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Posted by Chioma Isiadinso
Do you ever wonder whether the cost of an MBA will be worth it in the future?
Many MBA applicants wonder whether an MBA is worth it for them.
For some people, they never even apply for their MBA because they think the the MBA return on their MBA investment is not high enough.
The real truth about the MBA return on investment is that, while the MBA program is a significant investment in your future, its actual payoff will be uniquely personal.
In this post, I’m going to teach you how to determine whether an MBA is worth the investment for you.
But first, here’s some info that you might not have not have known about the return on an investment in an MBA.
In January 2012, the Graduate Management Admission Counsel (GMAC) released its 2012 Alumni Perspectives Survey.
The study surveyed more than 4,000 self-selected MBAs, querying them about their employment following completion of their MBA programs.
The report illustrated remarkably positive results even in this trying economic period. Among the findings was that:
• 75% of the students were employed in jobs that they would have been unable to obtain without their MBA degree;
• 82% of the Class of 2011 said that their post-MBA salary met or exceeded their expectations;
• Graduates recouped 1/3 of their cost after one year and 100% of the cost within four years;
• 2/3 of the Class of 2011 found positions within their intended industries;
•The wage gap between male and female MBA graduates is decidedly smaller than the wage gap between male and female non-graduates; and
• Alumni with a degree from a full-time MBA program earned a medium of $95,000 with additional annual compensation of $18,123.
These numbers illustrate an upbeat employment situation for post-MBA workers, but once published, dissent arose.
Bloomberg Businessweek’s response took issue with the fact that, while the students may not have a vested interest in the success of the GMAC, the GMAC certainly has an interest in making sure that the numbers are positive.
In addition, the article pointed out that, while the numbers taken alone may be positive, in comparison to years past, post-MBA salary has in fact fallen by 5.4% and that there was no proven methodology for how surveyed students determined if they had recouped their costs.
With such controversy over the findings, what is a potential MBA student to believe? Does an MBA make sense for you in your future? And how can you determine your MBA return on investment?
In order to know whether an MBA will be worth the return on your investment, ask yourself these questions:
1. Will you be able to attend a top business school? Attending one of the top 57 schools has a significant impact on long-term earnings.
In fact, a second Bloomberg article reported that “Overall, grads from the 57 top programs earned an estimated $2.4 million in base pay and bonuses over the course of a 20-year career.”
2. What are your true costs for obtaining a MBA degree? This calculation is yours alone, but must include salary and benefits lost during your time in the program, the program’s cost, and potential salary loss during the time following the program while you are job seeking.
3. In what industry are you hoping to work? The percentage of employed graduates varies by industry.
Study results show that 40% of graduates went into the health care or pharmaceutical industries; 43% of those because of increased job opportunities.
4. Are you willing to accept an internship role following your degree program? The GMAC study indicated that average starting salary following an internship or work project was nearly $14,291 higher than those who did not find their jobs via internship or work project.
You, the candidate, must step back and evaluate for yourself what you anticipate the ROI will be. Don’t rely on statistics alone.
Instead, carefully evaluate where you are today, what your future goals are (ie. What is the average salary for your dream job?), and what the true cost of a short-term break from the work force will be.
And most importantly, consider whether the career you choose would be fulfilling and personally rewarding. That is something that money cannot compensate for.
Are you thinking about applying for your MBA? Are you wondering if the cost of an MBA is worth the return?
I’d love to get your thoughts or comments on this, so leave a comment in the comment box with an thoughts on any challenges you’re facing in this area or any stories you’ve heard about this topic.
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