Once you have been accepted to your target MBA program, things start to move very quickly, and you will need to begin planning for your transition to business school right away. Understanding the financial realities of your MBA education is an important first step, and we have created this comprehensive, five-part “Mastering Your MBA Finances” series to help you do so. In this first installment of the series, we examine typical MBA internship salaries and signing bonuses.
Earning an MBA offers intellectual growth, a respite from the typical workday, and an opportunity to make new friends and contacts, but the main reason most candidates pursue this degree is to improve their managerial skills and make a professional leap. In short, an MBA is an investment—one that should lead to a higher salary immediately upon graduation and for many years after. Most business school students are able to offset at least part of their living and educational expenses with the income from their summer position and their signing bonus(es), and some individuals also earn scholarships. A very small number of full-time students may continue to work—and thereby draw a salary—as they complete their studies, but this is not necessarily a feasible option for all, because MBA programs tend to be all consuming.
So you may be wondering, What kind of compensation can I expect to receive during my MBA program as a source for financing my education? What will my internship salary be like? How much might a signing bonus be? In this first part of our series, we explore these questions to help you develop the “revenue” side of your MBA student budget.
Starting with internship salaries, let us examine the income data the MBA programs provide in their career reports. You can see in the following table that for the most part, the summer salaries for students across a smattering of top business schools are relatively similar. Counterintuitively, Harvard Business School (HBS) and the Stanford Graduate School of Business (GSB), which typically top the rankings with regard to average post-MBA salary, are actually at the bottom of this list. (We surmise that these programs may have lower averages than one would expect, because more of their students take chances with entrepreneurial summer positions, feeling certain that they can later land a more stable full-time position, if necessary.) If you were to create a budget line for your internship income, a safe number to use might be the $18,069 average internship salary seen with this selection of programs. Although some MBA students also receive performance bonuses during the summer, to be conservative, we will consider only the average guaranteed compensation for our discussion here.
Now we have the beginnings of a revenue picture! Of course, not all job functions draw salaries that hew to the averages—some are above, while some fall below. In our next table, we parse the data provided by Dartmouth Tuck to give you a better understanding of what you might expect across industries.
In this table, you will see that consulting salaries are the most generous, while those for the other industries listed are somewhat evenly distributed, with the nonprofit sector (as is typical) paying the least. So, if you are certain that you want to enter consulting, you might be able to bump your salary expectations upward; if you are dedicated to entering the nonprofit world, you might need to adjust your expectations downward. Of course, you will not be able to assume all of your summer salary as income, because you will still have expenses to cover during this time, and you also have to pay taxes. Nonetheless, most MBAs should be able to save some money during the summer.
If you do a great job in your summer internship, the firm just might offer you a full-time job, and if you agree to accept that position, you will likely receive a signing bonus. In industries such as financial services and consulting, signing bonuses are very much the norm and are by and large standardized across the industry. In other industries, however, such payouts can vary. Still, an MBA can look to a median signing bonus of approximately $25,000 as a guide, and this can certainly help pay some second-year bills.
So, if you were to take these somewhat standard compensation elements of the MBA experience and add them together, you would have a $43,000 total revenue line.
Still other revenue opportunities are available, of course—scholarships and offsets like tax credits, for example—but at the most basic level, we can assume that you will earn approximately $43,000 over the course of your MBA program if you pursue a conventional professional track.
Check back next week, when we discuss unexpected revenue sources that can reshape your student budget. And if you are looking for even more strategies for funding your degree and minimizing your debt burden, download the free MBA Student Loan Reduction Primer!