How much more do MBA graduates earn?

Wednesday, September 7, 2016 - 19:21

By AIM Education & Training

Money is what makes the world go round. Well, scientifically, that's not really true. But metaphorically, it is money that funds our ability to create a life, to live and to love.

We also know that it takes money to make money, so when it comes down to making more, the question of where and what to invest in often leads to confusion. Should you invest in stocks or a house? While the potential to make money is there, one area that you may want to consider investing in is your education, specifically a Master of Business Administration (MBA).

MBAs are in high demand across the globe, and employers are willing to pay premiums for such potential. The latest Corporate Recruiters Survey from the Graduate Management Admission Council (GMAC) found that employers are seeing the value of MBA graduates more and more each year.

Based on responses from 748 prominent employers worldwide obtained in 2013, only 59 per cent of employers had plans to take on recent MBA graduates. This rose to 74 per cent in 2014 and now sits at 84 per cent as of 2015. Basic economics tells us when in demand people will pay more for goods or services, so how much more are we talking about?

MBA's have practical and financial value.

 

MBA graduates almost double their income prospects

One of the most compelling findings from the Corporate Recruiters Survey was the difference employers planned to pay graduates of varying levels. Candidates with an MBA under their belt were looking at being offered an average of US$100,000. Compared to the modest pay rate for bachelor's graduates of only $55,000, it is easy to see the financial value of higher-level qualification. Looking specifically at Australia, this is still true. 

Graduates with master's degrees from business schools earn the highest starting salaries in Australia.

According to the most recent Graduate Salaries Report published in 2015 by Graduate Careers Australia, the median starting salary rate for bachelor's graduates has remained virtually unchanged since the early 2010s, sitting around AU$52,500. While it varied markedly based on career path, the median for master's graduates is much higher at AU$80,000, and even more so in the field of business and economics, at AU$98,000, the highest reported figure ahead of engineering at AU$95,000.

On top of a higher starting income, overtime, growth prospects look even more appealing. According to the 2016 Alumni Perspectives Survey Report from (GMAC), which drew responses from 14,279 alumni from over 275 MBA programs worldwide, in terms of actually salary growth rate, MBA graduates are looking regular pay rises, with a compound rate of between 5 and 11 per cent each year.

Once the cost of the course and various other factors are taken into account, graduates are seeing a return on their investment less than four years after completing the course. In fact, after they have recouped their costs, professionals equipped with an MBA are seeing a return of investment between 37 per cent and 296 per cent, depending on the type and cost of the course. Five years on, the ROI had risen to between 132 and 491 per cent. A decade later, the ROI is getting as high as 1,747 per cent for executive MBA graduates.

Acquiring a degree that employers want is a great way to boost your income prospects.

 

More than just financially rewarding

Looking at the statistics above, it is unsurprising that three-quarters of survey respondents were financially satisfied with their degree and consequent salary outcomes. But this extends further, to showcase how MBA's are incredibly gratifying degrees. A clear majority of respondents, which included graduates from Australia, found their program to be rewarding personally (reported by 93 per cent of participants) and professionally, (89 per cent). In fact, 93 per cent of respondents were so content with the knowledge and skills they garnered that they had no regrets taking the course in the first place. Bob Alig, GMAC's Executive Vice President for School Products, commented on the survey findings.

"Business schools enable students to develop the knowledge, skills and abilities needed for career success and to achieve personal and financial fulfillment."

"People make the decision to invest in a graduate management education to meet a variety of different aspirations and needs, and the vast majority are enthusiastic about their investment and inspired by their experience," he said.

"Business schools enable students to develop the knowledge, skills and abilities needed for career success and to achieve personal and financial fulfillment."

MBA programs are unique in that they explore the full breadth of business functions and acumen at an advanced level but in a practical manner. This very nature means that people choose to extend their education with this degree for one of three reasons, according to GMAC. They either want to take a step up in their current profession, change their career path, or prepare for starting their own business venture.

Whenever making such a major decision, however, there will be opportunity costs involved. Will you miss out on better opportunities for professional or financial growth?

Luckily, with an MBA from the Australian Institute of Management, we can help you overcome these costs by offering a fully flexible education experience. You can complete your tuition online or in the classroom, and with payment options available, you can confidently make a worthwhile investment in your future.

At AIM, we believe postgraduate education is the most effective way to fast track your way to a promotion. We know postgraduate study is not a decision to be taken lightly. With such a significant investment of time and money, you need to be sure you’ll see a return on your investment.

As the old saying goes, an investment in education truly pays the best interest so invest in yours today.

If you’re ready to take the next step in your career, visit www.aim.com.au/mba or call us on 1300 658 337 to discuss your options.