How does the cost of an MBA stack up against other major life expenses?
At a top UK business school, a one year course will set you back between £40,000 and £50,000 in tuition fees alone.
Add on living expenses and the opportunity cost of not working for a year, and you’ll be nearing a total of £100,000, the equivalent of a deposit on a small London flat.
Thankfully, like that flat, investing in an MBA could deliver a sizeable return.
Read more: Changing career? How the MBA could help
According to GMAC’s 2015 Global Management Education Graduate Survey, 63 per cent of full-time MBA graduates were offered a job prior to finishing their course and the median post-degree salary increase was 90 per cent.
But how should you use previous cohorts’ salary growth figures when choosing a business school? Is it really a useful figure to be focusing on at all?
Unsurprisingly, your post-graduation salary will be affected by the industry you subsequently enter.
Data from Cambridge Judge Business School, for example, shows that those entering finance received the largest average post-MBA base salary, at £65,682.
With the cohort starting the course on an average of £45,375, those landing jobs in consultancy and industry post-MBA received £61,406 and £59,184 on average respectively.
Read more: Is a specialist MBA a sensible option?
For Kellie Vincent, MBA director at Westminster Business School, however, “return on investment is a very traditional way of looking at MBAs.
People’s decision-making process has changed quite a lot over the past five years, with more emphasis now on using an MBA to shift job, industry, or country” than pure salary growth.
At Cambridge Judge, 86 per cent of its 2013/14 MBA cohort switched at least country, function or industry sector.
It is difficult to move industry, so the ability to do so via an MBA may be one of the unquantifiable benefits that business schools often talk about. Others, says Sarah Juillet of Cass Business School, include personal development, building networks, even improved confidence.
“People are looking at MBAs very differently – they’re now looking to get entrepreneurial skills, they’re using the MBA to develop softer skills.”
It’s difficult to put a price tag on personal development.
Juillet adds that it could be a mistake to enter an MBA course with a laser-like focus on future salary growth in any case – especially if that closes your mind to what the degree might offer more broadly.
“It sounds cliched, but an MBA is about keeping an open mind and going on a journey. Most of our students want a transformative experience.”
FT analysis of its MBA rankings recently found that, the younger you are when starting an MBA, the larger your post-graduation salary increase is likely to be.
In Europe, for instance, those starting at 24 or younger saw a 163 per cent average uplift, while those starting at 31 or above received 61 per cent.
The average age of a cohort may skew the salary figures a business school releases, says Vincent, since it is easier to double a salary of £40,000 than one of £80,000.
So it is useful to find out the typical length of experience a school’s students have.
At Imperial College Business School, for instance, its MBA cohort has spent an average of eight years in work. These figures tend to be published on business school websites.
The MBA rankings themselves should also be treated cautiously. Some accuse them of unfairly benefiting US schools, whose MBA courses typically run a year longer than their UK competitors.
Juillet suggests that they’re of most use when comparing specific aspects of a course that matters to you – whether that’s the percentage of international students, how big their alumni network is, or how helpful they are for networking.
So, while they’re not shy of promoting figures from their own students, for the business schools at least, salary uplift post-graduation is a crude measure of what an MBA can offer.
When you’re spending such a large amount of money on a course, however, it’s a hard measure to ignore.