The MBA is the single most popular advanced degree in the U.S. With more than 250,000 students pursuing their master’s degree in business administration as of April 2022, making the leap to business school is a foregone conclusion for many business undergrads and for quite a few working professionals.
This is because the MBA is widely recognized as an important stepping stone for those on their way to business leadership roles, executive management positions, and an array of specialized roles in business. Business school is also a valuable step for those interested in developing specific career goals or simply earning more money and achieving greater success in the private sector.
This versatility and value obviously help to make business school popular. But is business school actually worth it? How likely are you to receive a return on your investment? And how big must that investment be?
On the surface, business school is absolutely worth it. You’ll learn valuable leadership skills, you’ll master basic research techniques, and you’ll have an opportunity to pursue uniquely focused education programs in areas like accounting, human resources, finance, marketing, and much more.
But business school can also be expensive. According to Investopedia, you could easily spend between $100,000 and $200,000 for two years at a top business school. And even just the average MBA will cost more than $60,000. So does the value of a business school education justify the cost?
Well that may depend on a wide range of factors including the type of experience you desire, your career goals, and, of course, how much you’re willing or able to spend.
With that in mind, the first and most important question is…
What Can I Do With a Business Degree?
Naturally, there’s quite a bit you could do with a business degree. As noted above, this is a uniquely valuable advanced degree, one where you’ll have the chance to select from a wide range of concentrations–many of them noteworthy for their high salary range.
Included among the numerous areas of specialization that you could choose when pursuing an MBA are:
- Accounting
- Executive Management
- Human Resources
- Marketing and Promotions
- Finance
- Operations Management
- International Business
- Entrepreneurship
- Business Analytics
Beyond advancing and gaining specialized skills and credentials in particular areas of business, business school is an important step for aspiring business leaders. If you anticipate pursuing a career trajectory that includes a role as a key decision maker in your organization, most employers will expect to see an advanced business degree on your resume.
Ultimately, it’s up to you to decide what your passion is. Fortunately, two years in business school may help you to develop a stronger sense of where your leadership skills might best apply.
That said, it is important to recognize that different roles, departments and industries may lead to different pay scales. For instance, according to the Bureau of Labor Statistics, Accountants and Auditors earned a Median Pay of $77,250 in 2021; Financial Managers earned a Median Pay of $131,710; and chief executives earned an annual median wage of $179,520.
That’s an extremely broad differential, and for executives at the very top of the food chain, that wage differential can extend well into the millions. Of course, that is rare professional air, but the point remains that even as a graduate from one of the top business schools in the world. your earning potential will vary depending on the type of concentration you choose and the type of work you plan to do.
This is important to consider as you’re choosing the right business school for you. Is the cost of your chosen business school commensurate to your likely post-graduate earning potential? If you’re planning to become a financial manager or chief executive, your likely earnings may justify the expense of a top business school.
On the other hand, if you’re considering work as an Administrative Services and Facilities Manager (2021 Median Pay–$99,290) or a Management Analyst (2021 Median Pay–$93,000), you may want to control the cost of your graduate degree. To be clear, these earnings would place you substantially above the median earnings for all professionals. But given the exceedingly high cost of top business schools, it may be a sounder investment to choose a 2nd tier school with a strong reputation and reasonable cost. Many public universities will fall into this basket, particularly if you are an in-state student with access to lower in-state tuition rates.
Be sure that you understand the basic pay scale for your intended profession. As you consider whether or not business school is worth it for you, this should factor into your calculation.
How Much Does Business School Cost?
Before determining the actual worth of going to business school, it’s important to discuss some of the basic costs.
According to Forbes, the MBA ranks among the most expensive master’s degrees that you can get.
Forbes reports that, according to the Education Data Initiative, the typical master’s degree will typically cost between $30,000 and $120,000. Of course, there are examples of highly affordable graduate degree programs that may cost less. But all told, the average cost of an MBA, according to EDI data from November 2022, is $61,800.
This means that in addition to leading all master’s level degrees in popularity, the business degree is also a leader in cost. And the figure above is just the average price. For the most prestigious business schools, the cost may be considerably higher still.
And according to Poets & Quants, this cost is getting higher all the time. The blog reports that its “analysis of tuition, room-and-board, fees, and other costs at the leading MBA programs shows that the total price tag has eclipsed $200,000 at a dozen institutions, up from nine schools last year. In 2016, only four schools charged that much for two years of graduate business education. Another four schools are in the $190K range, knocking on the door to the $200K Club.”
If you’re the type who can afford it, and you have your sights set on a career as a top business executive, there is a case that this is a worthy investment. Reputation can play a big role in how your business school education is perceived by future employers. Not only that, but the most prestigious business schools also include leaders of industry among the faculty, which enhances opportunities for networking, mentorship, and postgraduate employment.
But of course, you need to get into these top business schools first…then you need to figure out how to pay for them. Today, the most prestigious business schools–those whose graduates are most likely to command top salaries in the future–are growing more costly all the time.
How Much Do Business School Graduates Earn?
It goes without saying that there are numerous variables impacting the likely earnings of MBA holders. As we noted in a section above, the concentration and career path you choose can have a truly determinant impact on your earning potential. Likewise, the prestige of your degree program can play a large part in shaping your immediate post-graduate opportunities.
Other factors like geography, industry, and personal circumstances can also play a part in your likely earnings both immediately out of school and beyond. But with that said, graduating from an accredited business school generally does lead to a wage premium. Just exactly how significant is that premium though, and does it justify what it costs to attend a top business school?
According to Harvard Business Review, “The average starting salary for MBA grads (class of 2020) is $20,000 a year more than those with an undergraduate business degree, according to the National Association of Colleges and Employers. But that’s not all. Graduates from top MBA programs often land positions that put them on an accelerated path into leadership. The reason is simple: Employers expect graduates of these programs to have the academic, interpersonal, and leadership skills to solve complex business problems.”
Now, when you consider the sticker price of an MBA, that premium may not sound like a whole lot. But this entry level pay is only a small sliver of the picture. When it comes to a wage premium for MBA grads, the salary advantages add up quite a bit over the course of a career. This is because both the starting pay and the MBA credential can place one on the trajectory toward some of the top-paying roles in the private sector.
According to Poets & Quants, “which collects salary data from individuals through online pay comparison tools…the MBA–even from schools that lack global or national caché–delivers a hefty seven-figure income over a post-MBA lifetime. MBA graduates from the top 50 business schools in the U.S., in fact, will pull down median cash compensation of $5.7 million after graduating and working for 35 years. That is a premium of $2.3 million over those with just an undergraduate degree.”
Those lifetime earnings offer a few obvious arguments in favor of attending a reputable business school. First, your future earnings will more than pay for even the most expensive of MBAs over the lifetime if you follow the trajectory outlined here above.
Moreover, there is pretty compelling evidence that you don’t have to attend the most expensive business school on the planet to achieve this robust wage premium. Whatever other variables apply to your earning potential in the business sector, graduating from a credible business school gives you a major leg up in the job market. Whether you land in a fancy corner office in a New York skyscraper or you corner a unique market in your own little slice of the economy, chances are that your MBA will contribute to a topflight earning power.
What Kinds of Business School Options Are There?
In the previous section, we explored the wage premium generally enjoyed by those with MBAs. And we offer some good news for those concerned about the high cost of business school. That wage premium is likely to apply to business school graduates who have completed their MBA program through any well-regarded, fully accredited, full-time university.
In other words, you’ve got plenty of options, and many of them offer more affordable pathways to excellent faculty, important learning opportunities, and vibrant educational communities. For instance, a rapidly growing number of topflight private and public universities provide access to either fully online or hybrid degree programs.
You will typically have access to the same faculty as on-campus students, and in most cases, they will be teaching from an identical curriculum. While your cost per credit would typically be close to the same for remote closes, you could cut your overall costs nearly in half by eliminating major expenses like housing, transportation, and certain campus fees.
If you’re already working in your field and the MBA is a threshold you must clear to advance to the next level in your organization, these online and hybrid options may be perfect for your schedule. In fact, gaining some professional experience before diving into your MBA program can actually improve your chances of getting into a top school and perhaps even receiving some tuition assistance from an employer.
Online business degrees are not only improving access for working professionals interested in advancing in their careers. Emergent remote learning programs are also making it possible for MBA candidates to pursue this advanced degree according to their own pace.
A growing number of online business schools now offer accelerated programs that can be completed in as little as six months to a year. To this point, many business school programs are designed for those whose top priority is to get a practical education, earn a reputable advanced degree, and turn the page back to full time work as quickly as possible.
And to an extent, some of these business schools may even prioritize affordability over amenities or prestige. If you are earning your MBA strictly for the knowledge and skills you’ll gain there, as opposed to name-brand recognition, you could pay as little as $20,000 to $30,000 for a fully-accredited MBA.
So Is Business School Worth It?
So now that we’ve had a chance to dive into the facts, let’s return to our initial question. Is business school worth the investment of your time and money? Well, even as the high cost of a degree continues to cast doubt on the value of a formal higher education, there is an argument that the value of an MBA has never been greater.
Of course, we have discussed the wage premium here throughout. And indeed, when you measure the lifetime wage premium against the basic cost of business school, evidence suggests that business school is worth it in terms of basic dollars and cents.
But the value of an MBA actually goes a bit deeper than that, especially in light of the changes to the labor market occurring rapidly around us.
Here are a few reasons why.
5 Reasons Business School is Worth It
1. Irreplaceable Human Skills
The labor landscape is changing rapidly. As automation, artificial intelligence, and machine learning grow more sophisticated and omnipresent, the most valuable professionals will be those who are versatile and who demonstrate skills that can’t easily be replaced by machinery. According to Forbes, “management skills have never been more important to long-term career success. In a post Covid-19 world, the only jobs that are truly future-proof are those that can’t easily be automated or outsourced. One key category is management roles that require a high level of interpersonal skills, emotional intelligence and experience.”
Business school graduates may enjoy an advantage when it comes to job security in the not too distant future. And this is about more than just the MBA credential. As a business school graduate, you’ll gain education and insights that can help to set you apart in a changing labor market. And as you parlay these skills into genuine leadership experience, you may have the power to make yourself indispensable.
2. Enhanced Networking Capabilities
Another feature that makes business school uniquely valuable is the opportunity you’ll have to meet people. From brilliant faculty members and professors–many with noteworthy experience and connections in the private sector–to your fellow students, the people you meet in business school have the potential to be your future professional references, employers, collaborators, and business partners.
And because this is a major draw for most MBA candidates, many business schools take additional steps to facilitate engagement. According to Harvard Business Review, “Most MBA programs offer access to networking events hosted by clubs and employers, as well as affinity networks and student-led conferences — all opportunities that could expand your reach, and therefore, your chances of success in the business world.”
Not only that, but the top business schools have massive and massively influential alumni networks. Graduating with an MBA from MIT’s Sloan School of Business or the University of Chicago Booth School of Business makes you part of a club whose members include Fortune 500 CEOs, elected officials, and public thought leaders. As you move into the professional sphere, your alumni network may open a lot of doors.
3. MBA Grads Say The Got Their Money’s Worth
Fortune says that the vast majority of business school graduates would generally describe themselves as satisfied customers. According to a research report issued by the Graduate Management Admission Council (GMAC), which regularly surveys graduate students regarding their experiences in their various advanced degree programs, MBA graduates are among the most likely to report positive feelings regarding their investment.
Fortune notes that “87% of business school alumni have experienced a positive return on investment on their graduate business school degree, according to a survey of 3,600 grads conducted by the Graduate Management Admission Council (GMAC). The study also found that 94% of alumni rate the value of their graduate business education to be good, excellent, or outstanding.”
So take it from those who have already been there. A compelling sample of MBA holders have zero regrets about the money they’ve invested.
4. Grad Schools Create Job Opportunities
One of the reasons business school graduates surveyed by the GMAC found their experience to be so valuable was because many programs contribute directly to the job search. An article in Fortune points out that the vast majority of business school graduates land job opportunities directly out of school, if not slightly beforehand. According to Fortune, “Among the class of 2021 MBA graduates from full-time programs, 87% of these students received job offers within three months of finishing their programs, according to the MBA Career Services & Employer Alliance. And 73% of graduates had a job offer before they had finished school.”
One reason for the high job placement rate is that many business school students secure these opportunities through connections created directly in their programs. As Fortune notes, some 68% of students in the 2021 graduating class of MBAs secured their first post-graduate job through their program internship, an interview facilitated through their program, a posting on a career board accessible only to students in their program, or through a career fair or event facilitated by the business school in question.
In other words, business schools do not leave their students high and dry when it comes to finding jobs. Most will either provide active assistance as you take the next professional step or will put resources at your fingertips to help you manage this transition independently. Either way, the numbers suggest that it’s not just the degree that helps you land a great job, but the business school itself.
5. New Models Are Emerging
Some critics of business schools have argued that the investment continues to grow steeper even as existing education and teaching programs are slow to evolve with a changing business landscape. But there is evidence that some exciting changes are on the horizon, the kind that might render business school more financially accessible, more relevant to the needs of today’s aspiring business professional, or both.
As Forbes points out, “Alternative MBA programs are still experimental and in their infancy. There are many considerations that come with any online business class or alternative program. But…one of these programs will be the equivalent of Netflix: The model of the future that puts the brands we’ve known for years out of business. Either way, given that many of these programs are free or cheap, they’re a much easier risk to take.”
In other words, business school may absolutely be worth it if you consider taking a cost-effective and innovative route to learning, developing critical business skills, and gaining relevant experience.
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The key takeaway here is that business school is worth it, but where you go for your MBA, and how much you should spend, will depend on a great many personal and professional factors. Whichever path you choose, evidence suggests that your MBA will help advance your knowledge, career, and earning power.
Still not sure business school is right for you? Well, there are still plenty of other paths you can take if you’re looking for ways to enhance your career prospects and future job security in a rapidly changing labor market. To learn more, check out our look at these 10 Recession Proof Jobs for 2023.