.
But not everyone with an MBA will have higher income or better career prospects. It depends entirely on variables such as the subject chosen, the university issuing the degree, and the cost of the program. Is an MBA worth it? The answer will be based on your individual situation, but here are a few things to keep in mind.
What You Should Know About Getting an MBA Degree
Attending business school is a common choice. But MBA programs are selective and, if accepted, the programs are rigorous. Before you give up your money, there are a few things you should know about MBAs.
What typical MBA programs involve
MBA programs are usually very time-consuming and labor-intensive. If you’re enrolled in a traditional two-year program, the first year can be overwhelming. You will cover core topics such as finance, accounting, organizational behavior, economics and marketing. You can take a few electives to narrow your focus.
Many business school students aggressively pursue summer business partner programs. They can pay quite well, and they can lead to full-time positions. These programs can be very competitive and the application process can begin almost immediately after your freshman year as an MBA student.
The second year of an MBA program is usually less intense, but it usually includes many electives in your specialty. It enables a high degree of professional networking and development and helps you secure a job after graduation.
Time to get a degree
Most MBA programs last two years if you attend full-time. There are accelerated programs that can take less time – usually around 12 months. Executive MBA programs, where students work and take classes in the evenings or on weekends, can take much longer.
Cost of MBA programs
The cost of the top schools ranged from about $ 55,000 to over $ 161,000 for two-year programs in 2021. Factors that affect cost include location, prestige, and whether the school is public or private. For example, Stanford University is the best business school for 2021. The annual cost was $ 74,706, or more than $ 147,000 for the entire program. However, attending a public school with discounts for state residents could cut costs significantly.
Advantages of the MBA degree
When you are thinking about going to a business school, you may be wondering whether it is worth doing an MBA. Here are some potential benefits for an MBA.
According to GMAC, employers planned to offer an average base salary of $ 115,000 for new MBA employees in 2021, compared with a median of $ 65,000 for undergraduate graduates. In addition, many companies hiring new MBAs in the United States offer signing bonuses. The average signing bonus is $ 10,500 – a significant perk.
People with MBAs have increased potential for professional advancement. The outlook for leadership positions is set to increase by about 9% by 2030, according to the Bureau of Labor Statistics. MBAs can be speeded up to promotions in many different fields, including accounting and marketing.
Networking is an essential and lasting advantage of the business school. During your studies you will meet many other like-minded people. After graduation, you can also access your school’s alumni network. With so many business relationships that rely on personal connections, this can be a huge benefit for an MBA.
Disadvantages of an MBA degree
While an MBA can be helpful to many people, it is not necessary or even beneficial for all. Here are some drawbacks to be aware of.
Since the cost of an MBA can be well in the six-digit range, paying for a graduate program can be a challenge. You will likely need to use student loans to cover at least part of the cost. Graduate school loans can have high interest rates, and debt can be a heavy burden.
Lack of need
Not all areas require MBAs to advance in your career. While an MBA can be especially useful if you work in finance for a large company, other areas like marketing or working in the nonprofit sector may not get as much income growth with an MBA. Instead, it can increase your student loan debt more.
Not all programs are displayed equally
There is great interest in online MBA programs, especially after the pandemic forced students and staff to work remotely. However, there are some companies that place more value on personal learning.
The majority of recruiters view online MBA programs with skepticism. According to the GMAC survey, only 34% of respondents agreed that their organization rates both online and classroom graduates equally.
If you are hoping to work in a large organization or in a highly competitive industry, you may have to spend top dollars on a prestigious program.
Alternatives to MBA degrees
If you’re looking to change jobs or get a promotion, 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 great choice for someone looking to expand their skills and build their professional network. A mini MBA program allows you to complete coursework in less than a year. They’re not as intense or in-depth as traditional MBAs, but the programs can give you a solid overview of basic business topics at a lower cost.
If you are looking to embark on a new career or improve your qualifications, you can obtain 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 an award given by the CFA Institute to financial analysts after successfully passing exams in economics, ethics, and accounting.
- Lean Six Sigma: Lean Six Sigma is a way to reduce waste, improve performance and increase business efficiency. There are several certifications that can be earned, with a Lean Six Sigma Black Belt being the most advanced Proof of Entitlement available.
Memberships in the professional association
Joining a professional association, like the Public Relations Society of America or the American Accounting Association, can be a worthwhile investment. Membership fees are much cheaper than a business school, and you can network with professionals in your industry and attend conferences to make new professional connections.
Compare student loan installments in minutes
Compare rates from participating lenders through Credible.com
Is an MBA worth it?
There isn’t one right answer for everyone when it comes to knowing if an MBA is worthwhile. However, 87% of MBA alumni reported positive ROI, so this could be the tool you need to accelerate your career and increase your salary. Before spending your hard earned cash, research the degree requirements for your target level and speak to seasoned professionals in the industry you want to see what type of education they think will be needed to move forward.