Is an MBA Worth It? The ROI of an MBA
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Key Takeaways
- Getting an MBA is generally linked to higher earnings, potentially boosting salaries by as much as 50% or more.[1]
- MBA programs can help professionals build leadership skills and develop professional networks to open up new career opportunities.
- However, not all jobs in business require an MBA, and top-ranked programs are very expensive.
- On average, seeing a return on your investment in an MBA could take 3-9 years, depending on your career stage and program type.
- When choosing a program, it’s important to consider your desired career path plus your prospective school’s specialties, culture, and reputation.
Master of business administration (MBA) programs provide opportunities for students to learn key business leadership skills while growing their professional networks. But they don’t come cheap.
The average MBA costs close to $63,000, and top schools can run students over $120,000 per year. If you’re considering an MBA, you’ll want to know if that investment will pay off.
This report explores the data on an MBA’s return on investment (ROI). We’ll also cover the pros and cons of the degree to help you decide the next steps in your education and, ultimately, your career.
Pros and Cons of Getting an MBA
Deciding whether an MBA is worth it for you depends on your circumstances and goals. But hard data can help inform your decision, regardless. Consider these risks and benefits.
Pro: Getting an MBA is generally linked to higher earnings.
The National Association of Colleges and Employers (NACE) reported that recent MBA graduates earned a median starting salary of roughly $95,810. Meanwhile, folks who recently graduated with a bachelor’s in business administration (BBA) made starting salaries around $63,540.1 That’s more than a 50% pay bump or a difference of over $32,000.
That’s great news for career starters. But what if you completed your bachelor’s years ago and started growing your career and income? You still stand to benefit from earning an MBA.
In 2023, the Graduate Management Admission Council (GMAC) surveyed professionals who had been in the workforce for an average of five years. They found that the median salary for full-time MBA students increased by 42% after earning their degree. Additionally, professional MBA degree-earners increased their median salary by 29%.[2]
Pro: MBA graduates are in demand.
Of course, to get paid, you need to get hired. GMAC’s survey found that, on average, graduate business students received one job offer for every five applications submitted.[2]
GMAC also surveyed corporate recruiters and staffing firms about their demand for business school graduates. Worldwide, 63% of respondents anticipate that the hiring demand for business school graduates will increase in the next five years.[3]
Pro: MBA programs focus on developing critical skills for business leadership.
GMAC’s survey found that MBA students felt that their programs prepared them with necessary skills:[2]
83% felt adequately or very prepared with regard to communication, motivation, and leadership.- 80% felt prepared for interpersonal skills.
- 79% felt prepared for decision-making.
“The number one benefit from receiving my MBA was gaining effective leadership skills to compete worldwide,” said Paula Fontana, MBA, interim president of the National Black MBA Association. “Without my MBA, it would have taken many more years of experience to accomplish what the MBA provided in two.”
Pro: MBA programs may help you build your network to fast-track your success.
Attending business school offers the opportunity to connect with hundreds of fellow students and take advantage of robust alumni networks. Harvard Business School, for example, has 89,000 alumni across 173 countries.[4]
The combination of income, demand, and network can be powerful in more ways than one. In another GMAC survey, alumni of graduate business programs reported the following outcomes:[5]
Con: Not every business career requires an MBA.
While MBAs have their benefits, an advanced degree isn’t always necessary to pursue a career in business. Consider:
- Just 23% of business owners have a graduate degree, such as an MBA.
- About half of North American CEOs in large companies (54%) have an MBA.[6]
Also, while many top consulting firms hire MBA grads, there are other ways to become a consultant. For example, you can become certified in project management, human resources, supply chain management, or another field.
Con: Earning an MBA has its costs — and not just tuition.
Tuition and related costs vary widely by program. Harvard’s Business School will run you almost $120,000 per year — close to $240,000 in total. It’s worth mentioning, though, that the median starting salary of a Harvard B-school grad is $175,000.[7]
The average part-time online program costs about $16,000 per year and may take 3-4 years to complete.
Keep in mind, if you’re taking time off from work to complete your program, there’s an opportunity cost too. For up to two years, you’re not learning on the job, climbing the organizational ladder, or making money.
Con: MBA costs can turn into student loan debt.
According to the National Center for Education Statistics, about 50% of MBA students took out student loans for their degrees in the 2019-2020 school year.[8]
The average student loan debt for an MBA was $51,850.[8]
All this is to say that you should calculate your costs and likely debt — and think realistically about your return on investment — before committing to a program.
The ROI of an MBA: When Does an MBA Pay Off?
The idea of ROI is that you know you’ll take on some costs — maybe even great costs. But those costs should pay for themselves through salary or career opportunities later on. So, when does having an MBA pay off? We crunched the numbers based on national averages. Check out the timelines below.
For Early-Career Professionals an MBA Can Pay Off in 5-6 Years, on Average
Remember, the NACE study found that people who recently completed an MBA program earned about 50% more than people fresh out of a bachelor’s program in business administration (BBA).[1]
Let’s say that you just graduated from a BBA program and you continue school for another two years to earn your MBA. Let’s also assume that whether you earned your MBA or not, your salary was to grow at a rate of 2% annually. Then, it would take about five years and four months to break even on your investment.
Mid-Career or Later, MBAs Still Pay Off
If you completed your bachelor’s degree years ago, you may be making more money now than when you just graduated.
In October 2024, Payscale reported that the average salary for people with a BBA was $76,000. Payscale sources salary data from people at all stages of their careers, most of whom are in or past the middle of their careers.[9]
Payscale also reported that the average salary for MBA degree-holders was $98,000.10 That’s 29% more than all BBA degree-holders earned. While not as hefty as the pay bump for career starters, it’s still significant.
What does all this mean? Earning an MBA now can still pay off, but it might take a little longer.
If you stopped earning an income to attend an MBA program full time for two years, it would take roughly nine years on average to see a return on your investment. (For consistency, we’ll still assume 2% wage inflation each year.)
If you kept working while earning an MBA part time, it would take longer to earn your degree. But once you graduate, you would drastically cut your time to see an ROI — to around three years.
Behind the Numbers
Our calculations above:
- Do not account for any interest that accumulates on student loan debt you may have borrowed for your undergraduate degree or MBA.
- Do not include any bonuses you may receive at work.
- Do account for salary inflation — we factored in a 2% annual raise whether or not you earned your MBA.
Finally, we based our time to ROI calculations on national averages. The ROI of your educational journey depends on many individual factors, like the sector you work in or the specific program you choose.
ROI of Top Online MBA Programs
The ROI of an MBA partly depends on where you complete your degree. Different schools have different costs and different salary outcomes for graduates.
Georgetown University’s Center for Education and the Workforce estimated an ROI value for master’s programs in business administration, management, and operations, relying on data such as students’ monthly earnings and average debt payments.[11]
Here’s how our top online MBA programs stack up based on Georgetown’s report:
| School | Annual Earnings | Annual Earnings Net of Debt Payment |
|---|---|---|
| Virginia Polytechnic Institute and State University | $88,800 | $85,200 |
| Villanova University | $90,000 | $85,200 |
| Auburn University | $87,600 | $84,000 |
| University of Nevada, Reno | $82,800 | $79,200 |
| University of Maryland | $72,000 | $66,000 |
| Clemson University | $67,200 | $63,600 |
| James Madison University | $66,000 | $63,600 |
| William and Mary | $68,400 | $61,200 |
| University of Utah | $57,600 | $55,200 |
| University of Oklahoma, Norman Campus | $44,400 | $39,600 |
Top-Ranked Business Schools Have Highest ROI
According to Georgetown’s data, schools with the highest ROI are Ivy League institutions and other prestigious, highly selective business schools.
These schools charge higher-than-average tuition. They also provide far higher than average returns.
| School | Annual Earnings | Annual Earnings Net of Debt Payment |
|---|---|---|
| University of Pennsylvania (Wharton) | $175,200 | $169,200 |
| Northwestern University (Kellogg) | $189,600 | $168,000 |
| Dartmouth University (Tuck) | $166,800 | $162,000 |
| Columbia University | $170,400 | $160,800 |
| Stanford University | $163,200 | $156,000 |
| University of Chicago (Booth) | $159,600 | $148,800 |
| University of Virginia | $154,800 | $144,000 |
| Yale University (School of Management) | $147,600 | $140,400 |
| Duke University (Fuqua) | $147,600 | $135,600 |
| University of Michigan-Ann Arbor | $140,400 | $133,200 |
Ask an Expert
Does Business School Prestige Really Matter?
“I believe the main thing that school prestige provides is access to a stronger network, which ultimately leads to a higher starting salary,” Fontana said.
However, prestige is far from the only consideration to keep in mind when deciding on an MBA program.
“I would counsel those interested in pursuing an MBA to check for a culture match over prestige,” Fontana said. “You learn as much from your peers as you do your professors, so you want to ensure that you will enjoy your time at the institution. … The power of the network, how alumni engage with students, should also be part of the culture you evaluate.”
School prestige may also help you land a job at a leading management consulting firm — if that’s your ultimate goal. Top firms often prefer to hire MBA grads from elite business schools.
Prospective students should do their research: MBA programs may report on where their grads end up working on their website. Consider:
MBA programs’ employment reports also may include graduates’ median starting salaries.
Takeaway: Finding Your Right MBA Program Matters
Earning an MBA can positively impact your paycheck and many other aspects of your career, but choosing the right program matters.
Search for programs with active alumni networks that can demonstrate evidence of high value for graduates in terms of employment rates and starting salaries.
You can also find scholarships for MBA programs. Fontana received a scholarship from the University of Georgia for her MBA. So, she said, “the ROI was immediate.”
If you’re currently employed, find out if your company offers tuition reimbursement that could cover some of your MBA program costs.
Finally, you may also lower your opportunity cost by earning your MBA part time or through an accelerated program, such as a mini MBA. After all, flexible, faster, and more affordable options are the future of the MBA.