by Ilana Kowarski,
Consider both the short- and long-term payoff before enrolling in an MBA program, experts say.
OBTAINING AN MBA degree requires a significant investment of time, energy and money. So, before you enroll in graduate business school, it’s important to assess whether the benefits of attending outweigh the costs, according to alumni and professors of MBA programs. Read on to learn more about the key financial, professional and lifestyle considerations to factor into the decision-making process and tips for determining whether applying to an MBA program is the right choice for you.
The Financial Return on Investment for an MBA
According to experts, one way to gauge the short-term financial benefits of an MBA is to research the average salary among a business school’s recent grads and compare that figure with the average student loan debt.
Among the ranked business schools in the U.S. News Best Business Schools rankings that provided salary figures, the average starting salary among 2018 grads from full-time MBA programs was $87,683.88. Meanwhile, the average debt burden among 2018 grads of full-time MBA programs at the ranked B-schools that self-reported their student debt statistics was $51,671.90. At the schools that provided both debt and salary figures, the average salary for MBA grads was $86,253.72, which is 167% higher than the average debt burden at those schools.
Still, in order to decide whether it’s a wise decision to attend B-school, it is not sufficient to calculate the immediate financial payoff of an MBA degree, because the professional contacts you make during B-school could have a long-lasting influence on your career trajectory, experts say.
Mike Catania, the founder of the coupon website PromotionCode.org and a student in the executive MBA program at the University of California—Los Angeles Anderson School of Management, says one of the major reasons why he chose to attend B-school was a desire to expand his network. “I got exactly what I wanted – access to brilliant classmates and faculty that I would never have encountered on my own,” he wrote in an email. “It’s difficult to ascribe a value to that, but I look at it as only temporarily intangible – the relationships forged over the next few years will positively affect my opportunities as an entrepreneur moving forward.”
Experts advise prospective MBA students to also think about the long-term financial implications of pursuing an MBA.
A 2018 report on the financial return on investment for an MBA, published by QS Quacquarelli Symonds – a higher education data, consulting and research company – reveals the potential long-term profit from an MBA. According to the report, within 10 years of earning an MBA degree, the average MBA grad from either a U.S. or international business school had an estimated decade-long return on investment of $390,751, even after subtracting the tuition and opportunity costs of attending an MBA program. Furthermore, the report shows that the average decade-long return of an MBA from the Stanford University Graduate School of Business exceeded $1 million.
Nonfinancial Factors to Consider
Though the monetary benefit of an MBA degree is a key consideration, experts say there are other important factors to evaluate, such as whether pursuing that degree would either facilitate career change or accelerate career advancement. Potential MBA students should also assess whether an MBA would help them gain technical skills and professional connections that would make them more marketable to employers and more attractive to clients in their target industry, experts say.
“Often candidates have a career progression in mind – ask whether people who have followed that path have been helped by an MBA,” wrote Mark W. Nelson, the dean of Cornell University’s Samuel Curtis Johnson Graduate School of Management, in an email. “Also, consider your personal opportunities for growth. What do you want to work on? Consider how an MBA would help you develop those capabilities.”
Nelson says an MBA is best suited for people who want to initiate a major change in their career trajectory. “An MBA is a good path when candidates are looking for a career switch or a significant career advancement,” he wrote.
Elissa Sangster – the CEO of the Forté Foundation, a nonprofit organization whose mission is to increase the representation of women in business schools and corporate leadership positions – cautions that an MBA may not be necessary for every type of business career.
“You could trick yourself into thinking you need to go and pursue an MBA because, if you’re going to run a yoga studio or you’re going to … open up a car wash or run a food truck, those are all businesses,” Sangster says. Getting an expensive MBA degree may not be a smart financial decision for someone who wants to run a small local business, while it could be a strategic move for someone who hopes to start or manage a large, influential corporation, she says.
Sangster says MBA programs are designed to train future organization leaders, so an MBA is only suitable for a person who wants to become a leader. “That could be an entrepreneurial leader or it could be a corporate leader or it could end up being a nonprofit leader of some sort (or) a governmental leader, because we see MBAs in all those fields,” she says. An MBA might not be the best fit for someone who wants to be a functional specialist in a particular business field, since it is a general management degree. However, MBA credentials are highly relevant to individuals who want to gain the interdisciplinary strategic thinking and communication skills necessary to lead a complex organization.
Anyone considering an MBA should understand that completing this type of academic program requires serious commitment, Catania says. Enrolling in an MBA program isn’t something you should do if you’re unsure about wanting an MBA degree. “It’s just going to eat up so much of your time, and all of the (business) schools make it abundantly clear that this is on par with a job,” he adds.
Catania urges potential MBA students to think carefully about whether they have a compelling reason to pursue an MBA. “I would advise a prospective student only to pursue an MBA if they can distill their intentions into a single, clear objective,” he wrote in an email.
MBA professors and alumni say someone struggling to decide whether to pursue graduate business school should consider whether acquiring an MBA would be an academically and personally enriching experience.
“Chances are, if you’re thinking about getting an MBA, you are an analytically rigorous person who’s done the analysis on whether it makes sense to pay now for future gains in salary,” wrote Phil Strazzulla, an entrepreneur and the founder of two companies in the software sector – Select Software Reviews and NextWave Hire – who earned an MBA from Harvard Business School, in an email. “And, if you go to a top school, it undoubtedly is. However, the other way I’d recommend thinking about your decision is how it’ll impact your overall happiness. For me, business school was easily two of the happiest years of my life. And in my opinion, that’s worth a lot! … It’s a whirlwind of stimulation and stretch experiences that will change you for the better.”
Siqi Mou, the co-founder and CEO of the tech-driven beauty company HelloAva who earned an MBA degree from Stanford, says one of the key perks of attending a high-quality business school is that it provides exposure to a wide array of career opportunities.
“I would say the advantage of coming to one of these relatively prestigious business schools is that you have a lot of options that are open to you,” she says. “You can go back into finance or consulting types of jobs, or you can also start something yourself.”
Bruce Bachenheimer, a clinical professor of management at Pace University’s Lubin School of Business in New York City, says that project-based learning activities in MBA courses allow students to practice solving real business problems. Ultimately, this can help students become more creative thinkers, and he says this type of education tends to have a lasting impact.
Bachenheimer adds that an MBA can offer a formative experience that helps a student shape his or her professional identity. “An MBA can be much more than the knowledge and skills acquired through coursework; it can truly expand you and your world,” he wrote in an email.