Assess the R.O.I.

Graduate school is one of the biggest investments you will ever make in yourself.

Before you commit, consider graduate management education in business terms: How much return on your investment (ROI) can you expect?

In general, 2008 business school graduates surveyed in September reported a median salary increase of 39% over their pre-graduate degree salaries, says the GMAC® Alumni Perspectives Survey, which tracks graduates of all program types. 

But before you can calculate a personal ROI, you should think about your skills, values, and interests, and how a graduate business degree would help you. Once you know where you want to end up, you will know more precisely what the potential return is.

Next, look at the costs. Although about 70% of MBAs receive financial aid, it is still a financial commitment.  It’s also a time commitment: A recent U.S. Department of Education study showed that 75% of MBA students overall and 61% of full-time MBA students work more than 35 hours a week.

The “Cost of Attendance” includes tuition and fees, books and materials, and living expenses. You’ll also have to consider the type and amount of financial aid (including loans, scholarships, and fellowships) you can expect.

Also consider:

• Total loan costs amortized over different repayment terms, including any accrued interest on unsubsidized student loans
• Relocation expenses and associated changes in living expenses
• Income lost while in school. If you leave the workforce to get an MBA, you lose income during that time. But full-time programs are typically shorter than part-time programs, allowing you to get back into the workforce faster─ at an MBA salary.

You’ll ring up extra expenses as you search for and apply to schools, as well as hunt for a post-graduation job. Costs add up, so be realistic about the number of schools you apply to. Consider:

• Testing fees, preparation materials, and other miscellaneous costs
• Application fees (ranging from US$40 to US$200), including fees for submittals using Web services or CD-ROM programs
• Phone calls
• Transcript request fees
• Corporate networking visits
• Postage or express delivery services
• Travel for recruiting events, interviews, or campus visits

To get to your ROI, weigh the costs against the higher salary and greater opportunities over the course of your career with an MBA. Also consider less tangible benefits—higher skill levels in management and business, better job preparedness, lifelong relationships with your MBA classmates, and personal growth.

Finally, weigh all of these costs and benefits as they relate to your specific goals. You may well conclude that an MBA is a smart investment in your future.