Making the decision to earn your MBA is no small matter, especially when determining the financial impact. Just the first year alone can cost up to $85,000 after you factor in tuition, room and board, books and supplies, and personal expenses. And what about the opportunity cost? You may already be in a great job that pays you $70K, $80K, or more per year, and if you decide to go to business school full time, those earnings are lost.
It’s probably safe to say that everyone who does decide to study for an MBA believes that he will make up those lost earnings and cover his expenses with the huge salary increase he will get after finishing business school. There certainly are plenty of data to back that belief up. But there has also been hot debate over whether MBA graduates with higher GMAT scores see a greater return on investment than those with lower scores. In a previous blog entry, we looked at a trend among some employers who compare job candidates according to their GMAT scores. Since some employers do favor one candidate over another based on GMAT score, it seems plausible that candidates with higher scores are more likely to land the higher paying jobs.
How else might the GMAT factor into the salary equation? A high GMAT score increases your chances of getting into a better school, and, not surprisingly, graduates from top tier schools end up with the biggest starting salaries right out of the gate. In addition to going to a great school, whether your MBA will translate into a higher paying job depends on your concentration, the job market where you live, and your previous work experience. But that bit of information shouldn’t come as any surprise.
Don’t believe the hype in the media about an MBA degree no longer leading to a better paying job. Plenty of information on the internet exists to prove that it doesn’t, but plenty of information also exists to prove that it does. There are even blogs that offer formulas to calculate the precise salary increase you can expect based on your GMAT score. With all the relevant factors to consider, you shouldn’t put too much stock in such gimmicks. Just remember that the GMAT is only one of the first links in a chain of dedication and hard work that will make your time spent in business school worthwhile, so prepare well and do your best!
Image Courtesy of 401(K) 2013 with Creative Commons License