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By Gabriella Cruz-Martínez
October 20, 2020
Money, Getty Images

A master’s in business administration (MBA) is a graduate degree program that combines multiple disciplines, such as accounting, marketing, finance and entrepreneurial relationships, to help you develop the necessary skills for business or investment management.

What You Should Know:

  • The average cost of an MBA can range from $25,000 to $100,000 or more
  • Courses can be taken full-time or part-time
  • Online MBA schools are cheaper, with some starting under $10,000 in tuition and fees
  • An MBA can be useful for those in the fields of marketing, finance, health services, communications, and technology

A master’s in business administration (MBA) can give you a versatile skill set and networking opportunities to advance your career. According to a survey conducted by the Graduate Management Admission Council (GMAC) in 2016, 96% of employers said that hiring business school graduates added value to their companies.

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That labor market demand means it’s not uncommon for MBA grads to have job offers before they even graduate. For example, at least 89% of business school alumni from Berkeley Haas’ part-time, evening and weekend MBA class of 2018 received promotions or attained new positions while still in school. Students in the program reported a 27% salary increase and an overall compensation increase of 38%. The degree also opened the door for more job opportunities, as nearly 93% of graduates enrolled in the full-time MBA class of 2019 received job offers from employers like Google, Amazon, and VISA within 3 months of graduation.

But a successful outcome isn’t exclusive to graduates from the nation’s elite schools. Over 80% of MBA graduates from the University of Florida had a full-time job offer before finishing their program, and the same could be said for other programs such as those offered at Ohio State University and Depaul University.

Work Experience

In the past, business schools required applicants to have a standard four to six years of work experience prior to applying. Now, a growing number of schools, such as Boston University, Loyola University Chicago, and the Sloan School of Management at MIT don't require applicants to have any prior experience.

Still, most applicants choose to pursue an MBA after having some years of professional work experience under their belt. At least 80% of Columbia Business School’s class of 2019, for example, had between three and eight years of work experience, with virtually all applicants having one year of experience.

Those with limited work experience can use their interview or statement of purpose to explain why an MBA program will help them achieve their goals. This is your opportunity to showcase any community service or leadership opportunities that may make up for your limited years in the labor market.

Internships, community service, part-time work, research or graduate assistantships, sports, or other extracurricular activities can all demonstrate valuable skills and be good substitutes for work experience.

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Degree Options

If you’re interested in pursuing an MBA degree, there are a number of programs designed to meet varying experience levels and goals. These include full-time MBAs, which can take up to two years to complete and may be combined with concurrent degrees such as a Juris Doctor; part-time programs for professionals; accelerated MBAs, that can be completed under a year; and executive MBA programs, for individuals with over 10 years of work experience. Some universities, like Harvard Business School, even offer accelerated programs that guarantee undergraduates admission to an MBA if they meet certain conditions.

Requirements to Apply for an MBA

Here’s a checklist of requirements you should expect to turn-in when applying to an MBA school:

  • Letter of recommendation
  • Personal essay or statement of purpose
  • An updated resume
  • Transcripts from each college or university in which you were enrolled
  • GMAT, GRE (some business schools offer waivers if you have sufficient work experience or a graduate degree)
  • TOEFL exam (only applicable to certain international students)
  • In-person or video conference interview
  • Application fee (generally between $100-$250, may be waived in some cases)

Let’s Break Down the Cost and Payoff of an MBA:

Earning an MBA can cost anywhere from just under $10,000 to over $100,000. Calculating the potential return-on-investment (ROI) can help you decide if a specific program is right for you. To do that, you’ll have to research what a typical MBA grad from the program you’re interested in earns, and weigh that against the cost of the program. Also consider that there are some graduate programs that may offer merit-based scholarships and work-study opportunities for students that can help you cover a portion of your expenses.

For example, almost 90% of Boston University’s fall 2019 entering class received merit-based scholarships, with the average award exceeding almost half of their tuition each year. Similarly, other programs like New York University also provide full or half-tuition awards to qualifying full-time admitted MBA students. In some cases, employers may offer tuition reimbursement for employees seeking MBAs.

According to GMAC, the median annual base salary for MBA hires in 2019 was among the highest on record at an average of $115,000, higher than industry hires ($75,000) — and more than double the median offered to new bachelor’s degree hires, $55,000.

Calculate your ROI: Example Boston University (Questrom School of Business)

Let’s say your current earnings are $75,000 and you decide to invest in an MBA program at Boston University to enhance your career opportunities. As of the 2020-21 academic year, a two-year full-time MBA would cost you $28,400 per semester or $56,800 for the year.

At a bare minimum, you should also count university fees, health insurance, and books and supplies. These add an estimated $5,325 to your costs. Some people also borrow for living expenses while in grad school, especially if you’re not working or living with a partner who can pick up the bill for rent and food. Room and board for a semester at Boston University are estimated to be around $14,590, and incidental expenses add on another $4,374.

In short, your two-year tuition alone (without counting for expenses such as fees, books, and rent) would be $113,600. But your total educational expenses could rise up to $162,286, or an estimated $81,143 per year.

The average debt of a Questrom School MBA grad is $55,170, according to the federal College Scorecard. Using current interest rates, that translates into payments of more than $570 a month on a 10-year repayment plan. (As of July 1, 2020, federal student loan rates for graduate loans are 4.3% for Direct unsubsidized loans, which have an annual borrowing limit of $20,500, and 5.3% for Direct PLUS loans).

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According to the university, the average salary for MBA grads is about $100,000, or about $25,000 a year more than what you were earning before the MBA, not accounting for any raises that happen in the years after you graduate. Graduates from the program also report an average signing bonus of $15,800.

Why Get an MBA?

The Bureau of Labor Statistics data shows that business-related careers have some of the highest salaries in the US.

“Many companies now require or prefer candidates with an MBA for a number of roles. Earning this degree significantly expands the number of potential job opportunities for which you qualify,” says Kim Girard, a spokeswoman from the Haas School of Business, at UC Berkeley.

Unlike career-specific advanced degrees, an MBA can transfer easily to many industries and offer you a wide array of careers throughout your life. According to the latest Payscale data, careers in business operations, finance, sales, and management have some of the best job outlooks and highest salaries in all of the US.

Is There Any Difference Between Getting the Degree Online vs. On-Campus?

Online MBA programs from public and private colleges can be less expensive than their full-time, on-campus counterparts.

On average, MBA students in traditional on-campus, full-time programs could obtain their degree for an average of $50,000 to $150,000 in tuition and fees. For instance, the Graduate School of Business at Stanford University, one of the top schools in the country, charges an estimated $74,706 in tuition per year for its full-time, residential students.

But online business schools can be more affordable, and you’ll still participate in the same curriculum that on-campus students complete. At Missouri State University, for example, both in-state and out-of-state students pay an estimated $11,682 for the online program. And the University of Illinois Urbana-Champaign’s popular iMBA online program costs less than $22,000 in tuition and fees. While you may save money on tuition keep in mind you may not get the same networking or recruiting opportunities as your on-campus counterparts.