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Does an MBA increase salary?

A post-MBA salary increase is front of mind for many business school applicants. After all, when the world’s top MBA courses are charging upwards of $50,000 a year in tuition, students want to be sure that they’ll get their return on investment. However, the question ‘does an MBA increase salary’ isn’t as simple as it seems – and it isn’t always the right question to ask, either.

It’s important to think beyond the immediate, about longer term metrics – such as the average MBA salary 5 years after graduation for schools you are considering applying to. These longer term figures are when you often start to see differences between certain schools really open up. And of course, you’ll want to factor in the cost of your MBA as well when you’re thinking about ROI, including the opportunity cost of anything between 12-30 months out of work, depending on how long it takes you to secure your post-MBA job.

However – the answer to the question ‘does an MBA increase salary’ also differs greatly depending on who you are, where you plan to work, and what you hope to do with your MBA. In the majority of cases the immediate answer is likely to be yes – but this is where you also need to consider those longer term numbers. A great ROI on an MBA comes from your career – and salary – trajectory beyond that first post MBA job. If you’re going into a ‘classic’ MBA industry such as consulting or finance then things may appear straightforward, but what about industries which recruit fewer MBA graduates? The challenge with these sectors is that there is simply less data to work with – so you may need to turn to networking and connections to get an idea of salary performance. Also, beware of business schools’ average salary data – these can be inflated significantly by large numbers of graduates working in areas such as finance, consulting or private equity.

Finally – if you’re using your MBA to make a major career change, the unpalatable truth is that you may not be able to command the kind of headline-grabbing MBA salary you might like. This is particularly true if you are coming from a smaller, less well known school, if you are joining a firm in Europe, where MBA specific recruiting is ‘less of a thing’ than in the U.S., or if the career switch you are making sees you moving into an industry in which you have little or no prior experience. That isn’t to say that MBAs don’t make great – and profitable – career switches all the time, just to caution that if a major change is on the cards, you might find yourself having to make some difficult choices.

Ultimately – the question ‘does an MBA increase salary’ comes down to what you decide to do with it!

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