Getting your MBA can be a great way to increase your earnings potential, change careers, or move into management – but it isn’t for everyone. Before you take the leap to getting your degree, weigh the costs to see if getting an MBA makes sense for you.
Do the Math
The costs of getting your MBA can be significant, both in terms of time and tuition costs, and if you are taking time off work to go to grad school, you have the lost wages to consider too. According to Campus Explorer, the average cost of an MBA is $80,000 ($40,000 per year for two years) – and that doesn’t include living expenses. Add another $20,000 a year for rent and food, and you’ll be spending $120,000 to get your degree.
In addition, you have to consider your lost wages. If you have been earning $65,000 a year, you’ll lose $130,000 in income while you take the time off work to get your degree. All in all, that means getting an MBA will cost you $250,000.
Compare your Future Earnings
Now consider your average earnings after getting your MBA. The Chicago Tribune says that the median starting salary for 2014 MBA grads is $95,000. If you are earning an annual salary of $65,000, you would earn $30,000 a year more with an MBA than you would without the certification.
Given that getting an MBA will cost you around $250,000, it would take more than eight years for you to make that money back – and that is if you are able to find a position right away.
Making it Work
Of course, there are other reasons to getting an MBA. Personal pride, a requirement for advancement at your company, or desperate desire to change careers can each factor in to your decision to get an MBA – and there are ways to make it work. You could consider a state school – they frequently offer considerably lower tuition rates for in-state students. Attending school part-time may be another option. Classes could be in the evenings after you get off work or you may be able to get an online MBA.
Many online MBA programs offer classes you take at your own convenience, in your own time. That type of flexibility may make it easier to take classes while still earning a salary.
Don’t forget, those averages may not be typical. The numbers can be skewed by people who have decades of experience and come out of school to salaries in the high-six figures and beyond. The choice of school makes a difference as well.
According to Poets and Quants, the starting salary for an MBA grad from a lower ranked school can be as low as $60,000. If you are making more than than now, an MBA could cost more than what it’s worth. In addition, someone who is changing careers – which the reason over 43% of students cite for doing an MBA – you may not have the bank of experience necessary to garner a higher wage.
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