An MBA can help you advance in your career, but is the high cost of a graduate degree really worth it?

If you work in the business field, the MBA degree can be the gold standard in both position and compensation. But on the flipside, an MBA is not an inexpensive degree to obtain. You can easily spend six figures getting the degree, and that’s on top of a similar cost to obtain your undergraduate degree.

Is an MBA worth having? The better question is; how much is an MBA worth?

There’s no simple answer to that question. There is something of a rule of thumb on the cost to acquire the degree. You take the cost of getting the MBA, and then divide it by the increase in salary that the MBA produces. If your degree costs $100,000, but results in a salary increase of $25,000 per year, you will recover the cost of obtaining the degree in four years.

But the only way to know that is to know how much the program costs, and how much you can expect to earn as a result.

The cost of an MBA

The website reports that the average cost of tuition at a two-year MBA program ranges between $50,000 and $80,000. Other sources report much higher fees at top MBA schools (see below).

The actual calculation for the cost of an MBA is complicated, even more so than an undergraduate degree. In addition to tuition, there’s also the cost of room and board near the school. There are also the usual higher education related expenses, such as books, fees, and the cost of a specialized computer, if necessary.

But an even bigger expense is the opportunity cost. Since MBA students often come out of the workforce, and enroll in the programs in order to advance their careers, there is the lost income from the job that has been vacated.

If you are earning $50,000 per year on your job before enrolling in an MBA program, the two-year opportunity cost will be $100,000. That’s on top of all the other direct expenses related to the degree.

As well, the tuition itself varies dramatically, between in-state public institutions and highly ranked private universities.

The answer to the how much does it cost to obtain an MBA question has no simple answer. The actual answer is, it depends – on all of the factors above.

MBA compensation

In doing some detailed research, it turns out that there is no average salary for MBA graduates. At least not in the sense that you might think of an accountant, an engineer, a nurse or a teacher.

Virtually all career fields have wide variations in average salaries. But those variations seem to be more pronounced in the case of MBA related careers.

A newly graduated MBA out of a state college program, living in a small city in a rural state might earn $50,000 per year. But a graduate of the top program, with several years of experience, and living in New York City or San Francisco, might earn $300,000.

Salary depends on the occupational specialization

A survey by US News reported that the average salary for an MBA graduate is about $90,000, five years after graduating. But they’ve also indicated that there is a wide variation in MBA salaries, based on the industry that the MBA is employed in.

Salaries for 2016, five years after graduating from MBA programs, look like this:

  1. Consulting, $126,919
  2. Financial services, $116,395
  3. Technology, $110,538
  4. Energy, $106,965
  5. Healthcare, $102,296
  6. Retail, $101,171
  7. Consumer packed goods, $97,968
  8. Real estate, $96,809
  9. Manufacturing, $93,102
  10. Media and entertainment, $92,828
  11. Other, $83,026

The job website, provides average mid career (10 years’ experience ) salaries for specific MBA occupations:

  • Finance, $121,000
  • International business, $116,000
  • Marketing, $113,000
  • Information systems, $106,000
  • Technology management, $102,000
  • Business management, $96,900
  • Accounting, $84,000

It also depends on the school you graduate from

According to the Forbes 2017 List of America’s Best Business Schools, salaries for graduates of the top five business schools in the country (five years after graduation) are as follows:

  1. Wharton, University of Pennsylvania, $225,000
  2. Stanford University, $215,000
  3. Harvard, $212,000
  4. Haas, UC-Berkeley, $212,000
  5. Columbia, $203,000

Further down the list, average salaries for graduates of Michigan State (Broad) come in at $117,000, Alabama (Manderson) $96,000, and Missouri (Trulaske) $84,000.

The survey also noted that the average tuition at the top 25 MBA programs is $119,000, though it can exceed $150,000 at the very top schools.

And also on geography

Information compiled by shows a wide variation in MBA salaries from one state to another. Here is a sampling of states they provide:

  • California, $100,652
  • Texas, $83,863
  • New York, $91,824
  • Florida, $74,357
  • Illinois, $87,835
  • Ohio, $77,811
  • Massachusetts, $94,994

Just looking at that list of seven states shows a wide disparity in average salaries. For example, the salary gap between MBA salaries in Florida is more than $26,000 below California.

Unfortunately, gender is also an issue with MBA compensation. The same data by shows that the average male MBA earns between $52,803 and $123,678. The average woman earns between $45,046 and $99,311.


Is an MBA worth getting?

The general answer seems to be yes. But much depends upon the cost of the degree, in contrast to the expected compensation as a result.

That of course will be determined by a combination of factors, including the school that you graduate from, the occupational specialization, where you will live and work after obtaining the degree, and even, unfortunately, your gender.

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About the author

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Since 2009, Kevin Mercadante has been sharing his journey from a washed-up mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed “slash worker” – accountant/blogger/freelance web content writer – on Out of Your He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides “Alt-retirement strategies” for the vast majority who won’t retire to the beach as millionaires. He also frequently discusses the big-picture trends that are putting the squeeze on the bottom 90%, offering work-arounds and expense cutting tips to help readers carve out more money to save in their budgets – a.k.a., breaking the “savings barrier” and transitioning from debtor to saver. He’s a regular contributor/staff writer for as many as a dozen financial blogs and websites, including Money Under 30, Investor Junkie and The Dough Roller.