Graduate school is an investment that makes sense for many people, but not for all. When you consider getting a Master of Business Administration (MBA) degree, there is time, effort, and costs you must put in. To know if it’s the right path, you will want to figure out if the return on investment (ROI) is worth it for you given your situation. But this isn’t always a black-and-white easily quantifiable answer. So, to answer the question, “is an MBA worth it?” we will share both financial and non-financial aspects of earning the degree to help you decide.
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What is an MBA? What Does the Program Teach?
A Master of Business Administration (MBA) is designed to provide practical knowledge in the realm of business. It teaches students the skills to move ahead in their business careers, from analysis to communication. The subjects in an MBA are broad and span: accounting, marketing, economics, communication, entrepreneurship, and more. An MBA can help you reach the C-suite in an organization or even start your own business.
However, it’s important to know that you can do all of these things without an MBA, too. The road to success just may feel steeper.
When is an MBA Worth It?
If you are considering an MBA, here are some of the reasons why it’s a good idea to pursue:
If you want to work in the C-suite or be a leader in business. For some organizations, an MBA is a requirement to apply and/or fill such positions.
- The Reward:
From both a financial standpoint and the feeling of fulfillment, earning your master’s degree is a rewarding achievement.
While it’s becoming increasingly more possible to begin a business without an MBA, having the practical business knowledge from the program can help with the process. Additionally, business schools may help expedite finding investors and expanding your network through connections gained in school.
Things to Keep in Mind
Although an MBA signals to employers that you have advanced educational experience, it doesn’t mean everything. It’s important to note:
1. Having an MBA doesn’t guarantee a job.
2. A lot of startups value out-of-the-box thinking and experience more than an MBA degree.
3. It’s always important to stay up-to-date and hone your technical and marketable skills when advancing in any career.
4. When getting an MBA, you will have to dedicate a lot of time to studying. It’s best to perform research on the different types of MBA programs to pursue the one that fits your schedule (part-time, full-time, executive MBA, global MBA, etc.).
Expected Cost and Time of an MBA
The cost of an MBA varies by institutional education and location.
However, when looking at the top business schools in America, the average annual tuition is more than $50,000. For some, that number is higher than $70,000 a year. For the next tier of schools, tuition averages about $40,000 per year.
In general, MBA programs take two years to complete. However, this timeline can vary if you enroll part-time versus full-time, or instead, choose to complete an accelerated program. Accelerated programs may only take a year.
The ROI for an MBA: Is an MBA Worth It?
To figure out if an MBA is “worth it,” you can financially weigh the costs and benefits.
The benefit would be defined as the salary you will earn because you have the degree and title of MBA. Of course, your salary will depend on your job, title, location, experience, and more. However, when looking at the average salaries of MBA graduates, it’s easiest to consider the numbers by industry:
- Consulting – $130,656
- Financial Services – $118,585
- Retail – $94,934
- Real Estate – $91,290
- Nonprofit – $56,553
For the full chart of industries, see the source chart from U.S. News.
The costs come from paying for school and the opportunity cost of not jumping straight into work. However, these are short-term considerations. According to an MBA report, they deduced the ROI by looking at the decade-long returns. As such, they concluded that the return on investment from an MBA is about $390,751.
This number is not meant to serve as the right ROI for everyone. Of course, variations like the cost of tuition, the job you have, the non-financial benefits from attending school and many other factors can affect the outcome.
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Alternative MBA Options
Regardless of variables, it’s true that an MBA is an expensive and time-consuming undertaking. There are other ways to pursue degrees in the business field or an MBA without breaking the bank.
Here are some alternatives to traditional MBA programs to consider:
1. Master of Finance degree:
An MF is a good alternative to an MBA for students who are seeking financial-specific knowledge. The subjects cover: investments, markets, financial reporting and analysis, and more.
2. Online MBA program:
Another option is to enroll in an online MBA program, like the University of the People. The benefits of doing so mean that you can save money on tuition costs and have more flexibility for when and where you learn. At UoPeople, for example, an MBA is tuition-free and has few requirements to enroll.
Is an Online MBA Worth It?
The number of online MBA programs is skyrocketing. But is an online MBA worth it?
With better technology and global access to education, online MBAs are being equally respected as traditional on-campus programs. In fact, many universities that offer on-campus programs are adding online learning to their offerings. This is true of the University of California, Davis and the University College London, and USC, to name a few.
Employers and students alike realize that online programs are not always chosen for the same reasons as a traditional MBA. For starters, online programs tend to be highly concentrated by students who have more work experience. Additionally, many students choose to take online classes so that they can continue working during school and set their own schedule.
When considering the ROI of an MBA, online programs like the University of the People prove to be very high since it’s tuition-free. Thus, the cost is relatively low with many benefits, like learning from top professors and networking with people from all over the world.
When is an MBA Not Worth It?
We’ve discussed the reasons why pursuing an MBA is worthwhile. However, before you jump into the commitment, make sure you aren’t doing so for the wrong reasons. These can include:
1. Unclear or unrealistic expectations:
If you think it’s going to solve your problems of being unhappy with your current career, think again. Don’t enter an MBA program with the expectation that everything will fall into place because of it.
2. Wrong timing:
Depending on your career goals and MBA program of choice, your work experience could make or break your admissions.
3. Your reasons:
Write down why you want your MBA. Make sure they are valid reasons and not because you believe it will make everything easier once you graduate.
4. Wrong program choice:
There are many types of MBA programs, as mentioned above. Be sure to outline the differences between part-time vs. full-time, online vs. traditional, EMBA vs. MBA, etc. to make sure you apply to the right program for you.
The Bottom Line
The right answer to, “is an MBA worth it?” really ends up being, “it depends.” If you can define your reasons why you want an MBA, you can handle the first step in making the decision. It pays to be aware of your timing, location, program type, career goals, and the alternatives before enrolling.
Of course, those with an MBA will generally end up earning more than those without it, but they also pay more for an education. Additionally, there are non-financial considerations like expanding your network that may not be immediately quantifiable.
As such, an MBA is very worth it for some and not worth it for others.