Getting an MBA can be expensive. This is why anyone interested in the degree needs to consider the payback.Unfortunately, the MBA doesn't come with any guarantees. There will be no promise of higher earnings when you apply or as you are nearing graduation. That said, it is likely that you will earn more with an MBA than without one. Recent MBA graduates reportedly make 35 percent more than those without the degree (source: The Princeton Review).
Of course, the amount you make will depend on a number of things, including where you work upon graduation, as well as your job title. Even the business school you attend will play a part in determining your salary.
It isn't unusual for many MBA graduates of Harvard, Wharton, and Stanford to start out with six-figure salaries and five-figure signing bonuses. Graduates of smaller, less prestigious schools may not be as lucky, but they will still have an MBA. And the bottom line is this: climbing the corporate ladder is much easier with a degree than it is without one.
Financial Value of an MBA
That said, an MBA degree from one of the top business schools in America could set you back by up to $100,000. This is by no means a small amount and is indeed one of the largest investments that you are likely to make in your life. So you need to ascertain the return on investment on the amount that you are likely to incur in pursuing an MBA and see if it is financially valuable to you.
If you are looking at Forbes ranking, the average Return on Investment in around 3-4 years. Calculate all the costs that are involved in pursuing an MBA, namely application fees, program fees, tuition costs, interest on any loans, cost of materials needed, travel costs related to training etc, test fees, and any other miscellaneous costs that you may incur. Once you have estimated the cost of your MBA, you need to factor in the opportunity cost of doing an MBA, and then you can assess the benefits of an MBA in terms of increased salaries, better wages, and more career opportunities to evaluate the monetary value of your MBA degree.
This is what all applicants to an MBA program need to ask themselves when they apply to any school to be admitted into their MBA program. Remember that the admissions officers and those professionals, who process your application, are also asking themselves if you will make a good candidate for their MBA program.
It’s not rare to guess-estimate that the total cost of an MBA is roughly twice the price of the total tuition of the MBA.
Return on Investment
- Statistics you need to know about the value of the Executive MBA degree
- GMAC survey reports: like an MBA ROI, or the Value of an MBA, Recruitment Corporate Report, or an Alumni Perspective Survey. Disclaimer: the GMAC is the institue that manage the GMAT test.
- ROI is not the acurate way at evaluating a project since it does not incorporate neither the time value of money nor the opportunity cost. You better look at NPV, or doing an Cost-Benefit analysis instead.
- If you want to calculate your ROI depending your MBA program, BW build a tool that will let you compare between schools
- While the average salaries and bonuses of the Class of 1992 paint a broad portrait containing every swath of income median sums provide an additional level of detail. Half the respondents from each school made above the median, and half below.
- Hobsons AMBA Scholarship is an annual book that register all Grant Support for student, a giant directory of Funding Sources.
- Rotary International can provide financial help
- In USA, FastAid, FinAid, are the 2 great source of information for loans
- The Sallie Mae Company primarily provides federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP) to US citizens, and offers comprehensive information and resources to guide students, parents and guidance professionals through the financial aid process.
- Bourses Internationalistes Celanese Canada (BICC) offer fellowships of $10 000 to Canadian for study outside of North America
- Scholarships for study in France may be obtained through the Cultural Services of The French Embassy.
- French Fongecifs give advice and help people taking a career break to plan and finance higher education.
- Upon AMBA accreditation, UK citizens may apply for financing arrangements set up by AMBA
- The Sainsbury Management Fellowship Scheme - enables young engineers of high career potential to undertake MBA courses at major international business schools. Since 1987 the scheme has supported about 195 engineers. Funding is made available to UK engineers via the Royal Academy of Engineering.
- British Council
- Commonwealth Scholarship & Fellowship Plan (CSFP)
- German Candidates may apply to the DAAD
- Fundacion Pedro Barri้ de la Maza offers scholarships to students from Galicia in Spain.
- Funded by the European Commission, Alban Scholarships are specifically targeted at young Latin Americans wishing to complete their academic or professional education in Europe.
- From Japan, have a pick at World Bank Scholarship
- Can I afford the program fees?
- Will the living expenses, travel costs, and other expenses involved in the particular program put an immense financial burden on me?
- Will I have to borrow a loan to cover the costs and do I even want to?
- If I do take a loan, will I be able to bear the interest on the loan and how long will it be before I can repay it?
Remember, Christian Schraga estimates that the ten year NPV of a top MBA program is (-$53,000). You can find his calculation of NPV (net present value) of full time MBA.