Getting a Master of Business Administration can do wonders for your career, and depending on which industry you work in, you could experience a massive increase in your annual salary.
But getting through an MBA program may require you to take on tens of thousands of dollars in student loan debt, making many wonder whether the average MBA salary is enough to pay it back.
If you recently graduated with an MBA or you’re thinking about going back to school, here’s what you need to know about salaries and repaying student debt.
Average MBA salary by industry
The average MBA salary for all graduates is $116,248, according to data from RelishCareers.
That’s a significant jump from an average pre-MBA salary of $79,505.
How much you can expect from your graduate degree, however, can depend on your career path and chosen industry. Here’s a breakdown of the data for the top 17 industries.
|Industry||Average pre-MBA salary||Average MBA salary||Percent increase|
|Food, beverage, and tobacco||$63,070||$104,319||65%|
|Technology, internet, and ecommerce||$85,134||$121,897||43%|
|Accounting and audit||$67,953||$88,947||31%|
|Restaurants, hotels, tourism, and hospitality||$68,521||$83,503||22%|
|Government, military, and politics||$77,646||$90,631||17%|
How to save on your MBA student loan debt
Regardless of what your post-MBA salary is and your graduate student loan balance, it’s important to be intentional about how you pay off your debt.
It’s also a good idea to look for opportunities to save money, which is possible if you consolidate MBA student loans with a private lender — this is also typically called an MBA student loan refinance.
Why you should refinance MBA loans
Refinancing student loans involves the process of consolidating your MBA student loans with a new private lender. You can do this with federal loans, private loans, or both. If you were to refinance MBA loans, here are some benefits you could enjoy.
- Lower interest rates: If you have a strong credit history and a solid income — which is typical for the average MBA salary — you may be able to qualify for a lower interest rate than what you’re paying right now. Even a small reduction could result in big interest savings over the course of several years. It could also reduce your monthly payment.
- Payment flexibility: Depending on your goals for paying off your student loan debt, you could get some extra flexibility with a shorter or longer repayment period. Private lenders typically offer terms ranging from five to 20 years. So if you want to pay off your debt faster, you could opt for a shorter term. In contrast, if you want a lower monthly payment, you could choose a longer term. Either way, make sure you understand what your new payment would be and how much interest you might save or pay over time, compared to what your current situation is.
- Lender choice: When you first take out student loans, you don’t always get to choose your lender or servicer, especially if you borrowed federal loans. When you refinance MBA loans, however, you’ll get to choose which lender you want to work with based on interest rates, repayment terms, customer satisfaction, and other features.
If you’re considering refinancing your MBA loans, use Purefy’s Compare Rates tool to easily shop around and view rate quotes from multiple lenders in one place.
What are the downsides of refinancing MBA loans?
While refinancing your MBA loans can have some significant upsides, there are also some potential pitfalls to consider before making a decision.
- No more federal benefits: If you took out graduate loans through the U.S. Department of Education, refinancing your loans with a private lender will cause you to lose all the benefits the federal government provides. That includes access to federal loan forgiveness programs, income-driven repayment terms, and generous forbearance and deferment options. If, however, you don’t expect you’ll ever need these perks, refinancing may not be an issue.
- There’s no guarantee: With the average MBA salary, it’s unlikely you’ll have a hard time qualifying to refinance MBA loans based on your income. However, if you don’t have a strong credit history or you have a lot of other debt, it can be challenging to qualify. Even if you do, there’s no guarantee you’ll qualify for a lower rate than what you have now. You can apply with a creditworthy cosigner, but even that doesn’t guarantee you’ll get the rate offers you want.
As you think about whether refinancing your MBA loans is the right move, make sure you consider both the advantages and disadvantages and how they might affect you and your financial situation.
The bottom line
Graduating with an MBA can do wonders for your career and your income. But it can also put you deep in debt with student loans. As you think about all the different ways you can tackle your student loan debt, consider refinancing them as an option.
Student loan refinancing has some lofty eligibility requirements, and moving federal loans to a private lender could cause you to lose some benefits. But depending on your situation, it could provide large amounts of interest savings. It can also give you the flexibility you need with your payments to achieve your student loan pay off goals.
As with any financial decision, it’s crucial that you take the time to consider all of your options to make sure you choose the right one. Shop around and compare rates and other features, and also consider whether you might be better off keeping your loans where they are right now.
Whatever you choose, do the work to determine the best path forward for you.