The MBA has long been regarded as a ticket to the C-Suite for ambitious employees ready to take their next steps in the company. However, a divergence is occurring that is making bosses increasingly anxious to foot the bill.
The latest MBA rankings from the Financial Times show nearly 30% of students use their MBA as a springboard to create their own start-ups, continuing a divergence from the classic trend of using an MBA to gain promotions within a firm or find a better position at a competitor.
It is perhaps this trend that has led employers to increasingly stop funding their aspirational employees’ studies.
The latest FT ranking shows average tuition costs for an MBA climbed to $95,000 in 2024, with just 18% of students having all their costs covered by their employer. By comparison, 55% of students received no support from their employers.
Mature students in their 40s and 50s are particularly keen on building a startup rather than using their MBA to move to the boardroom, as they take the “Executive” route to study part-time while working on the side. The FT also identified a growing older cohort of 50+ students taking an EMBA later than expected to advance their careers.
Employers appear to be growing increasingly wary of shelling out nearly six figures for staff who will jump ship once their studies conclude.
MBA fears
Fortune spoke to one MBA grad, who took the course at BPP Business School in London in 2008, funded by her law firm.
While MBAs are typically taken by mid-career employees, she entered as a graduate after her firm deferred her and some of her colleagues for a year during the Great Recession, realizing it was cheaper than taking them on full-time or even laying them off.
She says it was the most useful year of study she ever had. Classmates would work in groups on a Harvard-style MBA, tickling fresh business cases every week and developing their expertise across the board, from accounting practices to operational best practices.
Her firm, initially at least, also saw the value. Bosses monitored both the graduate cohort that took the MBA and the other half that went straight into the workforce, finding that in the beginning those with an MBA seemed to outperform their peers in some areas.
However, her employers were also inadvertently fueling her ambitions beyond the law firm.
“I think it meant that I went into the law firm probably primed not to want to stay, which may not be quite what they intended it for,” she said.
“If I look back at my cohort, not very many people stayed.”
She didn’t immediately go into the startup world, but her links from her MBA helped her forge a path into the space.
She is now COO at a startup, gaining the opportunity following an introduction to the founder by a former classmate who moved into venture capital.
The network effects of an MBA perhaps inevitably give way to students moving on after a year of broadening their horizons.
“We spent every day in the classroom, nine to five for a year. You build quite a deep friendship with the people that you do that with. And you get graded together, so you have to learn how to get the best out of everybody, which from a social perspective is quite a deep bond that you have with them.”
