Is an MBA Worth It?

The Master of Business Administration (MBA) graduate degree is designed to provide business professionals with marketing, economics, analysis, and communication skills that are in demand in many businesses.

But is an MBA worth the cost? Below, we examine the return on investment students can expect from an MBA.

Key Takeaways

• A Master of Business Administration (MBA) is a graduate degree focused on business management, with specializations including finance, marketing, analytics, and entrepreneurship.
• MBA programs are often expensive, especially at universities that employers consider more prestigious.
• Most MBA graduates say the degree is worth it, leading to better, higher-paying jobs.
• When deciding on an MBA program, look at the return on investment (ROI), such as the salary (or other benefit) you hope to gain from a new job or promotion after graduation, vs. the cost in time and money for the degree.

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 also for management positions or as founders of startup companies.

Many MBAs are cross-listed with other graduate-level programs to specialize in business administration for health, real estate, technology startups, or others.

Excelling in academics serves as a solid foundation, but business school is geared toward real-world professional outcomes. That’s why many schools value relevant work experience in their admissions.

For instance, executive MBAs (EMBAs) are designed for those already in management or leadership roles in the workforce. EMBA admissions teams know that academic records might be stale and thus give greater weight to work experience and the professional networks applicants have built.

Part-time and EMBA programs are designed to allow full-time employees to earn their MBA through evenings, weekends, and online courses. Some employers pay toward tuition if they believe the degree will make you more valuable to the company.

Full-Time vs. Part-Time Programs

One can take two routes to earn an MBA: through 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 working difficult while they go to school. These programs are more popular with younger students who can afford to study full-time on campus.

Part-time MBA programs typically come in two types:

• EMBAs: Designed for students in the workforce in executive or leadership roles, these programs can be costly. Many students’ employer picks up at least part of the tab.
• Part-time MBA: This degree is geared toward full-time employees not yet in leadership positions. These students 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 an achievement. But not getting straight A’s doesn’t necessarily destroy your chances of getting into a respectable MBA program. Schools usually target students with a GPA of 3.5 or better, which means average grades between B+ and A-. The very best and top-rated programs demand a higher GPA.

The best business schools generally demand the highest Graduate Management Admission Test (GMAT) scores. The average score among successful applicants to top-tier programs, as well as their 2023 full-time tuition and fees, is below.

MBA Degree Pros and Cons

Pros

• Many schools to choose from

• Wide variety of topics studied

• Powerful when combined with experience

• Variety allows for more options than only business

• MBA grads can be found in many industries

Cons

• Better when paired with an additional field

• Value to employers varies by school reputation

• Not a guarantee of successfully becoming employed

• Working adults may find it challenging to balance schedules

• Expensive

What MBA Degree Program Alumni Think

GMAC publishes annual reports on how graduates from business schools rate their experience during and after school. The survey results are encouraging.

Their 2022 Alumni Perspectives Survey Report (the latest report) shows that more than 90% of graduates rated the value of their experience favorably and that 85% believed that their investment in education had been positive. Two-thirds of graduates reported moving up at least one job level after graduating, though this was most common for those starting at junior levels.

While business school alums rate their degrees positively, unless they have managed to land higher-paying positions after graduation, their ROI has decreased as costs such as tuition have increased much more than salaries.

Important

All MBAs aren’t created equal, so ensure you choose your program and your school wisely.

MBA Degree Alternatives

Many alternatives 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 and takes 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 someone 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 equal a graduate education, and being a charter holder is often valuable in the hiring process.

Other self-study programs are just as coveted, such as the financial risk manager designation and actuarial exams.

How Much Will an MBA Increase My Salary?

According to a report from GMAC, the median starting salary for an MBA graduate is $125,000, 22% to 40% higher than for graduates without an MBA. Remember that your MBA’s impact on your salary depends on many factors, including your school, chosen field, position, and experience.

What Are the Disadvantages of an MBA?

The primary disadvantage to an MBA is the cost if the degree isn’t converted into a return on investment. The degree alone is not a ticket to success but a door to opportunities. Success still depends on the person and their experiences, skills, and abilities.

Is an MBA Still Worth It?

It depends on your work experience, the industry you work in, and the school you attend. It can create opportunities that were previously unavailable but those opportunities come at a cost, and aren’t guaranteed.

The Bottom Line

Regardless of the cost-benefit analysis, most business school alumni report very positive experiences and high value from their MBA degrees, regardless of the school and program they attended. It’s important to understand that this degree is not a magic ticket to a better-paying job—you’ll still need to work hard to achieve the outcome you desire.

If you can’t afford the costs, can’t get into the right program for you, or don’t have the time to juggle work and study, there are other options you can pursue, such as a Master’s of Finance, a CFA, or other business or finance-related certificates or specializations.