I graduated December 2012 with my MBA from Washington University in St. Louis through their part-time, Professional MBA program. In my experience, the $80,000 investment over two intense years balancing work and school was absolutely worth it.
That said, it was an enormous investment in money and time.
While I recognized the value of an MBA personally and professionally, given the high cost, I spent quite a bit of time evaluating my priorities and analyzing the financial value of an MBA program. Would it help me advance toward my career goals, or was my undergraduate degree sufficient? Should I pursue professional certifications or other forms of ongoing education instead? Was it the right time to add school to a busy schedule? Could I afford it? Would I be better off investing the money in my retirement or putting it toward a down payment on a home?
These are all important questions to consider about any higher education track. For the purposes of this article, I am focusing on MBA programs as that is where I have both personal and secondhand experience and perspectives.
Financial factors aside, an MBA is an intense, two to three-year program that prepares you to lead at a senior level. If you career goals include roles that prefer or require a Master’s degree in business, or if you are interested in starting or running a business, an MBA program that has rigorous academics, experiential learning opportunities, and a strong alumni base for networking is an excellent investment in yourself. MBA programs provide access to structured learning on solving complex business problems, consulting opportunities, and a built-in network of students, alumni, faculty, and professors who are positioned to help you reach your career goals.
My decision to go back to school came down to prioritization. In 2010 I started a new job that required me to complete my Masters degree while working within five years. I knew that I wanted to stay with the organization, so obtaining my MBA became a priority. After researching a few degree programs in the St. Louis area, I started the professional MBA program at Washington University (“Wash U”) two months shy of my 25th birthday which was an excellent season of my life to attend graduate school. I had a few years of work experience which gave me real-world context for my classes. My commitments were few and flexible; I was dating my now-husband and I did not have anyone (children, pets, etc) counting on me which allowed me the luxury of focusing 100% on school when I was not working.
One of the best attributes of a professional, part-time program is the opportunity to simultaneously learn and apply knowledge and theories into practice at work. There were weeks where I would read something or hear an idea in class and the light bulb would “go on” for how I could use that idea or approach at work. My MBA program gave me a more seasoned perspective, supplemented and complemented my on-the-job learning , and showed me the importance of relying on the intersection of facts and intuition in business. It also gave me a new level of confidence. Full-time MBA programs, specialized degree programs, adult learning classes, and professional certifications can also provide similar connections. I think an important attribute for professionals today is a strong sense of curiosity, coupled with a desire to learn. There are so many opportunities to learn from people and experiences in your life, and it is important to take advantage of what is available to you to further yourself.
Financially, my goal was to pay at least the first year in cash and, if I had to borrow money in year two, to be debt-free within 18 months of graduating. I accomplished both goals through a disciplined budget. The crushing weight of compounding interest rates on student loans was so high that it was a better use of my money to pay off my loans as quickly as possible than to invest it somewhere else. It also made me emotionally value my education and the sacrifices I made to pay for it myself. You can also hear more about my experience at Wash U here.
If you are also considering a MBA program, it may help to consider some of the same questions I did, including:
Why do you want to get your MBA? Are you doing it because it will further your career, or are you doing it because you do not know what you want to do with your life? Is someone else pressuring you to do it? An MBA is an intense, expensive commitment. Before you go, make sure you are going for the right reasons.
Would a specific class or a professional certification (i.e. Six Sigma, LEAN, SPHR, PMP, etc) provide you with the appropriate skills and credentials for your career instead of an MBA? What about a specialized Masters degree in finance or supply chain? A specialized Masters degree is often shorter and less expensive than an MBA program.
Where do you want to go to school? Why do you want to go there, and does it make sense from a financial perspective?
What is your goal of pursuing an MBA? Will it prepare you to run a business or pursue an executive-level career path that otherwise would not be available?
What stage of life are you in? Single or married? Do you have kids? Are you early in your career, at the midpoint, or at the end? An MBA can bring value to someone at any age, but the time you have available to commit to it may differ based on what stage of life you are in and what type of support structure you have in place.
Do you want to stay in your current field, or are you trying to pivot to a new industry or functional area? A part-time MBA program is an excellent option for someone who wants to stay in their current field, while a full-time MBA program is tailored to people looking to pivot into a new industry or functional area.
How much is your current compensation? What is the starting salary range for MBA programs you are looking into? What about within your specific industry? What about long-term compensation opportunities? Given this information, does it make financial sense for you to go back to school?
How will you fund your MBA? Will you pay in cash or take out loans to fund your education?
If, after the questions above, you are still interested in a MBA program and are funding it yourself, here are here are a few ways I saved money and limited the debt I incurred in my twenties:
Cancel your cable. I went six years without a cable bill. This tactic also helped me avoid the mindless distraction of television, a habit that still benefits me today.
Pack your lunch during the week. Going out to lunch with colleagues adds up fast, even if you go someone inexpensive. I rarely ate out at all during school.
Avoid making expensive purchases that you will outgrow. I had a couple pieces of furniture from my parents, IKEA, Target, and garage sales from the time I graduated at 22 until I moved into the house we built when I turned 30. If I had purchased furniture for the apartments I lived in, but rarely spent time in, I would have had to sell or donate them after a few years as they would not fit the dimensions or style of my house. I preferred to have minimal furniture at first and save my money so that I could buy exactly what I wanted when I was in a house.
Shop at garage or estate sales. You can find kitchen products, furniture, dishes, and books in excellent condition at garage sales and estate sales. I still love hunting for deals on a Saturday morning, and some of my favorite household items once belonged to someone else.
Pay off undergrad loans first (if applicable), then, once these loans are paid off, redirect the money you would have put toward the loans into a separate savings account for your MBA. You will already be used to living a certain lifestyle and will not miss the extra money you set aside.
Create a priority list for your spending and allocate money accordingly. This might mean limit nights out with friends, driving an older car, pausing vacations, etc. so you can pay for your degree. You can also find free or inexpensive forms of entertainment. When I lived in St. Louis, I went to free yoga classes and ran in the park rather than join a gym. I attended free concerts with friends or went to coffee with them rather than dinner so I could save a little money.
Create a detailed monthly budget and pay for as much as you can in cash to hold yourself accountable. I gave myself a set amount of money to spend every month, all in cash. This helped me visually see where my money was going and allocate it to the highest priority items rather than mindless, impulse purchases.
Pay yourself first. I had separate accounts for savings, MBA savings, and retirement. Once I paid off my undergraduate loans, I started maxing out my 401k contributions every paycheck, followed by “paying myself” by transferring money to my savings and MBA savings accounts. Once the money was out of my checking account, I wasn’t tempted to spend it on something I did not need.
Along with the approaches above, many MBA programs offer scholarships, and some employers still fund a substantial portion of part-time MBA expenses. Other employers, particularly consultancies, will fund the cost of a full-time MBA program for associates who work for three to four years after their undergraduate degree. Finally, some MBA programs have adopted a deferred admission policy where senior undergrads can apply for and be accepted to an MBA program starting two years after their graduation, assuming they use the two-year gap to gain relevant work experience. Here is a link to information on deferred MBA programs.
While the sacrifices are great if you are funding your higher education, the payoff, both in terms of personal confidence and professional success, is worth it. The time you spend sacrificing and living a different lifestyle is short. From my perspective, it has given me a special appreciation for my education and the things I have because of the hard work and planning that accompanied them.