What an MBA Degree Is and What You Need to Know

It's a credential that appears on the resumes of numerous Fortune 500 executives, including Walmart president and CEO Doug McMillon, who earned his MBA at the University of Tulsa in Oklahoma, and Facebook COO Sheryl Sandberg, an MBA alumna of Harvard Business School in Massachusetts.

College students and young professionals often wonder whether attending a top graduate business school will set them up for career success.

But while many prominent business executives hold an MBA, the degree isn't a golden ticket to fame or fortune. Excelling in business requires initiative, creativity and effort, regardless of someone's academic pedigree, according to MBA experts.

"There's nothing about getting an MBA that doesn't require initiative from that point all the way through your career," says Elissa Sangster, CEO of the Forté Foundation, a nonprofit organization that encourages women to attend MBA programs and pursue ambitious career goals.

Sangster says an MBA degree from a quality business school can help people break into certain highly competitive business sectors such as Silicon Valley tech companies or the Wall Street finance industry. She adds that prospective students who have dreams of working in major cities far from home can often benefit from earning their MBA at a nonlocal school.

"When you think about business school, there are so many great choices that are going to require you to pack up your apartment or your home and move across the country," Sangster says. However, she acknowledges that MBA hopefuls who have family commitments or want to stay at their current company may not want or need to attend a national B-school if that means moving across the country. She says career enhancers who are more focused on gaining skills than adding cachet to their resume can benefit from attending a regional B-school.

For students intrigued by the possibility of earning an MBA degree but who wonder whether it is a good fit, here's an outline of what they can expect to get out of an MBA program.

What 'MBA' Stands For

MBA is the common abbreviation for a Master of Business Administration degree, and recipients typically stop attending school after receiving it.

However, those who are interested in conducting business research may decide to pursue a doctorate in business or management. Such students can earn either a Ph.D. or a Doctor of Business Administration degree, commonly known as a DBA.

How Long It Takes to Get an MBA

A full-time MBA program typically lasts two years, though there are many accelerated full-time MBA programs that last a single year. This fast-paced type of MBA is common, especially at non-U.S. business schools.

Part-time and executive MBA programs vary in length, depending on how many credits a student enrolls in each academic semester or quarter. Both executive and part-time MBA programs are designed for working professionals who are attending school while maintaining a full-time job.

MBA Requirements

MBA applications typically include standardized test scores, resumes, academic transcripts, essays and recommendation letters.

Many B-schools will accept either GMAT or GRE test scores. However, there are a few test-optional MBA programs where applicants do not need to submit business school entrance exam scores. Additionally, some B-schools that ordinarily require test scores will waive that requirement for applicants who qualify based on impressive work experience or a solid college GPA.

B-schools occasionally invite applicants to interviews and sometimes require applicants to submit video essays. And most programs prefer MBA applicants who have significant work experience, though some programs are designed for college students or recent college graduates.

MBA admissions officers generally like to see evidence of career progression in an MBA application, meaning that the applicant gradually took on more professional responsibility. It's also helpful if applicants have success stories about how they were able to contribute to their current company, past employers, college campus or local community, experts say.

Types of MBA Degrees

There are multiple types of MBA programs to choose from, including full-time, part-time and executive MBA programs, says Rebecca Horan, a former admissions officer for the executive MBA program at New York University's Stern School of Business. Each type is appropriate for a different kind of student, she adds.

A full-time MBA program is an all-consuming educational experience that allows students to reset their career trajectories, Horan says. "You can use it to accelerate your career and you can also use it to do a career switch, because it is such an intensive, all-in program."

That said, a part-time program may be a better fit for someone satisfied with his or her career path but who wants to move up at work, especially if the company is willing to subsidize the cost of a part-time MBA program, Horan says. Someone who is happy with his or her current job may not want to leave it to pursue a full-time MBA program, she says.

Executive MBA programs, Horan adds, are designed for seasoned businesspeople who want to leap to the next level in their career and increase their leadership skills.

Among full-time MBA programs, experts say there are two primary types that MBA hopefuls should consider: a traditional two-year MBA program and an accelerated one-year MBA program. One-year, full-time MBA programs typically cost less than two-year programs and require less time, but the speed of these programs means that students must carry a heavy academic workload, experts say.

MBA Concentrations and Specializations

MBA programs generally offer a range of concentrations or specializations that allow students to acquire expertise in a specific aspect of business, such as finance or technology.

Experts say MBA hopefuls should decide which topic to specialize in based on what skills would help them improve their work performance and which specialties are most likely to increase their job opportunities. MBA graduates with in-demand specializations are paid higher wages than their peers who focus on less-marketable disciplines, experts say.

How to Prepare for an MBA

It's important for aspiring students to figure out their general career goals before pursuing an MBA program so they can capitalize on their program's on-campus recruitment opportunities, Horan says. She notes that MBA recruiters typically begin to visit business school campuses shortly after MBA programs start.

Sangster also says that it's generally advisable for college students who know they are interested in business school to take the GMAT or GRE entrance exam as soon as possible. MBA hopefuls are likely to perform best on standardized tests while they are still students, as opposed to after they have spent years in the workforce, she says.

The Average MBA Salary and Bonus

Starting salaries and signing bonuses vary greatly among MBA graduates, with alumni of highly ranked B-schools in the 2022 U.S. News Best Business Schools rankings earning notably more than their peers who graduated from lower-ranked schools.

Among the 10 ranked B-schools where the average salary and bonus were highest, the overall average compensation was $172,265. By contrast, at the 10 ranked B-schools where the average salary and bonus were lowest, the overall average compensation was $52,338.

U.S News data shows that pay among MBA grads depends on which sector they enter. Those who work in the consulting sector are paid an average base salary of nearly $152,500, while those who work at a nonprofit typically makes approximately $85,100, or about $67,400 less.

The Cost of an MBA

Annual tuition for traditional full-time MBA students exceeded $64,000 at the top 15 ranked MBA programs in the 2022 Best Business Schools rankings, and at most of them it surpassed $70,000.

Tuition prices are typically lower at public schools than private schools, especially for in-state students. Among the 11 highest-ranked public B-schools, the average in-state tuition for full-time MBA students was $46,068 per year, according to U.S. News data. However, advertised MBA costs can be misleading, since many students receive either merit scholarships or need-based financial aid.

Both partial and full-ride MBA scholarships exist, but many are extraordinarily competitive. Some MBA scholarships are reserved for specific populations within the applicant pool, such as scholarships designated for women, ethnic minorities, active-duty military personnel and military veterans. But there are also scholarships open to any applicant, no matter his or her family background or profession.

What Skills an MBA Teaches

Business school professors say MBA programs help students develop the skills required to excel as business executives, such as the ability to quickly and accurately analyze large amounts of information and the ability to develop smart solutions to business problems. MBA programs also teach students how to inspire and motivate people and command respect, a skill which is vital for those who want to tackle ambitious business projects that require teamwork, MBA faculty say.

"An MBA degree is designed to teach everything needed to run your own business," Michael Provitera, an associate professor of organizational behavior at Barry University in Florida who has an MBA and a DBA, wrote in an email. "However, the program caters to managers that want to become leaders and students aspiring to climb the corporate ladder."

Phyllis Zimbler Miller, who received her MBA in finance from the Wharton School at the University of Pennsylvania in 1980, says she has greatly benefited from the lessons she learned in MBA courses decades ago. "And every day of my life since then I have used my graduate business education, which provides an effective mindset and framework for looking at situations and acting on these situations that is not provided in most undergraduate education," Zimbler Miller, a screenwriter and book author, wrote in an email.

What Classes Are Included in an MBA

An MBA typically includes courses in accounting, finance, marketing, organizational behavior, economics, management and business ethics.

The breadth of the MBA curriculum is something that James Reeves – a consultant who advises companies on how to confront environmental, social or governance challenges – says he appreciated his MBA experience at the University of Chicago's Booth School of Business. He says the MBA program he completed in 2013 offered him exposure to multiple aspects of business and didn't pigeonhole him into a specific career track.

Reeves adds that someone who wants to become a subject matter expert may be frustrated by the fact that an MBA covers so much material, but the variety of courses was a selling point for him. He says his MBA provided a big-picture understanding of business and is useful as he consults with CEOs, the C-suite and members of boards of directors.

Horan says that a top-notch MBA program will not only offer theoretical lessons in how business works, but also experiential learning opportunities where students do meaningful business projects for actual companies.

Horan, a brand strategist who earned her MBA at NYU, says that during her MBA program she worked on a marketing campaign for a chocolate company that needed to increase sales during the slow summer months. She says such projects help MBA students gain real-world skills.

When Combining an MBA With Another Grad Degree Makes Sense

According to MBA alumni, before pursuing an MBA and another degree simultaneously in a dual-degree or joint-degree program, prospective students should think seriously about whether they need two graduate degrees. Experts warn that earning two degrees at once is psychologically and financially taxing, so it's not right for everybody, but it could be a good choice for people who have genuine interest in two programs and a serious plan about how they would use each degree.

"Don't fall in love with the idea that you want to get into that type of program for vanity reasons, meaning that you want that J.D.-MBA because it would look really good on your resume," Reeves says.

He adds that it's important to ensure that you have a compelling reason to pursue a dual-degree program that explains why a single advanced degree will not suffice.

Sangster says people contemplating a J.D.-MBA should know that business executives and business lawyers tend to have different mindsets. Corporate leaders typically are willing to take bold risks if those opportunities could result in hefty profits, she says.

Meanwhile, corporate attorneys usually strive to minimize risks, since their job is to recognize the potential for legal harm and mitigate the possibility of legal penalties. For that reason, it can be hard to combine those two disciplines, Sangster says.

Decide for Yourself: Is an MBA Worth It?

Nirav Mehta, associate director for MBA admissions at the University of Southern California's Marshall School of Business, says the greatest benefit of an MBA degree is the relationships students forge with their classmates and faculty.

"The MBA degree's real value comes from membership in a lifelong learning community and access to the alumni network," Mehta wrote in an email. "The overall network serves (as) an active source of personal and professional support. The connections that one makes through the MBA program can be life-changing, and these relationships help to facilitate career transitions long after graduation."

This article was originally published on Usnews.com