If you are sick of your current earning potential, you may be seeking a MBA to increase your salary. Before jumping head first into any program, make sure you do your research to find the best MBA program for you. In 2006, which was the last time GMAC recorded MBA salary statistics, MBA graduates earned an average of $10,736 more than alumni from other graduate programs.
It used to be that earning a MBA was a surefire way to increase your earning potential. As there were over 100,000 MBA graduates in 2010, it comes to no surprise that these figures have changed a bit. There is more competition for MBA jobs. Nonetheless, MBA students can expect a 10% to 82% increase in salary after graduation.
What Careers Yield the Highest MBA Salary?
The most popular MBAs are in specializations that earn the highest salaries after graduation including:
Hedge funds and private equity firms are the highest paying recruiters today. In 2010, close to nine percent of Harvard MBA graduates gained employment at private equity firms and received a median starting salary of $155,000 each. While finance seems to be the highest paying MBA career, not everybody is going to be sought after by the top-tier recruiters who can provide these jobs.
Business schools try to only report the median or average salaries as to not raise unrealistic expectations for applicants and students. In order to get a starting salary of over $100,000, it helps to be in the top 75 - 90 percentile of your class.
Breaking Even With Your MBA
In 2008, students were able to break even on their MBA investment on average of 5.6 years after graduation. Today the cost of tuition of business school is increasing and students' pre-MBA salaries are closer to their post-MBA salaries, which has caused it to take longer for graduates to break even.
Businessweek reports that MBA graduates of European business schools take significantly less time paying off their grad school debt. This is largely due to the fact that most of their MBA programs last for one year, as opposed to the two it usually takes in the United States. This means that students spend less on tuition and can start earning a salary a year quicker than students in the US.
Interestingly, the students who take the longest to repay their debt went to the country’s top schools. This is because these students generally enter the program with a high salary, so their increase is not as significant. In addition, the average tuition is much higher than at the less recognized business schools.
So How Can I Earn a High Salary With My MBA?
There is not a specific formula to ensure you make a high salary after graduation. Each person’s graduate school experience is different and not everyone can land jobs in the top businesses in the country.
How much your salary will increase after obtaining your MBA depends on several factors:
- Prestige of school you attend. It’s no secret that the top-tier schools graduate students who can earn the highest salary.
- Geographic location. A MBA in a small town or rural area is going to weigh much less than an MBA in a large metropolitan area. This rule is generally the same for all occupations.
- How well you did in business school. People who graduate in the top 75 – 90 percentile have a much higher chance of getting a high starting salary upon graduation.
- Whether you stay with a current employer or find a new job. Some students pursue an MBA in order to earn a promotion. If this is the case, chances are your salary will increase significantly. However, if you are starting fresh at a new company and weren’t one of the top students, your starting salary will not be as impressive.
- How qualified you are for the position. Just because you graduated from a prestigious school, it doesn’t mean that you are necessarily going to get a job with a high starting salary. You must be able to demonstrate that you have the appropriate skills to excel in the field.
- Type of MBA major. Finance is the big ticket earner for all MBA specializations. As the economy continues to be restructured, more people are needed in finance and accounting sectors.
- Networking skills. It’s easier to land a position in one of the top businesses if you know the right people. While grades and school are certainly important, you should also focus on networking.
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