Is business school the right investment?
It is no secret that rising tuition is a nationwide epidemic. There are now higher costs for running a university, ranging from higher bills for utility and technological infrastructure to higher salaries for professors. Ultimately, these expensive trends come at the expense of students in the form of higher tuition. This of course applies to all levels of education, including master’s degrees and PhD’s.
One highly scrutinized master’s degree is the Master’s in Business Administration, or MBA. The question that often looms over MBA students is whether the money invested in this specialized degree is worth it. The average tuition for an MBA-granting program ranges from $60,000 for state universities, to over $100,000 for the best private, non-profit MBA programs. Another cost associated with an MBA program is the opportunity cost of simply remaining in one’s field working instead of returning to school.
A strong majority of universities post information regarding MBA class profiles. A statistic that all class profiles include is the number of years of professional experience a student has prior to enrolling in an MBA program. These often range from 0 years to 13 years of professional experience, with the average being 4-5 years. In the business and STEM fields, this can constitute two years of over $75,000 annual salary plus bonus, as well as the professional advancement that comes with more work experience in a company. The decision to enroll in an MBA is all about managing expected outcomes and costs, including the average total compensation to exceed $100,000 a year.
Based on the class profiles of the 2017 and 2018 MBA classes from top graduate business schools such as University of Chicago, Harvard, Yale, Princeton, University of Pennsylvania, and Stanford to name a few, the academic trend is similar throughout. The average undergraduate GPA of these schools range around 3.5.
The most common industries for these students during their pre-MBA years include consulting, financial services, venture capital/private equity, and technology. Other fields include non-profit/military/government jobs, real-estate, and humanities. In addition, nearly 40-60% of some MBA classes are made up of business/economics undergraduate majors. A master’s degree in business administration, more so than other degrees, can be a way to switch fields. It is common move, as seen in these statistics, that undergraduate students pursuing other fields such as law, engineering, humanities, and social sciences go on to earn an MBA.
MBA programs do not require an undergraduate business degree to attend. What’s more important is strong academic standing, such as strong GMAT scores and a high undergraduate GPA. The question at-large, rather, is whether it is a smart investment for you at all. If you’re ready to swallow the $100,000+ in student debt and step away from your professional career for two years, then by all means, an MBA is right for you. It can also be a step up to higher roles in your previous firm, and that comes with a bigger salary. Between 95 and 100 percent of graduates of top MBA programs found jobs within three months, and the average salaries for MBA graduates entering fields such as consulting, financial services, and technology exceeded $100,000 per year.