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The question of whether it’s worthwhile to obtain a Master’s in Business Administration—an advanced and versatile degree that can help people ascend into management analysis and/or strategy roles—is a highly personal one without a real single objective answer. As usual with financial and personal decisions, the answer tends to be “it depends.”

The last decade has seen the MBA go from becoming the most popular master’s degree in the U.S. to “being in crisis,” with overall applications declining. The COVID-19 pandemic resulted in many schools expanding their policies and modalities for distance learning, so it’s still anyone’s guess what impact that will have on the MBA’s popularity and employer demand. Either way, it’s never a bad idea to consider betting on your future—and an MBA is still a big commitment. Here are some things to consider when deciding to pursue an MBA.

The Pros and Cons of Getting an MBA

Getting an MBA won’t be right for everyone, but it could be one way to advance your career. Here are some things to consider as you weigh the pros and cons of getting an MBA.

Pros to Consider

Improved earning potential. The average anticipated salary for MBA graduates entering the workforce is $79,043 according to the National Association of Colleges and Employers. A recent grad’s expected salary may be even higher depending on where a student gets their MBA. According to US News & World Report, the average salary for 2019 MBA graduates at the top 129 full-time MBA programs was $106,757. For top 10 programs, the average salary and bonus was $173,960.

But if you’re wondering if it’s worth getting an MBA from a lower tier school, consider that the average MBA salary for graduates with a degree from the 10 schools where compensation was lowest was just $52,720 .

Expanded Network. Business school can be a great opportunity to make friends and network with like-minded individuals. In addition to your peers in the program, you’ll engage with faculty and be introduced to a (hopefully robust) alumni network.

Career Acceleration or Transition. Successful completion of an MBA program can improve an individual’s career mobility. Coursework is often designed to encourage management skills, critical thinking, and other specialized skills, which can help prepare people for the workforce.

Cons to Consider

The cost. According to US News & World Report , in 2020 the average cost of the top 10 business schools in the United States was over $140,000 for tuition in a two-year MBA program. The most recent data available from the National Center of Education Statistics indicates that during the 2015-16 school year, the average MBA student loan debt was $66,300 at the time of graduation.

There are ways to mitigate the cost or to at least lower sticker shock out of the gate by pursuing part-time programs or staggering your course load over a longer period of time so you can still be drawing a salary to offset the costs while you’re studying.

Time commitment. Getting an MBA in a full-time program can take two years. There are some accelerated programs that may allow students to complete their coursework in 12 to 16 months. Beyond the length of the program, MBA classes are no joke. The coursework requires commitment and diligence, so be sure you have the time to dedicate to classes.

Consider factoring in the application process when evaluating both time and cost. To apply, schools may require GMAT™ scores, letters of recommendation, and more. Meeting the application requirements may take both time and money if you still need to take the required standardized tests.

How to Decide If an MBA Is Worth It for You

While an MBA can offer great potential for career growth, it’s definitely not the right choice for everyone. Be honest with yourself about why you want to pursue an MBA. It can be an excellent opportunity for students who are interested in career growth but it can be a huge time and monetary commitment.

Take the time to really evaluate whether getting an MBA is in line with your career and personal goals. Also understand the types of schools you may be able to get into, as the earning potential for someone who attended a top-tier school isn’t the same as someone who is enrolled in a lower-tier program.

When sitting down to crunch the numbers and assess your goals, pay particular attention to long-term salary projections among graduates from the program you have in mind—assuming future earning potential is a primary motivator for getting an MBA. Debt may be offset by future salary. But because signing on for grad school is a big and expensive decision overall, it’s worth considering all angles.

How to Pay for an MBA

One approach to college programs is to first seek fellowships, scholarships, and grants—and to then pay for costs out of pocket or to seek a loan as a last resort. Unlike undergraduate scholarships, which may be based on financial needs, MBA fellowships and grants are often awarded on merit. That means rather than taking financial need into account, oftentimes programs will be looking at a student’s achievements, talents, abilities, and performance in spite of hardship.

Generally speaking, when trying for a merit-based award, it helps to apply early, really ponder how you’re distinct from your competition, and push yourself to craft your application specifically for the program. Admissions folks and fellowship committees spend a lot of time reading a ton of applications and can tell instantly when an essay has been rubber-stamped—spell check, read your application over repeatedly, and don’t rush any aspect of it.

When in doubt, consider calling the admissions office for guidance or for information on programs and awards that may not be fully described online. But many MBA programs, including, for example NYU Stern, clearly indicates that “about 20-25% of admitted full-time two-year MBA students receive a merit-based scholarship.” NYU Stern’s website runs down many of the possible scholarships and fellowships prospective students can try for and what’s required.

Review fellowship opportunities available at the college or university you are interested in attending. Fellowships can be highly competitive and rare but offer a chance to attend a program, earn a degree, and avoid incurring the full cost of tuition. Not all schools offer them, but the University of Florida’s Warrington College of Business and Arizona State University’s W.P. Carey School of Business are just two examples of ones that do.

It might sound like an incredible long shot to earn a full free ride or even a considerably discounted one via aid—but it’s always worth pursuing because you may be closer than you think.

Recommended: How To Pay For Grad School

Student Loans for Graduate School

Student loans are another option students can use to pay for graduate school. To apply for federal aid, students will need to fill out the Free Application for Federal Aid. It’s important to note that the federal loans available for graduate students vs undergraduate students are different. Importantly, graduate students are not eligible for subsidized loans.

While your search for aid often starts with the university’s website and making contact with real humans there—not just going off what’s online—it’s also worth getting on the phone to lenders and finance companies to shop around and get the lay of the land. SoFi offers options to help students refinance existing student loans or to take out a new one. According to The Fed, there is currently over $1.7T in student loan debt . Chances are anyone thinking about school would like to avoid personally contributing to that statistic. Note that refinancing eliminates federal loans from borrower protections like deferment or forbearance.

Recommended: The Lifetime Cost of an MBA Degree

Employer Tuition Reimbursement Programs

In addition to getting on the horn with the schools you’re considering, it’s worth talking to your employer. Some employers have programs where they will pay for all or part of your MBA if you commit to returning and staying with the company for a set number of years after you earn the degree.

A 2019 survey from the Graduate Management Admission Council found that 40% of companies offer education sponsorship . If you’re among the current majority of the 60% other companies, there may still be tuition reimbursement programs—it’s worth at least asking about.

You can also explore business school assistantship programs as a way to offset the cost of tuition. These are jobs that may require you to help school faculty with tasks like conducting research or grading papers, and can also help provide you with a stipend as well to help with personal expenses outside of the debt owed to the school you’re working to erode. Contact your school’s employment office for details—but know that like with every other option to minimize the bill for a degree, the competition is likely to be fierce.

Recommended: How Does Tuition Reimbursement Work?

The Takeaway

Even if you don’t have a few dream graduate schools in mind yet, it’s a good bet you know it’s a pricey proposition and not one to be pursued on a whim. In addition to this article, it would be worth reading our content on how today people are taking on a larger amount of debt for master’s, MBA, law, and medical programs than ever before.

Compared to undergrads, grad students are taking on more debt, taking out loans that come with higher interest rates, and there’s the additional opportunity cost of just time invested in your own life—later in life—that comes with pursuing another degree.

That doesn’t mean it isn’t worth getting an MBA necessarily, it just means before making the final decision about pursuing it, it’s helpful—necessary even—to sit down, do your homework, and really think it through to develop a strategy and identify where compromises might also be called for.

Like a Bachelor’s, an MBA is not a guarantee of anything in your future. Obtaining an MBA will not magically earn you a better salary, grant you access to a better network, or help you figure out your path in life. Like any degree, an MBA is a tool that might help you quickly pivot your career or “check a box” for earning a promotion with your current employer. Whether that’s worth it depends on your own specific situation and set of goals.

IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS, PLEASE BE AWARE THAT THE WHITE HOUSE HAS ANNOUNCED UP TO $20,000 OF STUDENT LOAN FORGIVENESS FOR PELL GRANT RECIPIENTS AND $10,000 FOR QUALIFYING BORROWERS WHOSE STUDENT LOANS ARE FEDERALLY HELD. ADDITIONALLY, THE FEDERAL STUDENT LOAN PAYMENT PAUSE AND INTEREST HOLIDAY HAS BEEN EXTENDED TO DEC. 31, 2022. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE THE AMOUNT OR PORTION OF YOUR FEDERAL STUDENT DEBT THAT YOU REFINANCE WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
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SOSL21002

Taking a break from financial obligations can offer some breathing room, but it’s important to understand how deferred payments may affect your credit score.

In most parts of the United States, people move their clocks back by one hour in the fall and move them forward by one hour in the spring. Many people have been doing this their entire lives, yet they don’t fully understand it. Perhaps still worse, many don’t know just how expensive daylight savings time can be.

Here, learning more about this topic, including:

•   What is daylight savings time?

•   What are the benefits of daylight savings time?

•   How much does daylight savings time cost Americans?

•   What would happen if daylight savings time was eliminated?

What Is Daylight Savings Time?

Daylight saving time (DST), commonly known as daylight savings time, refers to moving clocks forward one hour in the spring and back one hour in the fall. You may be used to hearing this referred to as “spring forward, fall back,” which is the clever phrase people often use to help them remember which way to reset the clock.

The idea behind DST is to sync times of activity (work and school, for instance) with daylight, so less energy is needed for artificial illumination. Using less energy is, in turn, a way to live more sustainably.

A couple of bits of DST trivia:

•   New Zealand entomologist George Hudson was the first to propose daylight saving time in 1895. Major countries adopted the standard shortly thereafter.

•   The United States adopted DST with the Standard Time Act of 1918 and later with the Uniform Time Act of 1966.

While most states observe daylight saving time, there are some exceptions. For instance, it is not observed in Hawaii and most of Arizona. It is also not observed in Guam, American Samoa, Puerto Rico, the Virgin Islands, and the Northern Mariana Islands. The places in the U.S. that don’t have DST generally have a lot of sunlight year-round, making the practice far less appealing.

Countries around the world observe daylight saving time as well. That includes most of Canada and Europe, plus parts of Asia and South America.

Recommended: The Benefits of Automating Your Finances

Who Benefits From Daylight Savings Time?

Given that daylight savings time has been a fact of life for many years, you might wonder why exactly it exists. What are the pros of this system? Here are some answers:

•   Typically, daylight savings time is credited with saving energy. Proponents of DST say it reduces energy usage, thus improving the financial health of the country.

One study from the Department of Energy showed that daylight saving time leads to a mere 0.5% reduction in energy usage, however. And economist Kurt Rankin notes the evidence around reduced energy usage is inconclusive, with some studies asserting that there would be no economic impact of daylight savings time on energy usage at all.

•   A common belief is that industries like tourism and retail might benefit from daylight saving time. The idea is that more hours of daylight in the warm months incentivizes more people to give these businesses their patronage. Again, though, there is debate about the efficacy of this. Rankin says there is no evidence to support this claim.

•   There could be certain social benefits of daylight saving time, such as a reduction in robbery and sexual assault. Longer days mean people spend less time outside after dark, which might reduce these crimes.

How Much Does Daylight Savings Cost Americans?

Now that you know what daylight savings time is and its goals, here’s some intel on the other side of the story: What is the cost of daylight savings time?

The exact cost (or benefit) of daylight saving time is difficult to estimate because there are many variables. A frequently cited study places the cost at $430 million annually, a figure that could lead to significant money depression. The research credited the time change with lowering productivity and increasing health issues.

But the true cost can be tough to estimate. Part of the difficulty of estimating the cost of DST is that the impact is not the same for everyone. For instance, some industries, such as agriculture, are negatively impacted by DST. But others, like tourism, sports, and retail, believe daylight saving time helps their businesses.

Daylight saving time can also lead to reduced productivity for workers after they spring ahead and lose an hour of sleep. Sleep experts say the change in sleep patterns can affect people’s circadian rhythm for weeks. While also difficult to measure, the cost of lost sleep can be significant.

Recommended: Tips for Saving Money Daily

What Would Happen if Daylight Savings Time Was Removed?

The immediate impact of removing daylight saving time is that clocks would stay the same year-round. No longer would you fall back in November and spring ahead in March. This could help keep sleeping patterns more consistent year-round, potentially increasing quality of life.

Without DST in the United States, you would also enjoy light later in the day in the winter months. However, the sun would rise later, which could mean groggy mornings. The inverse would be true for the summer. The sun would rise very early in the morning, but it would also set earlier.

(In parts of the world that are close to the equator, the length of days is not as varied throughout the year. Thus, changing the clocks would have little impact on these parts of the globe.)

Some groups suggest there could be a real benefit to removing DST for office workers. For instance, one study from the University of Alabama Birmingham suggests losing an hour of sleep in the spring increases the risk of heart attack. While some say DST contributes to increased traffic accidents and deaths, others say the difference is insignificant.

As you see, there are many viewpoints to consider in this debate about DST.

The Takeaway

Daylight saving time, or DST, involves setting the clocks back one hour in the fall and forward one hour in the spring. There is a debate about the value of this system, which is designed to provide daylight when it’s needed most. Some believe it boosts productivity; others say the cost of daylight savings time in the U.S. is actually hundreds of millions of dollars. In addition, there is a debate about the potential health impacts of changing the clocks.

3 Money Tips

1.    Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

2.    If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

3.    When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.

FAQ

Does daylight saving time save money?

The main way in which daylight saving time might save money is with lower energy costs. For example, it would cause people to have lights on for an hour less time in the evening, potentially saving energy. However, the Department of Energy released a study showing the energy savings to be just 0.5% per household on average.

How does daylight saving time boost the economy?

Some sectors, such as retail, believe daylight saving time can provide an economic boost by giving people an extra hour of daylight to go shopping. But the real-world evidence for this kind of idea tends to be mixed.

What are the downsides to daylight savings?

In today’s economy, the biggest downside to daylight savings might be the negative effect it has on workers when they lose an hour of sleep in the spring. For instance, it could lead to lost productivity due to drowsiness in the days and weeks after we spring ahead. Others believe it can lead to more severe consequences, such as an increase in the number of car accidents and heart attacks. However, the evidence for these more extreme impacts is inconclusive.

Photo credit: iStock/baona

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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