The ROI of a Business Degree

Just about every day, business leaders make decisions about investments that could affect the financial future of their companies for the long term.

People often face similar difficult decisions. For example, you might ponder whether to go back to school and evaluate the potential benefits and costs.

In both cases, it comes down to return on investment, or ROI, which is a formula used to determine whether a new investment will have enough positive financial returns to justify the initial expenditures. Specifically, the formula for ROI produces a ratio of investment gains and costs.

ROI = (Investment Gains - Investment Costs)/Investment Costs

If your ROI is positive, that means that the benefits of your investment outweigh the projected costs. The greater your ROI, the more profitable your investment. If your ROI is negative, however, that means that the long-term benefits of your investment do not outweigh the total costs, revealing a poor investment choice.

You might consider your college education an investment since you are choosing to invest both your time and your money today with the expectation that your degree will yield personal and professional benefits in the future.

In order to evaluate the ROI of a business degree, you must evaluate the potential gains, as well as the potential costs associated with furthering your education.

Let's begin by evaluating what you might gain by obtaining a degree in business.

Obtaining your business degree will help you develop the specialized skills and knowledge that will allow you to seek out more advanced career opportunities. This is the primary reason why most people go back to school to pursue a business degree.

Another potential benefit of obtaining a business degree is the opportunity to pursue a variety of different career paths, including accounting, marketing, human resources and more. As a business student, it is important for you to select a concentration that will provide you with the ongoing career opportunities and growth that you desire.

Of course, we must always evaluate our investment gains over a period of time. Most investments are made over several years, or even decades. Similarly, there are very few degrees where the initial costs can be paid back in a single year. A business degree, however, will provide you with both practical and soft skills that will remain valuable throughout your working life.

Next, consider the cost of education.

The cost of going back to school includes tuition, books, fees and other related expenses. Costs should also include the time and effort you invest in completing your degree, which might require you to adjust your commitments to work, family, and other obligations.

But, wait, we’re not done yet…

While direct costs and benefits are easy to calculate, it is also important to evaluate the intangible value of the education that you receive. By investing in your education, you'll not only gain access to more advanced positons, you’ll deepen your critical-thinking and decision-making skills so that you can immediately apply your new knowledge from the classroom to your work life.

In summary, the ROI of a business degree includes more advanced career opportunities and the opportunity to develop invaluable knowledge and skills for success. For many business graduates, these gains offset the initial costs of tuition, books, fees and the time invested in furthering their education.