Is an MBA Worth Pursuing During a Recession?

Is an MBA worth pursuing during a recession? Find out the pros, cons, and alternatives to consider. Learn about the current trends in MBA hiring, the cost of pursuing an MBA, and the ROI of a graduate management degree.

Questions Answered in this Article

1. What was the trend in MBA applications during the Great Recession, and why is it relevant to the current economic situation?

• According to the Graduate Management Admission Council, there was a surge in applications for graduate management programs during the Great Recession, and with economists predicting another U.S. recession, pursuing an MBA degree could be wise to mitigate economic uncertainty and increase earning potential.

2. Are employers still interested in hiring MBA graduates despite the pandemic-induced economic uncertainty?

• Yes, according to the 2022 Corporate Recruiter survey by GMAC, employers continue to show interest in hiring MBA graduates, with 97% of recruiters expecting demand for MBA hires to remain stable or increase in their organizations.

3. What percentage of prospective MBA students are concerned about the cost of attending graduate business school?

• Around 60% of prospective MBA students worldwide are concerned about the cost of attending graduate business school, potentially affecting their decision to follow or preventing them from going altogether.

4. What percentage of MBA graduates believe their investment in a graduate management degree was worthwhile?

• Over 85% of graduates believe their investment in a graduate management degree was worthwhile, according to a 2022 GMAC survey of over 3,600 MBA candidates from more than 700 business schools globally.

5. What are some alternatives to pursuing an MBA?

• Alternatives to pursuing an MBA include business graduate certifications, professional certifications, and mini-MBAs. These programs may be shorter and less expensive than an MBA but may not hold the same value in the job market as an MBA degree.

Considering an MBA During a Recession: Pros, Cons, and Alternatives

According to the Graduate Management Admission Council, there was a surge in applications for graduate management programs during the Great Recession. With economists predicting another U.S. recession, pursuing a Master of Business Administration degree could be wise to mitigate economic uncertainty and increase earning potential.

The economy is still under pressure due to inflation, and tech workers have been laid off. Top business schools such as Kellogg School of Management and Tuck School of Business are waiving GMAT and GRE exams for recently laid-off workers to attract more students.

However, it’s important to remember that an MBA may not be the best option for everyone during a recession. Considering returning to school, it’s crucial to weigh the pros and cons before deciding.

Employers Still Interested in Hiring MBA Graduates Despite Economic Uncertainty

According to the 2022 Corporate Recruiter survey by GMAC, employers continue to show interest in hiring MBA graduates, with 97% of recruiters expecting demand for MBA hires to remain stable or increase in their organizations. Maite Salazar, Chief Marketing Officer of GMAC, states that this is a positive trend that has persisted over the past 15 years. Despite the pandemic-induced economic uncertainty, MBA hiring trends have remained steady from 2020 to 2022, as employers value MBA graduates’ leadership and problem-solving skills, along with their ability to expand and scale up globally.

Cost of MBA Education Remains a Deterrent for Prospective Students

According to a 2021 GMAC survey, around 60% of prospective MBA students worldwide are concerned about the cost of attending graduate business school, potentially affecting their decision to follow or preventing them from going altogether.

In the United States, the average cost of an MBA is $225,605, per a 2022 report from BusinessBecause, a website for graduate management education. This represents a 3.7% increase from the previous year, and tuition and fees have been rising globally.

While scholarships, fellowships, and grants can help pay for an MBA, they may not cover the entire cost. MBA student loans can bridge the funding gap, but the more you borrow, the higher the interest payments, which can impact the return on investment of your MBA degree.

MBA Graduates Report High ROI, but Outcomes Vary by Race and Gender

According to a 2022 GMAC survey of over 3,600 MBA candidates from more than 700 business schools globally, over 85% of graduates believe their investment in a graduate management degree was worthwhile. The survey respondents, who completed their graduate business education between 2010 and 2021, cited increased employability, higher earning potential, and an expanded professional network as the most significant returns on investment.

The survey found that nearly two-thirds of graduate students advanced to higher positions after earning an MBA—those in junior positions before their MBA experienced even more significant career growth.

Furthermore, 2022 GMAC data indicates that starting salaries for MBA graduates in the United States are $40,000 higher than those with only a bachelor’s degree, even though salary growth has stagnated over the last three years.

However, MBA outcomes can vary based on race and gender. For instance, the GMAC study found that Black, Hispanic, and Native American graduates were less likely to report career advancement than graduates who are white, Asian, or of other racial/ethnic groups.

Alternatives to MBA: Business Graduate Certifications, Professional Certifications, and Mini-MBAs

If you aim to enhance your business knowledge, there are various alternatives to an MBA, including business graduate certifications, professional certifications, and mini-MBAs.

Business graduate certifications are credit-based programs provided by universities and colleges that concentrate on specialized fields and require fewer courses than an MBA, making them a shorter time and financial commitment.

Professional certifications offered by national organizations or companies are sought by those seeking certification in a specific skill, role, or software program. Some certificates require taking courses, while others require passing an exam, and costs vary by program.

A mini-MBA may take many forms. Some universities offer mini-MBA programs that function like business certificate programs, allowing students to earn credits toward an MBA degree in the future. Other organizations, such as Abilitie, offer non-accredited programs to improve specific business skills over 12 weeks.

According to Luke Owings, Vice President of Products at Abilitie, a mini-MBA program can make MBA-level skills accessible to those who may not have been able to pursue an entire MBA.

However, it should be noted that mini-MBAs and other business certifications are not equivalent to an MBA degree. The value employers place on such programs may differ depending on the company.

Summary

• Pursuing a Master of Business Administration (MBA) degree during an economic recession can be a wise decision to mitigate uncertainty and increase earning potential.
• Top business schools such as Kellogg School of Management and Tuck School of Business are waiving GMAT and GRE exams for recently laid-off workers to attract more students.
• Employers continue to show interest in hiring MBA graduates, with 97% of recruiters expecting demand for MBA hires to remain stable or increase in their organizations, according to the 2022 Corporate Recruiter survey by GMAC.
• However, around 60% of prospective MBA students worldwide are concerned about the cost of attending graduate business school, potentially affecting their decision to follow or preventing them from going altogether.
• On average, MBA graduates say it’s worth it, with over 85% of graduates believing their investment in a graduate management degree was worthwhile, citing increased employability, higher earning potential, and an expanded professional network as the most significant returns on investment.
• An MBA is not the only path to economic success, with alternatives including business graduate certifications, professional certifications, and mini-MBAs, but it should be noted that these programs are not equivalent to an MBA degree.