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The question of whether it’s worthwhile to obtain a Master’s in Business Administration—an advanced and versatile degree that can help people ascend into management analysis and/or strategy roles—is a highly personal one without a real single objective answer. As usual with financial and personal decisions, the answer tends to be “it depends.”
The last decade has seen the MBA go from becoming the most popular master’s degree in the U.S. to “being in crisis,” with overall applications declining. The COVID-19 pandemic resulted in many schools expanding their policies and modalities for distance learning, so it’s still anyone’s guess what impact that will have on the MBA’s popularity and employer demand. Either way, it’s never a bad idea to consider betting on your future—and an MBA is still a big commitment. Here are some things to consider when deciding to pursue an MBA.
The Pros and Cons of Getting an MBA
Getting an MBA won’t be right for everyone, but it could be one way to advance your career. Here are some things to consider as you weigh the pros and cons of getting an MBA.
Pros to Consider
Improved earning potential. The average anticipated salary for MBA graduates entering the workforce is $79,043 according to the National Association of Colleges and Employers. A recent grad’s expected salary might be even higher depending on where a student gets their MBA. According to US News & World Report, the average salary for 2019 MBA graduates at the top 129 full-time MBA programs was $106,757. For the top 10 programs, the average salary and bonus were $173,960.
But if you’re wondering if it’s worth getting an MBA from a lower-tier school, consider that the average MBA salary for graduates with a degree from the 10 schools where compensation was lowest was just $52,720 .
Expanded Network. Business school can be a great opportunity to make friends and network with like-minded individuals. In addition to your peers in the program, you’ll engage with faculty and be introduced to a (hopefully robust) alumni network.
Career Acceleration or Transition. Successful completion of an MBA program can improve an individual’s career mobility. Coursework is often designed to encourage management skills, critical thinking, and other specialized skills, which can help prepare people for the workforce.
Cons to Consider
The cost. According to US News & World Report, in 2020 the average cost of the top 10 business schools in the United States was over $140,000 for tuition in a two-year MBA program. The most recent data available from the National Center of Education Statistics indicates that during the 2015-16 school year, the average MBA student loan debt was $66,300 at the time of graduation.
There are ways to mitigate the cost or to at least lower sticker shock out of the gate by pursuing part-time programs or staggering your course load over a longer period of time so you can still be drawing a salary to offset the costs while you’re studying.
Time commitment. Getting an MBA in a full-time program can take two years. There are some accelerated programs that may allow students to complete their coursework in 12 to 16 months. Beyond the length of the program, MBA classes are no joke. The coursework requires commitment and diligence, so be sure you have the time to dedicate to classes.
Consider factoring in the application process when evaluating both time and cost. To apply, schools may require GMAT™ scores, letters of recommendation, and more. Meeting the application requirements may take both time and money if you still need to take the required standardized tests.
How to Decide If an MBA Is Worth It for You
While an MBA can offer great potential for career growth, it’s definitely not the right choice for everyone. Be honest with yourself about why you want to pursue an MBA. It can be an excellent opportunity for students who are interested in career growth but it can be a huge time and monetary commitment.
Take the time to really evaluate whether getting an MBA is in line with your career and personal goals. Also understand the types of schools you may be able to get into, as the earning potential for someone who attended a top-tier school isn’t the same as someone who is enrolled in a lower-tier program.
When sitting down to crunch the numbers and assess your goals, pay particular attention to long-term salary projections among graduates from the program you have in mind—assuming future earning potential is a primary motivator for getting an MBA. Debt may be offset by future salary. But because signing on for grad school is a big and expensive decision overall, it’s worth considering all angles.
How to Pay for an MBA
One approach to college programs is to first seek fellowships, scholarships, and grants—and to then pay for costs out of pocket or to seek a loan as a last resort. Unlike undergraduate scholarships, which may be based on financial needs, MBA fellowships and grants are often awarded on merit. That means rather than taking the financial need into account, oftentimes programs will be looking at a student’s achievements, talents, abilities, and performance in spite of hardship.
Generally speaking, when trying for a merit-based award, it helps to apply early, really ponder how you’re distinct from your competition, and push yourself to craft your application specifically for the program. Admissions folks and fellowship committees spend a lot of time reading a ton of applications and can tell instantly when an essay has been rubber-stamped—spell check, read your application over repeatedly and don’t rush any aspect of it.
When in doubt, consider calling the admissions office for guidance or for information on programs and awards that may not be fully described online. But many MBA programs, including, for example, NYU Stern, clearly indicate that about 20-25% of admitted full-time two-year MBA students receive a merit-based scholarship. NYU Stern’s website runs down many of the possible scholarships and fellowships prospective students can try for and what’s required.
Review fellowship opportunities available at the college or university you are interested in attending. Fellowships can be highly competitive and rare but offer a chance to attend a program, earn a degree, and avoid incurring the full cost of tuition. Not all schools offer them, but the University of Florida’s Warrington College of Business and Arizona State University’s W.P. Carey School of Business are just two examples of ones that do.
It might sound like an incredible long shot to earn a full free ride or even a considerably discounted one via aid—but it’s always worth pursuing because you may be closer than you think.
Student Loans for Graduate School
Student loans are another option students can use to pay for graduate school. To apply for federal aid, students will need to fill out the Free Application for Federal Aid. It’s important to note that the federal loans available for graduate students vs undergraduate students are different. Importantly, graduate students are not eligible for subsidized loans.
While your search for aid often starts with the university’s website and making contact with real humans there—not just going off what’s online—it’s also worth getting on the phone to lenders and finance companies to shop around and get the lay of the land. SoFi offers options to help students refinance existing student loans or to take out a new one. According to The Fed, there is currently over $1.7T in student loan debt . Chances are anyone thinking about school would like to avoid personally contributing to that statistic. Note that refinancing eliminates federal loans from borrower protections like deferment or forbearance.
Employer Tuition Reimbursement Programs
In addition to getting on the horn with the schools you’re considering, it’s worth talking to your employer. Some employers have programs where they will pay for all or part of your MBA if you commit to returning and staying with the company for a set number of years after you earn the degree.
A 2019 survey from the Graduate Management Admission Council found that 40% of companies offer education sponsorship. If you’re among the current majority of the 60% other companies, there may still be tuition reimbursement programs—it’s worth at least asking about.
You can also explore business school assistantship programs as a way to offset the cost of tuition. These are jobs that may require you to help school faculty with tasks like conducting research or grading papers, and can also help provide you with a stipend as well to help with personal expenses outside of the debt owed to the school you’re working to erode. Contact your school’s employment office for details—but know that like with every other option to minimize the bill for a degree, the competition is likely to be fierce.
SoFi is a leader in the student loan space—offering both private student loans to help pay your way through school, or refinancing options to help you pay off your loans faster.