ROI on MBA

4 minute read
ROI on MBA

MBA is one of the most sought-after programs in the world. An MBA offers a comprehensive business education at the graduate level that prepares students for a bright career in various fields, from finance and marketing to human resources and management. With high demand comes to a high salary, one of the major reasons why students pursue an MBA. According to the US BLS,  growth for MBA jobs is expected to increase 8 percent by 2031, faster than the average for all occupations. The average salary for an MBA graduate is much higher than that of a regular Master’s graduate. An ROI will help you figure out how soon you can earn back the amount you spent on an MBA. Read on to know more about ROI on MBA.

What is the ROI of MBA?

There is no doubt that getting an MBA degree is an expensive affair, hence you must have a clear understanding of how fast you will be able to recover the money spent on tuition, especially when you have taken a heavy debt. ROI or Return on investment in MBA is a performance metric that helps aspirants evaluate their investment from the total cost versus return standpoint. It basically predicts your initial salary and yearly income raise in the industry, determined by your work experience, post-MBA knowledge, and job competence. 

Also Read: MBA Guide

How to Calculate ROI on MBA?

The known method for calculating the ROI on MBA is to evaluate the annual rise in pay and determine how many years it will take to pay the debt through salary raises over ten years. Here are a few things to keep in mind before calculating the ROI on MBA:

  • Take into account your current salary
  • Figure out the entire cost of the MBA program and its duration
  • Then figure out the salary you will renounce while pursuing your MBA, including the program’s expense
  • Find out your post-MBA income, which you may get on the respective school’s official website

After gathering the above-mentioned information. You can calculate the ROI on MBA by using the following formula.

Current Salary (pre-MBA salary): US$50,000

MBA Cost (2-year US program)-  US$45,000 per year

Add salary + fees: US$100,000 of earnings forgone over two years + US$90,000 of tuition = US$190,000.

Next, you will have to take your predicted post-MBA salary to find out how long it will take to pay back the predicted amount i.e US$190,000.

Let’s assume that your post-MBA salary is US$95,000, an increase of US$45,000.

You can now divide the total cost of your MBA (US$190,000) by your salary raise (US$45,000) and then you can see that your MBA will be paid back in over four years. 

Note- The mentioned amount/s is used as an example. You can replace the amount on your own to find your ROI on MBA.

Why Calculate ROI on MBA?

It is important to calculate ROI on MBA as it helps you understand the financial risks that come along with a substantial financial investment made to fulfil your MBA dream. It also helps you avoid choosing a business school that doesn’t provide a good ROI, leading to a hefty amount of debt.

Top Business Schools with High ROI

Getting an MBA undoubtedly benefits your career in various ways, from developing in-demand skills to expanding your network in different industries. But choosing a good business school is equally important to avoid spending your precious time and money that doesn’t pay off well. If you are looking for good MBA programs with the most ROI, then you are at the right place. Mentioned below are the top business schools that offer high ROI on MBA:

School  10-year ROI 
Stanford Graduate School of Business US$1,023,150 (INR 8,47,33,599)
Ross School of Business US$826,300 (INR 6,84,16,731)
Imperial College Business School US$870,200 (INR 7,20,51,602)
University of Hong Kong US$845,350 (INR 6,99,91,091)
MIT Sloan US$788,950 (INR 6,53,21,430)

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FAQs

What is ROI?

ROI or Return on Investment is the calculation of the monetary amount of an investment versus its cost. 

What is the ROI on MBA?

ROI or Return on investment in MBA is a performance metric that helps aspirants evaluate their investment from a sheer cost versus return standpoint.

Which is the best MBA program with high ROI?

Stanford Graduate School of Business offers the best MBA program with high ROI, a jaw-dropping 10-year ROI of US$1,023,150 (INR 8,47,33,599).

Are you planning to pursue an MBA abroad? Our Leverage Edu experts will provide you with end-to-end assistance starting from your university application to the time you reach your university and commence your studies. Call us at 1800 57 2000 to book a FREE 30-minutes counselling session today.

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