The cost of earning a general Master of Business Administration (MBA) degree can seem daunting. However, the return on investment (ROI) can be substantial, making the upfront expense worth it for many business professionals. Therefore, evaluating and considering how numerous factors impact the potential ROI of an MBA degree is an important part of planning one’s graduate-level business management studies.
How Much Will Earning an MBA Cost?
The cost of tuition and fees for MBA programs varies widely. Tuition for MBA programs can cost over $80,000 per year. MBAs usually are two-year degrees, meaning program tuition totals top $160,000 — not including other fees.
Room and board for campus-based programs should also be factored in. For instance, room and board for Stanford University’s Graduate School of Business is $34,806 per year, as of 2021. Add this to annual tuition costs and earning a two-year MBA from Stanford would cost campus-bound students over $230,000.
Opportunity cost is another factor when considering full-time, campus-based programs. This refers to lost wages and income while in school. According to the U.S. Bureau of Labor Statistics (BLS), the median earnings of workers whose highest level of educational attainment is a bachelor’s degree was $67,860 per year in 2020. Foregoing this salary for two years to attend school would equate to a roughly $135,720 opportunity cost representing lost income.
However, there are more affordable ways to earn a solid MBA degree. For example, Bowling Green State University (BGSU) offers a fully online general MBA program with tuition at $17,850 for in-state students. In addition, students can complete the program in as few as 12 months, and with the program’s online format, students can continue working and earning a salary while completing their degree, saving substantially on opportunity cost.
What Can I Expect in Terms of ROI?
A Graduate Management Admission Council (GMAC) survey found that the median base salary of 10,882 master’s-level business program alumni was roughly $115,000 in 2017. Comparing this figure to BLS’ data on median earnings for workers with only a bachelor’s degree suggests the median wage difference for a business master’s degree could be about $47,000.
According to the National Association of Colleges and Employers (NACE) the projected average starting salaries for class of 2021 MBA graduates just out of school is $87,966. This represents a $29,097 wage premium compared to NACE’s projections for new graduates of business-related bachelor’s programs.
Considering these wage premiums, MBA graduates can start recouping their investment in school quickly. Still, the many costs associated with going to school will determine how long it will take to make a substantial return on that investment. For example, including two years’ worth of tuition, room and board and median-level opportunity cost, the true cost of a Stanford MBA would be about $365,000 (not considering student loan interest). At an average wage premium of $47,000, it would take just shy of eight years to start making a return on this level of investment. Still, the ROI over the entirety of a career would be substantial.
In contrast, BGSU’s online MBA could easily pay for itself within a year after graduation, even considering NACE’s more conservative starting salary projections. When considering a median wage premium over time of $47,000, the ROI for BGSU’s online MBA could exceed $900,000 in 20 years.
How Else Can a General MBA Specifically Impact ROI?
General MBA programs help students develop widely applicable business management knowledge and leadership skills, giving them versatility in career options. This versatility can be paramount in mass disruptions that affect markets, industries and even specialized management functions in challenging ways.
Changing management roles or industries with ease can help minimize career setbacks caused by such disruption. Thus, a general MBA education that promotes career versatility may bolster income and ROI resiliency in difficult times.
The broad knowledge and skills gained from generalized MBA studies are especially applicable to general management positions. In fact, GMAC found that median base salaries for general management roles were higher than any other job function in all but two of the eight industries the survey highlighted.
Clearly, a general MBA degree can be well worth the investment. However, students can minimize that upfront investment by choosing an affordable and convenient online MBA program like BGSU. Plus, after program completion, graduates can leverage their degree to selectively pursue high-earning careers with solid growth potential, maximizing their ROI in the long term.