Is getting an MBA worth it?

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There are many factors that can help you determine if pursuing a master’s degree in business administration (MBA) is worth the time and the trouble. On the one hand, the median student loan debt for MBA graduates worked out to $46,045 at last count, according to figures from the Brookings Institution. On the other hand, if you absolutely need to have an MBA to work in your chosen field, the tuition for your MBA program could be the best money you’ve ever spent.

To determine if an MBA is worth it, you should have a goal in mind, as well as a full understanding of the opportunity cost involved.

Is an MBA worth it?

Some career fields require an MBA, so pursuing this advanced degree makes sense if you have your heart set on working in a specific job. For example, you may need to earn an MBA if you want to become a financial manager or a computer and information systems manager, or if you want to climb the corporate ladder to become a general or operations manager or a top executive.

An MBA can also be a solid investment if you hope to build your own profitable business one day. After all, MBA programs help you acquire the business acumen necessary to plan and organize a business structure that could succeed. You’ll also learn management skills, accounting skills, soft skills for business environments and more.

Factors to consider

At the end of the day, you’ll need to consider a range of factors before you decide if an MBA makes sense for you and your situation.

Tuition cost

Over the course of a one-year or two-year MBA program, students can expect to pay $70,000 to $200,000 or more to complete an MBA degree. This estimate includes the cost of tuition and fees, as well as books, supplies and living expenses.

And remember, the cost of an MBA program comes in addition to the amount students have already paid to earn a bachelor’s degree. That could be why the average cumulative student loan debt for MBA students worked out to $66,300 at last count, per figures from the National Center for Education Statistics (NCES).

Why this matters: Regardless of whether you can pay for an MBA upfront or you need to borrow the money through student loans, tuition and fees for MBA programs represent a significant investment.

Financial aid

Financial aid also plays a role in whether an MBA is worth it. You may be able to cover some of the cost with scholarships or grants, but many students also have to turn to student loans. While some students qualify for subsidized loans for their undergraduate education, meaning the government pays the student loan interest while they’re in school, subsidized loans aren’t available to graduate students.

If you need to borrow money for your MBA and you want federal student loans, you’ll likely borrow money with Direct Unsubsidized Loans, which accrue interest while you’re still in school. Your other option is private student loans, which also begin accruing interest right away and may come with higher interest rates if you have poor credit.

Why this matters: Depending on how much “free” money you’re able to earn, you may have to borrow a large sum of money to cover the rest of your tuition. These loans could take years to pay off, and you’ll have to pay interest during that time.

Salary

In many cases, MBA degrees pay off due to the higher earnings you can achieve in your future career. After all, financial managers earned a median annual wage of $129,890 as of May 2019, and computer and information systems managers earned $146,360.

Of course, your salary depends on your area of expertise, company, location and more. Still, figures from Payscale show that the average MBA graduate earns around $89,000 nationally.

Why this matters: How much you earn will impact how quickly you can pay your MBA loans off and how much student loan interest you’ll pay along the way. Your salary can also help justify the extra time you spend in school versus in the workforce.

The bottom line

Don’t jump into an MBA program without thinking over the opportunity cost, as well as where you hope your MBA can take you. An advanced degree can certainly pay off, but you’ll want to have a plan in place to finance your program and pay back any MBA loans you use.

Take the time to research tuition costs for the MBA program you’re considering, then compare them to the salary you might earn in your future career, which you can research on the Bureau of Labor Statistics website. Once you know what your MBA will cost and how much you might earn if you have it, you can decide if the juice is worth the squeeze.

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Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson began her career working in the funeral industry, which may make you wonder why she works in personal finance now. Yet, the funeral industry taught the author everything she needs to know about the value of one's money and time. Johnson left the mortuary business a decade ago in order to explore her passion for personal finance and travel the world, and since then, she and her husband have built a debt-free lifestyle that has them on the path to retire very wealthy in their 40s. Holly's love of budgeting also led to the creation of her debt payoff book, “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."
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