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Earning an Master's in Business Administration (MBA) can help professionals enhance their career opportunities, receive increased compensation and job promotions. An MBA can provide the skills and knowledge necessary to start a new business, and many employers require an MBA for certain management or leadership positions.

On the other hand, an MBA from a top business school can cost nearly $100,000 – a substantial expense for recent graduates and substantial time out of the workforce for early-career professionals. The question becomes, is earning an MBA worth the cost? It all depends.

The MBA Degree: An Overview

MBA coursework involves a broad spectrum of business-related topics including accounting, statistics, economics, communications, management and entrepreneurship. MBA programs not only ready students to work for financial institutions such as banks but also prepare them for management positions in other fields or as founders of start-up companies.

There are two routes one can take to earn their MBA: a full-time or a part-time program. Although both programs will result in an MBA, there are trade-offs to consider. A full-time student will find it difficult to work for the duration of their two or three years at school. These programs are most popular, therefore, with younger students who have recently earned their bachelor's degree and can afford to study full time on campus.

Part-time MBA programs typically come in two flavors. The executive MBA (EMBA) is designed for students who have been in the workforce for some time in executive or leadership roles and who are typically 32-42 years of age. These programs can be very expensive, and students expect that their employer will pick up the tab. The part-time MBA is geared for employees who work full time, but are not yet in leadership positions. These students tend to be 24-35 years old and take classes after work, in the evenings or on weekends in order to enhance their career.

Earning a bachelor's degree with a 4.0 GPA is certainly an applaudable achievement. But not getting straight A's will not necessarily blemish a candidate's chances at getting into a respectable MBA program. Getting a 3.5 or better GPA (B+ to A-) is typically the range these schools select from. The very best and top rated programs will demand a higher GPA than mid- or lower-tier ones.

The best business schools generally demand the highest Graduate Management Admission Test (GMAT) test scores, and among top-tier programs, the average score is between 720 and 730 (out of a possible 800). A perfect score of 800 is certainly not required to gain acceptance to a top school, but it can make an applicant stand out. Poets & Quants have have compiled a list of average GMAT scores for some top MBA programs in the United States. 

Excelling in academics serves as a solid foundation, but business school is geared towards real-world professional outcomes. As a result, many schools value relevant work experience in their decision-making process. EMBA programs in particular are designed specifically for older adults who have been in the workforce for a number of years in management or leadership roles. EMBA admissions know that academic records will be stale and put a much heavier weight on work experience and the professional networks applicants bring to the table.

Part-time and EMBA programs are designed to allow full-time employees to earn their MBA at the same time by offering evening and weekend classes. Often times, employers will pay for a student's tuition in full or in part if they believe that their new degree will make them a more value asset to the company.

When is It Worth It, or Not

An MBA is only worth the expense, time and effort when the graduate plans to work in a business-related field, in management, or as a company founder. For those working in other industries, unless they are in management or leadership roles, an MBA may not be useful.

Moreover, not all MBA degrees are created equal. The number of colleges, universities, and business schools offering a Master's degree in Business Administration is increasing, making the space quite crowded. Unless a student earns a degree from a respectable program, it might not be as valuable as expected, while going to a top-tier business school greatly increases the value of the degree. Recruiters and hiring managers are not likely to view an MBA earned from an unknown or online-only educator to hold the same weight as from a top-10 school. For professionals forgoing a few years of work to go back to school, doing so not at a second- or third-tier school could end up being a waste of time, money, and opportunity.

Hiring managers also know that having the letters MBA after an applicant's name doesn't automatically make them an ideal hire. Some believe that people who have achieved leadership positions with the degree would also have done so without it. Furthermore, having an MBA won't make a candidate stand out if they're already flawed in other ways, like being obtuse, slow to adapt, or bossy.

While many entrepreneurs hold MBAs, start-up companies do not always look to hire other MBA holders. Instead, they often hire out-of-the-box thinkers who can innovate and offer a perspective different from their own.

An MBA might help in getting a job interview, but it will not guarantee the applicant will land that job. On the other hand, people with work experience looking to give their career a boost can open avenues for growth and promotion with a part-time or EMBA program.

What Alumni Think

The Graduate Management Admission Council (GMAC) issues regular research reports on how graduates from business schools rate their experience during and after school. The survey results are encouraging. Their 2016 Alumni Perspectives Survey Report shows that 95% of MBAs regarded their degree as of good, excellent or outstanding value. More than three out of four reported that their expectations from their education was met. Moreover, 93% of alumni would still pursue a graduate management degree if they had to do it all over again knowing what they do today.

While subjectively, business school alumni rate their degrees positively, the return on investment has gone down as investment costs – such as tuition – has increased at a much higher rate than salaries. 

Alternatives

For those who decide that an MBA is not worth it for them, there are alternatives that can help with a career in finance, business, or management. The Master of Finance degree is a finance-specific degree that takes only one year and provides graduates with the skills necessary for a career in trading, investments, asset management or risk management. Other Master's degrees in related fields are also good options for somebody looking to focus on economics, statistics, applied mathematics, or accounting.

The Chartered Financial Analyst, or CFA program, is a self-study program which offers a comprehensive curriculum covering three levels of study. Each level of study is tested by challenging exam. The curriculum is considered by many to be equivalent to a graduate education, and charter holders often are considered valuable in the hiring process. Other self-study programs, such as the Financial Risk Manager (FRM) designation and the SOA actuarial exams, are also coveted.

The Bottom Line

Earning an MBA can enhance one's career path, or help land a high-paying job. Typically, however, the expense is only offset if the degree is earned from a top-tier business school and if the career path sought is business-related. Despite the cost-benefit analysis, the great majority of business school alumni self-report very positive experiences and high value from their MBA degrees.

If somebody cannot afford the cost, cannot get into a top program, or does not have the time to juggle work and study, there are fortunately other good options to pursue such as the CFA or a Master's degree in Finance or Economics.

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