What is an MBA for and is your FOMO justified?

April 20, 2021

Wondering what an MBA degree is, what it’s all about, and whether it’s right for you? We’ve got you covered.

MBA means Master of Business Administration! Tada!!!

Yeah, ok, in reality there’s soooo much more for prospective students to consider about graduate business degrees before taking the plunge and entering the world of the MBA. In this article, I’m gonna tackle the main questions most people have when contemplating whether an MBA is an investment they want to make.

You probably started googling “what is an MBA” because you heard that so many top dogs at Fortune 500 companies seem to have one. Jamie Dimon (CEO, JPMorgan Chase) Sheryl Sandberg (COO, Facebook) have MBAs from Harvard. Melinda Gates (cofounder of the Bill and Melinda Gates Foundation) and Tim Cook (CEO, Apple) hold MBAs from Duke. Phil Knight (Founder of Nike) and Mary Barra (CEO, General Motors) earned their MBAs from Stanford. And then all these other folks who got their MBAs from all kindsa other places. So it might be tempting to assume that an MBA is a golden ticket to success as measured by status and $$$$$$!

A Master of Business Administration is a hot advanced degree and very definitely a popular stepping stone to career advancement. But hang on, Mark Zuckerberg, Elon Musk, and Warren Buffett don’t have MBAs. So what’s the value in an MBA, and do I really need one to succeed in business?

Let’s see!

How does an MBA degree benefit my career?

An MBA is a versatile degree that can open many doors in various industries and sectors, business-related or not. But at its core, an MBA is for people who want to learn how to create and grow value—for companies, organizations, and society.

Whether you’re looking to advance your career in business, switch industries, become an entrepreneur, or perhaps change careers entirely from an unrelated field to a business-centric role, then an MBA education is a great training ground. A graduate business education equips you with the business acumen and interpersonal skills necessary to make strategic decisions and step into leadership positions, as well as inspire and motivate teams to carry out business goals to create value.

It goes without saying that an MBA will play a huge role in sharpening a variety of interpersonal and professional skills to help you further your career plans in business management. In completing both your required coursework and electives, you’ll gain valuable experience over a broad spectrum of specialized career skills including conceptual skills and analytical skills, as well as soft skills such as communication and leadership skills.

After two years in a full-time MBA, you’ll come out with a strong and highly-respected credential on your resume that serves as a short-hand signal to employers that you are management material. While it’s true that any old Joe with a bank loan or some starting capital can set up shop and go into business for themselves (heck, kids do that all the time with their lemonade stands!), an MBA is valuable especially when you’re aiming for a career in Silicon Valley, Wall Street, General Management in a corporation or Management Consulting. An MBA can help you break into those places on a faster job track than you would otherwise be starting at entry-level, having to work your way up to management. An MBA essentially enhances your professional marketability at more prestigious firms that pay top annual salaries, and gives you a leg-up in your business career.

A huge appeal of an MBA degree lies in the networking opportunities that you wouldn’t otherwise have access to. Companies and recruiters will literally be coming to you on campus! Networking is such an important part of business career development, and so you should use your time in business school wisely. I’m not just talking about schmoozing with possible future employers and key players in the business world, though. This is the time to build relationships with your classmates and professors as well as talking to the recruiters who’ll be frequenting your school!

Depending on your desired industry, generally, the higher you aim in terms of company and role, the higher you’ll need to target in the MBA rankings for your school applications. For example, Management Consulting firms such as BCG or McKinsey, hire more grads from the Top 7 schools (aka the M7), which are: Harvard, Stanford, University of Pennsylvania-Wharton, Columbia, Northwestern-Kellogg, University of Chicago-Booth, and MIT Sloan. For tech jobs in Silicon Valley and Finance jobs on Wall Street, you might want to tailor your business education to help you develop your expertise and skill-set through industry-specific program offerings or elective courses.

But regardless of where you want to end up after your MBA, you will graduate with greater awareness of global markets, advanced critical thinking skills, improved ability to manage and lead, better time management skills, increased job opportunities, and higher earning potential because of those things.

If you’re on the fence about whether an MBA is for you, read this article for much more on why get an MBA.

What are the different ways I can get my MBA? (Program types)

If I asked you to guess how many MBA programs are out there in the world, I would bet a lot of money you wouldn’t come close to guessing even in the right ballpark. The number is that shocking.

There are more than 14,000 MBA programs in the world. Believe it or not.

So suffice to say that these days, you actually have a lot of choice between different types of Masters of Business Administration! This is really helpful if your circumstances aren't flexible enough for you to take two years off from work to pursue the “traditional” route, or a 2-year full-time MBA program.

Different MBAs offer and require different types of courses. There are a number of core courses, as well as electives that you will be required to take, from a foundation course before the MBA (for those who don't have a business background to help you get up to speed), to core courses such as accounting, economics and business strategy, or elective courses such as entrepreneurship and information technology management.

Choosing the right MBA for you is a very personal choice. There is no blanket right answer or one-size-fits all approach. So, as you’re deciding if an MBA is right for you, think carefully about what you need to get out of the program and then assess the landscape with your intent in mind. To help you assess the options…

Types of Programs:

There are four primary types of MBA programs. The one that’s best for you will likely depend mostly on your level of seniority, clarity about recruitment needs, and appetite to take time off working full time. Take a look at the table below to gain a quick overview of the main types of degree programs, plus a couple of additional options.

While the U.S. leads the way when it comes to top MBA programs around the world, there are some amazing opportunities to obtain your MBA abroad too (a number of international schools appear on the 2021 global MBA rankings list)! And hey, let’s face it, after the year that we’ve all had, who isn’t itching to hop on a plane to some far away land.

These programs tend to be shorter and obviously not everyone can just escape the country that easily. If you don’t live in the country of your MBA program, and if moving abroad is something you can do, this is definitely an alternative and exciting option to consider! The benefits include the opportunity to do some international networking, set yourself up to work in a foreign country in the future (if this is something that interests you) and the obvious allure of gaining your MBA while experiencing life in a new country!

As I mention below, a global MBA can often work out cheaper than a full-time MBA in the U.S.A. Check out the top 50 MBA Programs outside of the U.S.! If you’re jonesing for an American MBA, here are the top ranked schools in the U.S. for 2022.

Learning Format

Each type of program can be delivered in in-person and online formats, with some programs offering a blended format.

How long does an MBA take?

Given the variety of available options that I've already talked about, it makes sense that the period of time it takes students to complete an MBA also varies.

For a standard, full-time MBA program, you can expect two years of classes.
An Accelerated MBA will require 12-18 months of full-time study depending on the program
Most Full-time Resident Executive MBAs take 12-15 months.
Part-time MBA programs and non-resident / hybrid Executive MBA programs vary in length, depending on the number of credits you take in each semester and the course you opt for. Most people finish these degrees within 3 years.
Online MBAs, on average, can be completed in anything from 12-36 months, depending on the program.

With such a huge number of options out there, you should be able to not only find the right MBA but also the one that takes the right amount of time for you!

How much does a typical full-time MBA degree cost?

Just like everything else, it depends! Tuition costs depend on the school you’ll be attending and the type of program you’re doing. An MBA is a huge investment in you, your future, and your earning potential. So, as you’d expect, a degree in business doesn’t come cheap. The price is in the same range as a small house. Or at least the down payment for a house. The good news is that it doesn’t necessarily have to break the bank, and you can make some savings where you need to.

The average all-in cost to attend a two-year top 25 MBA program in 2020 was $195,416, up 0.7% from $194,031 in 2019. It looks like a scary number, I know, but it’s not even the true number. By most estimates, students actually spend $10,000 – $50,000 more than schools estimate on expenses beyond tuition.

Remember that this is the top 25 schools in the U.S., and many graduates will make enough in their post-MBA jobs to pay that back within 2-5 years of graduation. And there is always financial aid and merit scholarships to help you out.

But there are other amazing schools with lower tuition, and I’m also going to outline some alternative (aka cheaper) options below. If you’re leaning towards a full-time in-person MBA, a breakdown of the tuition costs might be helpful to see where your money is going. The costs are usually broken down into the following categories:

Tuition & Fees:

Tuition costs
Fees (ranging from student services, administrative, general, course materials etc.)

Expenses:

Room and board
Health insurance / healthcare
Transportation
Books and supplies
Personal

Here’s a rundown of the individual costs from Wharton Business School, or alternatively Booth Business School, which gives a clearer picture of where the money goes. But please note: in our experience, schools really lowball the costs of expenses such as travel and room and board. The full-time MBA is a social degree and the majority of students will take several trips – including some abroad – as part of their MBA. Wharton’s $890 estimate for transportation costs ain’t gonna cover all that! And frankly, neither is Booth’s $1,944.

Now for the good news!! Not every full-time MBA will set you back the cost of a house. Here are 8 MBAs from top 100 ranked U.S. business schools (including Warrington College of Business, ranked number 26 in the country), that all cost under $60,000. They range from 10 months to full-time two-year programs, with a variety of learning formats available.

What about the costs of other types of MBA programs?

If you don't have the option of dedicating yourself full-time, then part-time or online MBAs are a great option to continue earning while you're studying, which helps with the steep costs associated with an MBA. Another possibility is if a company you work for is willing to subsidize costs, which is often the case for an Executive MBA. While not necessarily cheaper, a part-time MBA can work out to be a more viable option financially, since you can continue to earn an income while studying, but the academic workload is much more intense if you complete it while working full-time and so you need to be prepared for that if this is the route you want to pursue. If you want to see the world and have the option of straying farther afield, MBAs outside of the U.S. tend to cost less!

Traditionally, online MBAs have been an appealing way to get an MBA at a lower cost (with the added bonus of learning from home, if that’s your thing). Now if a global pandemic has taught us anything, it’s that we can get a LOT more done from home than we would have ever thought before we had to get a lot more done from home. Suddenly, schools had to overhaul their curriculum and shift to an online learning format. Something that didn’t shift, in every case, was the hefty price-tag that comes with a number of these elite B-school MBAs. While you might have been willing to pay the price for an in-person learning experience before, these days it might be worth shopping around for some more competitively-priced online options.

If you were a bit wary of an online MBA before, 2020/21 just goes to show that this economical option is more viable than ever! Take a look at the rankings for 2021’s top online MBA programs here.

What are the requirements for admission?

So, you've decided you're going to do an MBA, hurray!!

But what are my chances? For a better idea of individual schools' acceptances rates, take a look at acceptance rates at the top-ranking U.S. MBA Programs. But don’t let a low acceptance rate discourage you from applying to your dream school. Just put your best foot forward and know what you’re getting into!

Now what about qualifications? Every business school publishes the stats of their most recent incoming class on their website. US News also gives a breakdown on the average qualification requirements of applicants to each MBA program.

But in general, all applicants to U.S. MBA programs (and most International MBAs too) should have…

a 4-year college degree (or equivalent)
fluent English abilities (ESL international students can look into standardized tests such as the TOEFL and the IELTS)
have taken either the GMAT or GRE (or the Executive Assessment for EMBAs)
at least two years of work experience (though this varies – no work experience required for deferred programs, more required for executive programs).

And entry requirements regarding the application? As they say, the MBA application process is a marathon not a sprint! Meeting the requirements in time for the application deadline is a process that requires thought, time, and careful self-management.

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Rounds & Deadlines

Most full-time two-year MBA programs have two rounds – sometimes three – in their MBA admissions cycle. Round 1 usually falls beginning to mid-September. Round 2 deadlines are from the beginning of to mid-January. Round 3, if available, can fall anywhere from April to May.

Try to get your application in during Round 1 because MBA classes are wide open then, and if they aren’t sure about your candidacy, they’ll likely waitlist you till Round 2 and you’ll get a second chance. So, plan ahead and budget your time accordingly!

For a handy reference for all MBA deadlines, bookmark our MBA deadlines page.

The MBA Resume

Your MBA resume provides the admission committee with a roadmap to understanding your professional story and evaluating your potential to make meaningful and insightful contributions to the classroom. Your level of experience, skill, and expertise in your industry, as well as your ability to communicate your knowledge to your peers matters. The average age of an MBA student tends to fall at around 27-28, with an average full-time work experience of 5-6 years.

As you get ready to proofread and finalize your resume, double check to make sure catch all the “Horrific MBA Resume Mistakes to Avoid”.

Test Scores

Your GMAT/GRE score is one component of your MBA application that helps the admissions committee gauge whether you have the quant skills and communicative ability to succeed in their classroom. Check out your target schools’ averages, medians, and ranges to see where you need to aim when studying for the tests.

The good news is that most schools don’t have a preference for one test over the other. Generally, some people do better on one test format over the other. Sit down with practice tests of both the GRE and GMAT. Study for and take the test that gives you the higher score. Or you can take both exams and submit the highest score that gets you closer to the school’s average. Still don’t know which test to take? Check out the Career Protocol blog for more information about “How to Decide Which Test is Right For You” and “What is a Good Enough GMAT Score.” Also see our MBA Monday video, “GMAT or GRE for Admissions Success?”

Transcripts

Your transcripts help business schools determine your analytical aptitude and potential to succeed in the MBA classroom. You’ll be required to upload transcripts from all undergraduate and graduate institutions you’ve attended. For most schools, unofficial transcript copies are fine for the applications, but you’ll need to provided official transcripts if admitted.

Worried your transcript won’t measure up? Don’t freak out! Watch our MBA Monday video, “So You Failed a Class and Want to Apply to Business School.”

Post-MBA Career Goals

Your post-MBA career game plan is a key part of your application. You’ll need to have a strong idea going into the MBA what Industry and Function you’ll be aiming for right after graduation.

Recommendations

Choice of recommenders is an important decision for your MBA application. While your resume details all your professional experience and accomplishments, your recommendations not only confirm what’s in your resume, but most importantly, give the admissions committee a glimpse into how others perceive you in a professional capacity from two primary sources. Choose wisely. Please Don’t Choose the Wrong Recommenders for Your MBA Applications!

Most MBA programs require two recommendations. Almost all schools ask that one of your recommendations should come from your current direct supervisory at work. The other recommendation should come from someone who has worked closely with you and can speak to your analytical, leadership, and teamwork skills.

MBA Essays

This is one of the hardest parts of the MBA application because it requires a lot of self-discovery and reflection. Every school requires a personal essay (or several) on the application. To make it more complicated, each school has its own unique question(s), which are informed by the school’s distinctive mission and values. So unlike college essays, you can’t get away with a one-essay fits all approach. And that’s the point. Schools want you to think long and hard about your personal values and plans, and whether those align with their own values and academic offerings.

For a more in-depth look at the MBA essays, check out “How to Write a Great MBA Essay” and “How to write a Why MBA Essay that makes the admissions angels sing”

What's really important is that you're serious about this. Like, really serious. You have to want it; you have to be willing to put in the work. Admissions committees like to see evidence of hard work and career progression in prospective candidates. Professional and management experience can play a role in the type of MBA you apply for, but it's not everything. Get ready to wow those admissions committees and show off your strongest skills in the interview with how ready you are to knock this out of the park!

By the way, in case you’re new here, our whole world at Career Protocol is helping people like you get into dream schools. Working with us is like having an MBA ninja on your team. Talk to us if you’re interested in 1:1 support & partnership on your road to successful MBA applications.

How much money will I make post-MBA? (MBA Income and Salary)

We've talked about the money you can spend, now let's talk about the money you can earn! Studies show that ultimately there are clear advantages to having an MBA when it comes to salaries, for those who are really serious about advancing their knowledge and ultimately their career. Whether you've got an undergraduate business degree (or a degree from a different sphere) or are working and wish to further your business experience, there's ample opportunity for salary growth.

Now I know you're not going to like this but once again, starting salaries and signing bonuses vary and so there's no direct answer to this question. At the 132 ranked full-time MBA programs which reported salary data for U.S. News’s annual survey, the average salary received by 2020 graduates came to $101,034.

Compensation for the 10 MBA programs on the highest end of the scale (which all appeared on the list of the 15 highest-ranked programs in the 2022 U.S. News Best Business Schools rankings) worked out at $172,265.

On the other end of the spectrum, the average salary of the lowest 10 on the list came to $52,338.

According to Payscale.com, the average starting salary for MBAs is $89,854, while GMAC states that the median annual base starting salary US employers planned to offer new MBA hires in 2019 – when the average starting salary for MBA graduates hit a record high – was $115,000 (that’s more than twice the median salary offered to new bachelor’s hires!).

But the averages will never tell you the whole story. Different careers, functions, companies, and roles all pay differently. A role in consultancy rakes in much higher median salaries than in other fields such as marketing, let's say. To get a better sense of what you could actually make post MBA, start with our comprehensive MBA Placement Report. Look at where MBAs go to work after graduating from top programs. Think about the jobs you are most interested in. Then look into expected salaries and bonuses for those roles. That will give you a much better sense of what you individually can expect to earn.

The graph below shows the average base salary by industry using data acquired by U.S. News.

The Economist published a more in-depth analysis of the types of roles within these industries – based on the above data – if you’re looking to find out more about jobs in these sectors.

Remember that an MBA degree alone is not going to guarantee you a high salary and bonuses. It’s not a golden ticket. You need to prove yourself to be a worthy candidate, a valuable asset and work hard for the money! Besides this, some of it is up to you. It's important to consider your own financial circumstances, the projected costs of the MBA, the likelihood of employment in your preferred field and where you are based geographically, as well as expected earnings in the role you want post-MBA and therefore your return on investment. Besides proving that you've got the necessary skills, you need to be a badass and know your worth when it comes to negotiating your contract!

So, should I get an MBA or what?

I hope this article has given you a strong sense of what an MBA degree is, what it’s for, and what all the different options are. It’s a significant investment and one not to be taken lightly. Do your MBA school research. Take time to reflect on what you truly want in your life and career. And talk to people!

One of the best resources you can tap into is folks who are doing the things you want to do and asking them how they got there. Also talk to current MBA students at the schools you’re considering applying to. Are they enjoying the program, or at least finding the investment and commitment worthwhile? Has the MBA helped them land dream internships or jobs post-graduation?

For more resources to help you decide if an MBA is for you, check out our thoughts on 9 problems the MBA doesn’t solve and whether and MBA is worth it, and then read this article about why to get an MBA?

If you think an MBA is for you, then you can dig into how to get an MBA and how the admissions process works and adopting the right MBA mindset before you apply.