One of the largest factors when considering whether or not to get a Masters of Business Administration (MBA) is the cost. The average tuition at a prestigious U.S. business school can exceed $130,000, so prospective students are right to be concerned about the cost of their MBA degree.
How long it might take to repay student loans or to recoup the cost of an MBA program depends on the circumstances of each individual student. But here are some factors to keep in mind when determining the value of your MBA investment.
Although the cost of an MBA program may be high, so are starting salaries for most MBA graduates. For example, if your starting salary as an education executive is $60,000 and you earn your MBA for a total cost of about $120,000, it will take you considerably longer to see a positive return on investment (ROI) than an MBA graduate who accepts a position at a Wall Street firm with a $50,000 signing bonus.
Starting salaries aside, the signing bonuses MBA graduates often receive can make a significant dent in student debt: according to U.S. News, the average signing bonus was over $30,000 for MBA graduates at top U.S. business schools that had the highest signing bonuses. For other business schools surveyed, the overall average was almost $16,000.
Determining the potential ROI of an MBA program can also be helpful when deciding which business program to pursue. StartClass calculated the ROI for 25 programs sourced from the Association to Advance Collegiate Schools of Business and other business school websites; researchers included an annual 3 percent salary increase rate based on estimates by CNN Money.
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The projected 10-year salary of someone without an MBA degree was subtracted from that of a business school graduate from each of the top 50 schools. The schools were ranked for ROI according to the difference between their new 10-year salary and their 10-year salary pre-MBA. Here’s a sampling of the rankings:
With returns like these, it's easy to see why many prospective business students decide to apply to MBA programs.
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