Education is expensive, and earning the MBA degree can be particularly expensive. Not only must you pay for tuition, books, and living expenses while at school, you must also forego the salary you could be earning using the undergraduate degree you already have. This article explores some of the ways that may help you to overcome the financial aspects of earning the MBA degree.
With the cost of MBA programs ranging from a low of about $50,000 to a high of over $100,000, many potential students may be asking themselves if the financial sacrifice is warranted. Some studies have claimed the earning the MBA degree has financial value only if it is earned from a top-tier university, and from any other school it results in a financial loss. It is therefore worthwhile, before we get into methods of financing the degree, to look at its monetary value.
Recent statistics on the starting salaries of graduates for four undergraduate fields that pay well can be compared with starting salaries of MBA graduates. The numbers are interesting:
* BS in Business – starting salary, $41,400; mid-career earnings, $70,600
* BS in Accounting – starting salary $46,500; mid-career earnings, $77,500
* BS in Paralegal – starting salary $50,000; mid-career $75,700
* BS in Nursing – starting salary, $52,700; mid-career $68,700
A recent Wall Street Journal article described a study of starting salaries for 2010 MBA graduates in the US. Their median starting salary was slightly more than $79,000, not including a sign-up bonus with a median of about $13,000. The median is the middle value. That means that half of the graduates earned less the $79,000 and half earned more. We know that graduates from some of the top MBA programs in the US easily receive salary offers of $100,000 and more. You can see that starting salaries of MBA graduates easily exceed mid-career salaries of undergraduates of the most lucrative fields. We can assume, therefore, that the MBA degree is worth attaining. The question then is “How do I pay for it?” Here are some approaches.
Most MBA programs accept students who have an undergraduate degree in any field and have worked in meaningful jobs for two to four years after graduating. People contemplating the MBA in their future should make every attempt to save as much as possible during the years gaining work experience that MBA programs desire. Personal savings are an important part of financing your MBA education.
Another vehicle is the job itself. Many companies encourage their employees to gain further education and support this by providing all or part of the cost. If you work for a company that helps to pay the tuition or other costs of an MBA program, taking advantage of such help is wise. Often such financial support requires that you continue working for the same employer after attaining the degree, at least for a specified time period. Financial help from the employer typically means participating in a local or distance learning part-time MBA program.
Part-time study can also be financed by continuing to work as a means of paying for the education. This often causes the degree to stretch over a longer period of time. It is not surprising that so many schools offer part-time MBA evening programs. They are filled with students with full-time day jobs, whether or not the employer provides any financial support.
For students wanting full-time study, an obvious source of financial aid is a scholarship or an assistantship. Many MBA programs offer financial aid to qualified students, usually based on merit, in the form of reduced tuition of assistantship requiring the student to perform some work while studying. The work may consist of assisting a professor with research or clerical tasks. An assistantship can in itself constitute an important part of the educational process.
A last resort of financing consists of debt. Many students depend on loans from family members, family businesses, private sources, government loans or student loans from lenders arranged by the educational institution. The assumption is that the MBA will lead to a well-paying job which will make it possible to repay the loans.
A final source of education funding which will soon be available in the United States is a Kyrano auction. A Kyrano auction is unlike any other auction in that the price of the product being auctioned decreases with each bid. Another unique aspect of Kyrano auctions is that they are available to provide discounts on college tuition, student loans, credit card debt, and similar financial obligations. In the case of tuition, students pay a fee to enroll in the auction, with the fees creating a discount. When bidding starts, every bid increases the discount, in effect providing the winner a reduction of the next tuition payment. The winner’s discount is paid directly to the student’s school, with the student required to make up the remaining balance. More on Kyrano auctions will be available in future articles.