Study costs, benefits before seeking MBA

Your Money

August 27, 2006|By Carolyn Bigda | Carolyn Bigda,Chicago Tribune

If you've been thinking about going to business school for an MBA, you're not alone.

After years of lagging interest, especially at full-time programs, a stronger labor market is driving up the number of applications to graduate business schools.

According to the latest research from the Graduate Management Admission Council, which administers the GMAT exam, a required part of B-school applications, only 18 percent of employers did not hire MBA grads in 2005, down from 23 percent in 2003.

"Recruiters are coming back to campus in ever greater numbers and more students per recruiter are being hired," said David Wilson, president and chief executive of the council.

More recently, 66 percent of this year's graduates received multiple offers, up from 57 percent in 2005, according to the 2006 State of Student Recruiting Report by WetFeet Inc., an online career resource. And 90 percent of graduating students had a job offer, compared with 55 percent in 2003.

But just because the pack is heading back to B-school, should you do it too? Some considerations:

Look past the hype.

Although an MBA may carry prestige, you need to ignore the noise and find a program that matches your needs. Ask yourself: Can you take two years off from work to study? Will the school help you build the skill set you're seeking? How successful are graduates in landing the type of work you want to do?

"It's a very personal decision," said Doug Braithwaite, a former director of admissions at Harvard Business School who now works at Admissions Consultants Inc., which advises prospective graduate students.

Some skeptics, such as blogger Josh Kaufman, argue you don't need to spend thousands of dollars on an MBA to learn the same skills. He's created a so-called "Personal MBA" program: a list of 42 recommended books to read, which you can discuss with other self-motivators on the blog.

One compromise to keeping down costs while benefiting from the perks of a traditional business school is a part-time MBA program.

Generally, if you want to enhance your skills but stay within the same career, you're better off in a part-time program, Braithwaite said.

But if you're switching careers - say you've been an engineer or working on Capitol Hill in Washington - you'll get more from a full-time program, which tends to offer more comprehensive career services.

Do the math.

The sheer cost of an MBA should weigh heavily on your decision.

A recent study by U.S. News & World Report listed the average amount of debt that students from various business schools graduated with in 2005.

Harvard grads had the highest average, $81,072.

Then, too, you have to consider the cost of giving up two years worth of salary if you choose a full-time program.

According to GMAC, graduates from the Class of 2000 typically recouped only 75 percent of their investment five years after graduation.

Be realistic.

In other words, an MBA is a long-term investment, and its value very likely won't take the form of instant wealth.

Rather, Braithwaite said, "You may not always get richer or famous with an MBA. But you may enjoy the job you're doing a lot better."

To help in your research, check out and the Bureau of Labor Statistics Occupational Outlook Handbook (, both of which give projections about certain career paths, including the type of education and training that's most coveted.

Also log on to, a forum for B-school grads, which shares tips for prospective students.

Finally, for school rankings, related articles and helpful tools, like return-on-investment calculators that compute your gain (or loss) from pursuing an MBA, go to or

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