The most tactful and detail-oriented businessmen and businesswomen of the financial world will always track the return on investment for important things like a transport vehicle, a new hire, or a new factory. But what about the ROI on an MBA? With skyrocketing tuition prices, pursuing a Masters of Business Administration will be equal parts of financial investment and time investment.
An MBA is a Master’s Program usually undertaken by those businessmen and women operating in the business sphere who are hoping to climb the corporate career. Before you commit to late-nights with stacking homework assignments and weekly study sessions, there are several factors to consider. Although the ROI varies from person-to-person, there are universal benefits any aspiring student can expect.
Ivy League institutions
Some argue that earning an MBA will only be worthwhile if you attend a top-tier business school. Is an institution like Harvard within your reach? Unfortunately, the Harvard college acceptance rate is quite low. As new lower-ranked institutions begin offering an MBA degree across the map, pursuing an MBA seems more and more attainable.
However, because prestige and networking opportunities are two major incentives in attaining an MBA, most aspiring graduate students are concerned with choosing the right institution. A notable fraction of this student population doesn’t work towards a Masters in Business Administration for technical knowledge but simply to affiliate oneself with an Ivy League institution. This emphasis on prestige leaves graduates of low ranked programs to claw their way up the corporate ladder and struggle to earn tuition fees back via their annual salary.
Some top-ranked schools offer part-time evening classes to accommodate a business exec’s densely-packed schedule. To motivate aspiring students to pursue MBAs, many major employers offer generous reimbursement rates to their employees for these evening programs. This can be a great opportunity for many, as you can still collect your original salary, allowing you to advance your career while earning a degree. The expert multitaskers who’ve mastered the balancing act of a busy schedule should take the leap.
Full-time vs. Part-time Students
There’s a catch, however. Many business schools don’t allow their evening school graduates to use the same job placement services as their full-time students. Because these career services are one of the major advantages of any big program, this stipulation can be a significant drawback.
At best, you’ll be able to slap “MBA” on your resume and attend the occasional networking event. However, with an Ivy League name attached to your degree, these exceptions may not detract from your ROI.
Earned salary Advances
Remember, an MBA isn’t just about the money for everyone. Let’s say a recent grad has worked for the same tech company since graduating from college and is almost 30. Now, she wants to try something new, with a different title in a different field. A lateral move might be hard. Often, the best opportunity presents itself after you obtain an MBA.
When calculating ROI, it’s important to consider sign-on bonuses. This will vary tremendously based on how the economy is faring and what type of firm you manage to secure an offer from. Oftentimes, a firm will be willing to negotiate.
Sacrificed wages during your education
Don’t forget to include lost wages when calculating return on investment. If you spend two years in an academic program (the standard length of a master’s in business administration) you sacrifice two years of your standard salary. Lost bonuses and 401k matching make this decision even more expensive.
Some MBA programs are only a year long. These programs may yield a greater ROI, as they take less time and you lose a smaller fraction of your standard wages.
If you do decide to pursue a two-year program, financial aid can help shave off overall cost. Institutions will be more generous if you come from a disadvantaged background or if you belong to an underrepresented minority. If you identify with either category, your tuition costs may be deducted.
Costly room and board
Room and board costs will vary significantly, depending on how thrifty you are. Many quality MBA programs, especially Ivy League institutions, are located in top-tier coastal cities which have an astronomical cost of living.
With a rigorous courseload and mentally-taxing, weekly study sessions, don’t be afraid to splurge a little. Enjoy your classmates and use your weekends wisely. A good work-life balance will help you feel well-rested and ultimately fulfilled.
Online MBA courses for convenience
In recent years, many schools have incorporated online options into their available semesterly courses. These online options allow students to maintain their work schedules while they study.
Students can study on-the-go, whenever and wherever they want to.
A downside to online coursework is your limited face-to-face interaction. You won’t be able to meet with your fellow students, nor will you be exposed to networking opportunities. This can be a major drawback, as one of the biggest benefits of an MBA program is its accompanying social network that can swing open doors for new positions in new fields.
As part of your MBA program, there are further specializations you can explore. For example, you could focus on finance or marketing in your program. This is a great opportunity to increase your chances of finding a job in the field of your choice.
Once you land on a specialization that feels right, you’ll have the option to apply for an internship. Strategizing which internship you accept is very important. If you’re selecting from several, do you choose the most lucrative or the most interesting? Either way, you may be pigeonholing yourself into a specialization you’ll later resent.
A Masters in Business Administration can be very expensive. Prospective students are putting a lot on the line: from tuition costs to their energy commitment to a potential career sacrifice.
Calculating the return on investment is like an assignment from a graduate finance class. There are lots of variables, but a few generalities stick out. As part of your equation, be sure to factor in the total cost (including lost salary and bonus). To avoid sacrificing a promotion at work or having to quit your job altogether, scope out your online and evening course options. As with any big move, doing your homework will pay off big time.
Interesting Related Article: “Online MBA Vs. Traditional MBA“