Doing the Math: The Case for Starting Your MBA Now
There are lifelong financial benefits to pursuing an MBA now versus later.
In business education, as in life, timing is everything. But if you ask five business professionals about the ideal timing to pursue an MBA, you might get five different answers.
While there is no one-size-fits-all guide to success, there is a financial case to be made for earning an MBA early.
“If you are someone who plans to enroll in a full-time, in-person MBA program, there are quite a few advantages to starting as soon as possible,” said Erik Davidson, DBA, an assistant professor of Finance at Baylor’s Hankamer School of Business.
With Davidson’s help, we considered the trajectory of two hypothetical students: “Riley,” who enrolls in a full-time MBA program immediately after completing an undergraduate degree, and “Liam,” who worked for two years before pursuing an MBA.
Two Scenarios
Let us say that Riley graduates with an undergraduate business degree in May 2024 and immediately begins an MBA program the same year. She is awarded a scholarship that cuts the cost of tuition in half and pays $35,000 in tuition/year for two consecutive years. Then, in 2026, she lands a job with a starting salary of $85,000/year. Every year, her wage increases by approximately 6 percent (in line with average annual wage growth in the United States between 1960 and 2024).
Liam, on the other hand, graduates with Riley in 2024 and accepts a job that pays him $50,000/year. Two years later, he exits the workforce to become a full-time MBA student. Tuition has increased, so he pays $40,000/year for two consecutive years. He also faces the opportunity cost of forgoing his previous salary ($50,000 or more). Then, in 2028, he re-enters the workforce in a similar job to Riley. Inflation has boosted the average median salary for MBA graduates in the two years he has been out of the workforce, so he re-enters at the same salary level as Riley.
Scenario 1
Riley | Liam | |
| Year 1 | $ (35,000) | $ 50,000 |
| Year 2 | $ (35,000) | $ 50,000 |
| Year 3 | $ 85,000 | $ (40,000) |
| Year 4 | $ 90,100 | $ (40,000) |
| Year 5 | $ 95,506 | $ 95,506 |
| Year 6 | $ 101,236 | $ 101,236 |
| Year 7 | $ 107,311 | $ 107,311 |
| Year 8 | $ 113,749 | $ 113,749 |
| Year 9 | $ 120,574 | $ 120,574 |
| Year 10 | $ 127,809 | $ 127,809 |
| 10-Year Total | $ 771,285 | $ 686,185 |
Even though Riley enters the workforce two years later and starts at a slightly lower salary than Liam, she will earn $85,000 more than him in the first 10 years of her career. By starting early, she paid a lower tuition rate and avoided lower-earning years.
Scenario 2
Riley | Liam | |
| Year 1 | $ (35,000) | $ 50,000 |
| Year 2 | $ (35,000) | $ 50,000 |
| Year 3 | $ 85,000 | $ (40,000) |
| Year 4 | $ 100,000 | $ (40,000) |
| Year 5 | $ 106,000 | $ 95,506 |
| Year 6 | $ 112,360 | $ 101,236 |
| Year 7 | $ 119,102 | $ 107,311 |
| Year 8 | $ 126,248 | $ 113,749 |
| Year 9 | $ 133,823 | $ 120,574 |
| Year 10 | $ 141,852 | $ 127,809 |
| 10-Year Total | $ 854,384 | $ 686,185 |
Scenario 1 is a conservative estimate of the difference in earnings between the two professionals. If Riley had earned a promotion in Year 4 while Liam was a full-time student (see Scenario 2), the disparity in income over a 10-year span would be significantly higher.
“By investing in an MBA education earlier and with a higher starting salary, a student can increase their lifetime earning potential exponentially,” Davidson said. “It is a similar concept to investing early in a retirement account.”
Every potential MBA student has an individual set of circumstances to consider when timing their degree. For some, a mid-career MBA is the most strategic option. But for students who are on the fence between earning an early-career MBA now or in a few years, the numbers are clear: taking the plunge now versus later can pay off for years to come.
Are you ready to invest in your career? Learn more about Baylor’s Full-Time MBA program here or fill out the form below to speak directly with an Enrollment Coordinator.
