4 Stats to Measure Before Signing Up for an MBA

As a young professional working at the International Finance Corporation, an arm of the World Bank, Bruno de Faria had a solid career but worried his business acumen was weak.

"I was a political science major in college. I had a little bit of an international relations background, but my work was becoming more and more related to business ¬Ė finance, accounting, marketing," the 36-year-old says.​ "I wanted to develop, personally, those skills."

He decided an MBA would give him the knowledge he lacked, but a business school degree often comes at a cost. Many schools charge students $50,000 or more in tuition and fees per year, and full-time MBA programs usually require a two-year commitment.

Business school experts recommend applicants weigh their return on investment before enrolling and how long it will take to recoup the money lost​. The investment includes the time in school, the salary a full-time student gives up while in school​ and the total cost of attendance.​

For de Faria, measuring his income before and after graduation was important.

"I looked at my salary going away, our incremental expenses and then what would be the expected salary that I'd get after graduation. So, that would be the return," says de Faria, whose wife worked while he was an MBA candidate at the University of Chicago's Booth School of Business. "Then I looked at in how many years, more or less, what would be my payback period?"

Graduates from two-year, full-time MBA programs usually recoup their investment in three and a half years, according to a February report from the Graduate Management Admission Council. Their median cumulative base salary three years after graduation is $348,000.

Prospective business school students should consider four factors in determining when​ they'll see a return on investing in an MBA program.

1. Projected salary: Most schools publish employment reports that detail how much their graduates make and which industries they enter. Applicants should view these reports to get an idea of their future salaries, experts say.

Reports that go back a few years are valuable, says Bill Glick, dean of the Jones Graduate School of Business at Rice University and chair of the board of directors for the Association to Advance Collegiate Schools of Business International.

"Getting three years out or five years out is much better than getting at graduation," he says. Reports that look at where grads land right after graduation could be influenced by the strength of the employment network for that school, he says, and may not reflect how alumni are using what they learned in business school to advance in the long run.

"Three and five years out means you got a good job, and you did something. You earned a pay raise, you earned a promotion, which to me says that you've learned something while you were in the MBA program that is making a difference," Glick says. ​

2. Time in school: Business school programs can be as short as one year or longer than three, although the two-year, full-time option is traditional. How much time students spend in school can affect ​when they're able to recoup what they've invested.

Graduates of one-year MBA programs can see the money they've lost in about 2.5 ​years, on average, according to the Graduate Management Admission Council.

In some instances, says Glick, attending an executive or professional MBA program may be a better fit for students. A 27-year-old making $100,000, for example, may not want to let go of that salary for school, he says.

"It's hard to give that up for two years for ​a full-time MBA program. You may be better off going for a professional MBA program, and that'll accelerate your career without losing the income."

Professional and executive MBA programs​ usually require students to attend classes on the weekends, leaving them free to work during the week.

3. Cost of living: While some industries pay higher than others, a job's location can determine how far a salary goes.

"Our average salary is typically about $60,000 upon graduation," says Dana Hart, director for the Flores MBA program at Louisiana State University¬óBaton Rouge's Ourso College of Business. "Depending on where students go, I mean that could be mostly a Louisiana base salary. If they go to Texas that could be a little bit higher. If​ they go work for Deloitte in New York,​ it's gonna be higher than that."

The school, he says, attracts many regional students and a lot of alumni work in the region.

"Given our geographic footprint here in the Gulf Coast and our strategic partnerships with oil and gas companies, energy is a big partner to us," Hart says. "We have students who work for Exxon, Chevron, Shell, BP. But then we also have students that work in a variety of different functions that support the energy industry."...


Read full story: U.S. News & World Report

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