Earning aMaster's in Business Administration (MBA) can help professionals enhance their career opportunities, increase compensation, and lead to job promotions. An MBA can provide the skills and knowledge necessary to start a new business, and many employers require an MBA for certain management or leadership positions.
On the other hand, an MBA from a top business school can cost nearly $100,000—a substantial expense for recent graduates and substantial time out of the workforce for early-career professionals. The question becomes, is earning an MBA worth the cost? It all depends.
Key Takeaways
- A Masters in Business Administration (MBA) is a graduate degree focused on management, business, finance, and entrepreneurship.
- MBAs often come with a pricey tuition and can be a substantial expense, especially for more recent college graduates.
- Most MBA graduates confirm the degree is worth it, leading to better quality jobs and better-paid jobs.
- When deciding on an MBA program, it helps to look at the return on investment (ROI); the salary obtained from a job once graduating compared to the cost of the program.
- However, given the cost and time commitment, you may want to consider alternatives.
Understanding the MBA Degree
MBA coursework involves a broad spectrum of business-related topics including accounting, statistics, economics, communications, management, and entrepreneurship. MBA programs not only prepare students to work for financial institutions, but they also prepare them for management positions or as founders of startup companies.
Excelling in academics serves as a solid foundation, butbusiness school is geared toward real-world professional outcomes. That's why many schools value relevant work experience in their decision-making process. For instance, EMBA programs are designed specifically for older individuals who are already in the workforce in management or leadership roles. EMBA admissions know that academic records will be stale and put a much heavier weight on work experience and the professional networks applicants bring to the table.
Part-time and EMBA programs are designed to allow full-time employees to earn their MBA at the same time by offering evening and weekend classes. Employers often pay for a student's tuition in full or in part if they believe that their new degree will make them a more valuable asset to the company.
Full-Time vs. Part-Time Programs
There are two routes one can take to earn their MBA. The first is a full-time or a part-time program. Although both result in an MBA, there are trade-offs to consider. A full-time student will find it difficult to work while they go to school. These programs are the most popular with younger students who have earned their bachelor's degree and can afford to study full time on campus.
Part-time MBA programs typically come in two flavors. The executive MBA (EMBA) is designed for students who have been in the workforce in executive or leadership roles and who are typically between 32 and 42. These programs can be very expensive, and students expectthat their employer will pick up the tab. The part-time MBA is geared for employees who work full time but are not yet in leadership positions. These students tend to be 24 to 35 years old and take classes after work, in the evenings, or on weekends.
Grades and GMAT Scores
Earning a bachelor's degree with a 4.0 GPA is undoubtedly an applaudable achievement. But not getting straight A's doesn't blemish your chances of getting into a respectable program. Getting a 3.5 or better GPA (B+ to A-) is typically the range from which these schools choose. The very best and top-rated programs demand a higher GPA than mid- or lower-tier ones.
The best business schools generally demand the highest Graduate Management Admission Test (GMAT)test scores. The average score among top-tier programs is between 720 and 730 (out of a possible 800). A perfect score of 800 can make an applicant stand out. Poets & Quants have compiled a list of average GMAT scores for some top MBA programs in the United States.
MBA Degree Pros and Cons
An MBA is only worth the expense, time, and effort when the graduate plans to work in a business-related field, in management, or as a company founder. An MBA may not be useful for those working in other industries unless they are in management or leadership roles.
Not all MBA degrees are created equal. The number of colleges, universities, and business schools that offer MBAs is increasing, making the space quite crowded. Unless a student earns a degree from a respectable program, it might not be as valuable as expected. Recruiters and hiring managers are not likely to view an MBA earned from an unknown or online-only educator to hold the same weight as one from a top-10 school. Professionals going back to school at a second- or third-tier school could end up wasting their time, money, and opportunity.
Hiring managers also know that an MBA doesn't automatically make them an ideal hire. Some believe that people who have achieved leadership positions with the degree would also have done so without it. Furthermore, having an MBA won't make a candidate stand out if they're already flawed in other ways, like being obtuse, slow to adapt, or bossy.
While many entrepreneurs hold MBAs, startup companies do not always look to hire other MBA holders. Instead, they often hire outside-the-box thinkers who can innovate and offer a perspective different from their own.
An MBA might help in getting a job interview, but it will not guarantee the applicant willland that job. On the other hand, people with work experience looking to give theircareer a boost can open avenues for growth and promotion with a part-time or EMBA program.
Pros
Graduating with an MBA can earn you a higher salary.
You'll have a leg up on your competition if you earn your MBA from a top-tier school.
An MBA gives you the skills and knowledge you need to advance in your field.
Cons
Having an MBA doesn't necessarily make you an ideal hire.
Going to an online or unknown school will not get you noticed.
An MBA isn't worth it if you don't intend to work in a business or management-related field.
What MBA Degree Program Alumni Think
The Graduate Management Admission Council (GMAC) issues regular research reports on how graduates from business schools rate their experience during and after school. The survey results are encouraging.
Their 2018 Alumni Perspectives Survey Report shows that 96% of MBA alumni regarded their degree as good, excellent, or outstanding value. Just 4% reported that the value of their degree was "fair" or "poor." Moreover, 90% of alumni would still pursue a graduate management degree if they had to do it all over again, knowing what they do today.
While business school alumni rate their degrees positively, thereturn on investment (ROI) has gone down as investment costs, such as tuition, have increased at a much higher rate than salaries.
All MBAs aren't created equally, so make sure you choose your program and your school wisely.
MBA Degree Alternatives
There are some alternatives that can help with a career in finance, business, or management for those who aren't interested in an MBA. The Master of Finance degree is finance-specific, taking only one year to complete. It provides graduates with the skills needed in trading, investments, asset management, or risk management.
Other graduate degrees in related fields are also good options for somebody looking to focus on economics, statistics, applied mathematics, or accounting.
The Chartered Financial Analyst (CFA) program is a self-study program that offers a comprehensive curriculum covering three levels of study. Each level is tested by challenging exams. The curriculum is considered by many to be equivalent to graduate education, and charter holders often are deemed valuable in the hiring process.
Other self-study programs are just as coveted, such as the Financial Risk Manager (FRM) designation and the SOA actuarial exams.
How Much Does an MBA Increase Your Salary?
According to MBA.com, new hires with an MBA can earn as much as $115,000 as a starting salary, compared to a new hire with an undergraduate degree at $65,000. But the impact your MBA has on your salary depends on a number of factors, including your school, the chosen field, your position, and your past experience.
How Many Years Does It Take to Get an MBA Degree?
The estimated length of a full-time MBA program is generally two years. Some schools offer accelerated programs for individuals who want to graduate earlier, which can take anywhere between 12 to 18 months. Part-time MBA programs, on the other hand, can take as long as three to four years, depending on how many courses you take every year.
What Is the Best Age to Do an MBA?
There's no real age requirement to do an MBA. Most students generally pursue a graduate degree like this when they're in their mid- to late-20s. Being in this age group gives them a good chance to gain some work experience, in addition to some time and flexibility to determine where they'd like to work after they graduate from business school.
Can an Average Student Do an MBA?
It depends. The top MBA programs in the world are highly competitive with strict admissions criteria, including top GMAT scores. Lower-ranked programs could be an option for those who were just average students during college. Alternatively, some executive MBA programs or those taught overseas may be more lenient with admissions.
Is an MBA a Master's Degree?
An MBA is a Master of Business Administration, it is a master's degree. It is a field of graduate study that specializes in business administration after a student receives their undergraduate degree.
The Bottom Line
Earning an MBA can enhance one's career path or help land a high-paying job. Typically, however, the expense is only offset if the degree is earned from a top-tier business school and if the career path sought is business-related. Despite the cost-benefit analysis, the great majority of business school alumni self-report very positive experiences and high value from their MBA degrees.
If somebody cannot afford the cost, cannot get into a top program, or does not have the time to juggle work and study, there are fortunately other good options to pursue, such as the CFA or a master's degree in finance or economics.
