What is an MBA? Everything applicants need to know

The MBA has traditionally been a tried-and-true way to get ahead in the business world by learning the in-demand skills in subjects like finance, marketing, and entrepreneurship as well as becoming an expert in networking and leadership.

So, should you get an MBA? To make it easier, Fortune has ranked all kinds of MBAs, from programs for executives to people looking to study from home. But first, you also need to understand the degree and what it entails and then assess your career goals.

What is an MBA?

The MBA is the internationally recognized graduate-level credential in business leadership and management and can help you advance in your current industry or change fields. About 46% of all Fortune 1000 c-suite executives have an MBA. 

An MBA prepares degree holders to lead, start, invest in, and/or advise organizations—usually for-profit businesses but sometimes not-for-profit entities, says Linda Abraham, founder of Accepted, an admissions consulting firm for prospective college and graduate students.

“I think getting an MBA in general, and certainly more now, is about being adaptable, being able to be able to learn, being able to figure out what’s next for you all the time,” explains J.P. Eggers, vice dean for MBA and graduate programs at NYU’s Stern School of Business.

Programs now vary in course format (for example, on-campus vs. online) and structure (part-time vs. full-time), when (and where) students take classes, the types of courses they take, program length, and cost.

Curriculum

MBA students may learn on a school’s campus, online, or a combination of both. Online students, who more often study part-time, can complete their coursework remotely but may still attend live virtual lectures or occasional in-person residencies.

Most MBA programs have a core curriculum focusing on business fundamentals, in which students study leadership, accounting, economics, finance, marketing, and operations, Abraham says. MBA students typically also enroll in electives.

Especially in full-time MBA programs, networking is integral to the student experience, opening doors to potential career opportunities. Students may also be able to complete internships, study overseas, and attend career fairs.

How long does it take to earn an MBA

In a full-time MBA program, the credit hour requirements, which vary among schools, translate to about two years of study. However, some schools offer accelerated one-year options. 

The lengths of part-time programs—generally geared toward working professionals—vary depending on the number of courses you take each semester or quarter. But these programs may allow students several years to complete the requirements. Executive MBAs, which attract more experienced professionals, can take roughly two years to complete.

Career paths

With an MBA, you may plan to advance into a managerial role in your field either at your current employer or elsewhere, which could lead to a salary increase. Or you may view the MBA as a way to make a major career change.

The MBA is also a good option for people looking to change from being a functional expert—say, an engineer—to a broader organizational leader, says Janice Kennedy, former executive director of recruiting and admissions at the Jones Graduate School of Business at Rice University.

“Different aspects of a person’s career stage and long-term aspirations are all considerations in ‘why an MBA?’” Kennedy says.

While MBA graduates hold jobs spanning industries, the most common post-graduation fields include consulting, tech, and finance, Abraham says. Smaller numbers of students enter real estate, consumer goods, health care, entrepreneurship, and media and entertainment.

Admission requirements

To apply to an MBA program, you may need to submit your résumé, past academic transcripts, essays, and recommendation letters. MBA applicants may be invited for in-person interviews with admissions staff.

Some MBA programs require different amounts of standardized testing. For example, while some programs don’t ask for any standardized test scores and are test-optional, others might require official GRE scores. Some schools might just ask for either the GRE or GMAT standardized test scores.

Types of MBA programs

MBAs have a variety of formats, each catered to a different subset of students seeking to become part of—or grow within—the next generation of business leaders.

The good news is that when it comes to employers, they are not looking so much at the format of your MBA (online versus traditional, for example) and are instead looking at the skills learned in the program. If prestige or a specific university is a big factor for you, make sure you do your research early because not every school offers a variety of formats. Harvard Business School, for example, only offers the traditional, in-person MBA.

Should you get an MBA?

When deciding whether or not to get an MBA, Eggers says the decision comes down to four main opportunity reasons: the credential, education, network, and job.

The credential

Let’s be honest, many students are eager to get an MBA just to say they have it. They want to be part of the exclusive MBA-holders club that leaders like Melinda French Gates, Satya Nadella, or Jamie Dimon are also a part of. 

However, there’s some validity to this since simply having the MBA can translate to greater trust at the business table that you understand business and can lead effectively. You can point directly to the salary increases MBA graduates experience. According to the Graduate Management Admission Council’s Corporate Recruiters Survey, the median starting salary for recent MBA graduates is $125,000.  

The education

Don’t be fooled—obtaining an MBA is tough. Students not only have to be analytical thinkers, problem solvers, and creative marketers, but they also need to learn to be master negotiators and network growers.

While it is unrealistic to expect all students to be exceptional at all aspects of the business world, it is paramount that MBA candidates are aware of the various hard and soft skills. 

One upside is that the MBA is one graduate degree with a variety of learning opportunities, which means students can learn via the format that is best for their education style and career status. The full-time, in-person MBA has historically been the most traditional route, but online, part-time, and executive MBA programs are also fairly common. However, not every school offers every type, so do your research.

Eggers, who will soon lead the no. 9 best MBA program in the country as its interim dean, says each MBA format serves a different purpose and the students that succeed the both are the ones that are able to identify what they want out of the experience and what format is best for their life.

The network

In the business world, who you know matters big time, and the MBA experience is one of the best places to build out one’s network. You never know who in a certain class may end up helping you land a job later in your career. Moreover, start-ups are constantly being created from MBA cohorts.

It’s no question, the traditional, in-person MBA experience is the most conducive for networking; in the business world, a handshake will never outdo a video conference.

“I think we all can accept the fact that while Zoom is great, the networking and relationship-building part is a difficult part of it,” Egger says. “The students who are after that lifelong network investment, I think, will continue to invest in full-time (in-person) programs.”

However, that’s not to say networking is impossible via an online program.

The job

MBAs certain shape students into exceptional business leaders, and it is without a doubt a degree that can propel individuals quickly into a new job or promotion. However, Eggers says individuals should not enter into a program thinking it will absolutely guarantee them a lucrative job, such as in investment banking at Goldman Sachs or consulting at McKinsey. 

“Students who are after a very narrow set of career outcomes, and they’re very determined to get one specific thing, I think that sets them up to be in trouble potentially just because you never know what’s gonna happen, and things don’t always work out,” Eggers notes.

Instead, he adds students should focus on the long-term impact an MBA may have on them, as well as the lifelong benefits an institution can provide.

Factors to consider when choosing an MBA

Career plan

Figuring out what you want to get out of an MBA education and degree usually ties back to where you want to take your career.

“[A career plan] really becomes the north star in guiding [students] as to whether the degree is worth the effort and cost,” Abraham says. It’s important to have solid reasoning for pursuing the MBA, she adds.

How do you know whether an MBA will get you where you want to go? Start by researching different career paths online and consulting with admissions staff at schools of interest. Contact MBA students and alumni and ask them about their experience and whether it has been worthwhile from a career perspective.

You may also speak with professionals who hold positions you find appealing. Abraham recommends asking these people what they do every day, what they like (and dislike) about their job, and what education is valuable in their field.

Your career goals will also impact the type of MBA program you pick. You may check whether there are programs that offer specializations tied to your job aspirations, for instance.

How the MBA fits into your life

An MBA represents a significant investment of time and money, so make sure it’s the right time for you to take this journey, Kennedy says.

“Is it the right time for me and my family, if I have one?” Kennedy says. “Is it the right time for me and my career? Is it the right time for me financially?”

You should also assess how you envision the MBA factoring into your life. If you want to continue working and earning a salary while pursuing the degree, you may consider a part-time or online program. If you want to make school and networking a full-time endeavor, consider a full-time MBA.

“It’s a mixed bag of what you want to do and if you want to get an MBA but how you want to get the MBA, as well,” Kennedy says.

Your return on investment

Another way to decide whether to get an MBA? Calculate your return on investment, or ROI, by looking into your potential salary post-graduation and how much you’ll spend paying for the program. How long might it take to pay off your debt and see a positive ROI? Factor in not only tuition costs but also charges associated with on-campus living, books, and other fees.

Many schools have resources to help applicants calculate the ROI on their MBA. This process will look different for full-time students—who generally don’t continue earning a salary while getting their MBA—versus part-time or executive MBA students. Whether your employer will pay your tuition is another important question.

Making your final decision

You don’t have to go through this process alone. Confer with admissions staff, academic advisers, and career personnel at schools you are considering applying to about your professional goals and whether an MBA would be a good fit. Get opinions not just from trusted professionals in your field but also family, friends, and colleagues you know well. 

When looking at programs, look beyond just the academics. Research the types of jobs MBA graduates at different schools get and if they’re the types of positions you’re looking for.

And when weighing the pros and cons, don’t forget about the nonfinancial benefits of getting an MBA, experts say—an opportunity to learn more about your interests, develop a strong professional network, and gain a broader understanding of leadership, to name just a few. For in-person experiences, don’t forget about the school atmosphere; studying in Boston or New York City will be a lot different than Ann Arbor, MI or Chapel Hill, NC.

“Without ignoring or diminishing the financial benefit and cost, that nonfinancial part should also be part of the equation,” Abraham says.

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Frequently asked questions

Is getting an MBA hard?

An MBA is certainly not an easy degree since it requires extensive time commitment both inside the classroom listening to lectures and engaging with discussions and outside the classroom with studying and networking. Graduation rates are typically very high. For example, at the University of Michigan–Ann Arbor (Ross), the rate is 99% for its part-time MBA program. 

What does an MBA degree do?

An MBA degree trains you with the in-demand skills to succeed as a business leader through coursework in finance, marketing, communications, and leadership. It also helps you build a professional network. 

Do I need an MBA to be a CEO?

No, you do not need an MBA to be a CEO. In fact, over half of all Fortune 1000 CEOs do not have an MBA. Those CEOs with the degree most commonly attended include Harvard Business School, Northwestern University (Kellogg), and the University of Pennsylvania (Wharton). 

Is an MBA a high-paying degree?

Yes, those with MBAs tend to have high salaries. While the median starting salary for MBA graduates is about $125,000, it is certainly possible to land a position with a salary over $200,000.

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Check out all of Fortune’s rankings of degree programs, and learn more about specific career paths.