Click To A List Top Schools Offering MBA Degrees Online
An MBA degree can propel you forward in your business career, but it’s important to weigh the costs and benefits before jumping into what’s usually a two year course of study. Many prospective students fail to really think through what the Return On Investment (ROI) will be from getting this degree. Before you even start looking at schools with MBA programs, sharpen your pencil and figure out if it’s the smart thing to do in your situation.
How to Calculate the True Value of an MBA
There are many MBA ROI calculators on the internet, but none of them can give you an exact reading on what your return will be, since so many of the factors are subjective. That being said, you should be able to quickly get a general idea of what your total investment in an MBA will be and how long it will take to recoup that cost and start to truly profit from it.
The most simplistic way to calculate your ROI is to total the cost of your schooling (including books and other additional costs), figure out how much more on average you will make per year with your MBA, and calculate how many years it will take to pay down your investment. That will at least give you a snap calculation of how quickly you can be debt free, and enjoying any salary increase you’ve achieved as a pure profit.
Let’s say, for example, that your MBA will cost $50,000 total, and upon graduation you believe you can expect a salary increase of $20,000 a year. If you choose to put all your salary increase toward paying off school costs, you’ll be able to start enjoying the higher salary free and clear after two and a half years. Plan to work for 10 more years? Even without a raise, you would have a minimum $200,000 return on your school investment.
A Baseline Value Estimate For A Business Degree
That is certainly an over-simplified way of looking at the numbers, particularly since many people don’t immediately use their entire salary increase to pay down school debts. But it’s a good baseline calculation to start from. To calculate your own numbers, try to get a clear picture of how long you plan to work, based on your age, what kind of salary increase you can realistically get from an MBA in the particular business you want to go into and, of course, the cost of the school you are planning to attend.
Some good news to keep in mind is that online schools generally offer a lower total cost of an MBA than brick and mortar schools. But even within the online school category, you can benefit from being a smart shopper. Many lower-cost online MBA programs have emerged in recent years. Well-known schools like Western Governors University and New England College of Business and Finance, for example, offer MBA programs online at a total cost of less than $22,000., even before financial aid is calculated in. That’s a far cry from the more typical private school cost of $50,000-plus that a private school MBA costs, and a more reasonable investment that can improve your ROI picture a great deal. (Find out more about moderately-priced online MBA schools here.)
More Factors to Consider:
Will you be working while you get your MBA or become a full-time student?
If you’re working while getting your degree, such as in an online program, getting to the point where you are enjoying your ROI may take less time than it will for a full-time student who has no income while attending school. There’s no right or wrong way to get your MBA, but choosing an online option that allows you to keep working while you study can give you the option to use your salary to keep down school costs, helping you emerge from school with less debt.
Are you relying on student loans or other financing, which accumulate interest?
Obviously loans with interest mean that you’ll be paying more than the original price tag for your MBA. And the longer it takes to get your degree, the more interest you may accumulate (unless you get a government-sponsored subsidized Stafford loan, which you can put off payments on until you graduate). If you take more than the typical two years to finish an MBA, you’ll also have to wait longer for the pay increase it will hopefully bring you, adding more debt payments into your ROI calculation. Conversely, if your employer is financing some or all of your degree and guaranteeing a raise when you get your degree (not an unusual situation), your risk is much lower.
How much of your total excess income will you put towards school debt upon graduation?
It’s idealistic to think that once your salary increases, you’ll put the entire increase towards your debt (even though many internet ROI calculators make this assumption). Instead, most people increase their lifestyle with their salary. Look at your total debt and work out beforehand how much of your potential earnings increase you’ll put towards paying down your debt. Are you willing to keep your lifestyle simpler and pay down the debt faster, or would you rather make modest increases to your current living and take a little more time to pay off the debt? It’s important to think this through before you start so that you can maximize the financial value of an MBA when you graduate.
Is an MBA Worth the Investment?
Some careers, such as those in finance or executive marketing, most often require an MBA to move up the corporate ladder. However, you may be surprised to know that most jobs in business rely much more heavily on experience than a specific advanced degree. In fact, several studies have come out in recent years that show only 1 in 3 CEOs has an MBA (it also showed, amazingly, that the companies run by non MBAs tend to have better performing stocks!). This doesn’t mean you shouldn’t get your MBA, but you should have solid experience first. Combining your degree with related experience is what will give you an edge over other applicants in your chosen career.
If you have a specific career goal, experience in that career, and an MBA that has given you knowledge to move forward, it can be a good investment at any age. But if you’re getting an MBA because you think it may help you, are uncertain about your future career goals, or think that getting this degree will take you out of unemployment, you might want to think again, especially if you’re well into your 30s. You need have at least a fairly good idea of which career path you want to follow for a MBA to offer you the chance of a real salary increase that will allow you to pay down your debt.
An MBA can be very helpful if you obtain and use it wisely. But getting an MBA without doing the research first could end up costing you much more that you ever bargained for.
In that environment, companies that have slimmed down during the health crisis will be hungry for job candidates familiar with utilizing data analysis, artificial intelligence, machine learning and other knowledge areas being taught in most MBA programs today. Marketwatch says the starting salaries for business schools grads from quality universities already average above $150,000. per year and could go higher in the coming years. MBA grads, it adds, come out of school with “the ability to assess and bear sensible risks,” a skill which “is the core of business and entrepreneurship.”
Today, there’s a strong variety of non-profit colleges offering programs online, and MBA degree have been a particularly strong area of growth. That’s because colleges across the board have realized that lots of the people who want MBAs are adult students with jobs (and often families as well) who don’t have time to get themselves to a classroom on a regular basis. Some schools have responded with abbreviated business programs online, but lots of others have moved to put their full MBA programs online.