When you should invest in further education for yourself
In today's competitive job market, having a respected qualification can fast-track your career - and your wealth. One in three Australians holds a bachelor degree, but just one in 10 has postgraduate qualifications. And the extra years of study can give your pay packet a much-needed bump
Data from a 2018 KMPG report "Is Tertiary Education Worth It?" confirms that financial gain goes hand-in-hand with tertiary qualifications. Weekly pay for both male and female graduates is around $500 higher than for workers with vocational and Year 12 qualifications.
The upshot is that several years of living on two-minute noodles and being fifth in line for the shower in a student share house can pay off. And as you move through a career, postgraduate qualifications can help you stay ahead. The question is, which qualifications deliver the most bang for their buck? We look at what's up for grabs.
MBA can be worth the cost
The Master of Business Administration (MBA) has a rock star reputation and a price tag to match. The average cost is $60,000, though fees vary widely.
You could pay $89,500 with the Melbourne Business School (part of University of Melbourne) for an MBA ranked 26th internationally and number one in Australia, according to QS Global MBA Rankings.
At the other end of the scale, an online MBA through Central Queensland University may set you back less than $18,000.
It's a big outlay, but the returns can be equally super-sized. The annual Financial Times MBA rankings show MBA graduates pocket salary increases averaging 70% to 100% within three years of graduating.
As a guide, MBA students from Melbourne Business School can enjoy a salary uptick of 87% with an average salary of around $156,000. Alumni of the Australia Graduate School of Management can see their pay packet jump 82% to $157,000, and Macquarie University MBA grads earned 81% more post-study with a salary average of $168,000.
That's plenty of motivation to get back to the books but a salary increase is not set in stone. Nicole Gorton, director of the international recruitment firm Robert Half Australia, says very few employers expect job candidates to hold an MBA, and it doesn't guarantee a higher salary. However, she notes "an MBA can assist with securing more lucrative roles or accelerating a professional's career at a greater speed than their peers, which can lead to higher remuneration over time".
Evan Lucas, head of strategy at robo adviser InvestSMART, holds an MBA from Flinders University in South Australia. He completed his MBA immediately after graduating from University of Adelaide and describes it as a chalk-and-cheese experience.
"During my undergraduate degree [in health sciences] there was a large number of students - I felt like a number. The MBA provided a much more intimate experience. Classes were held in a boardroom-style setting where we debated issues, raised questions and shared ideas. The learning environment was much more aligned with what you experience in a workplace."
For Lucas this intimacy delivered profound benefits. He topped his class, and by taking advantage of networking opportunities secured an internship with ABN Amro in Amsterdam.
That said, Lucas says his MBA hasn't attracted the attention of recruitment agencies. "It's a box tick but you still have to explain why you're the best person for the job."
For Lucas, signing up for an MBA is not about the cost, it's about getting the best out of the experience: "An MBA can improve your skills but it's really about gaining a granular education."
He adds that an MBA won't suit everyone. "It's a very intimate learning experience. There were only 14 students in my class and some people found it difficult to talk. And if you hadn't done the required reading you were soon found out."
Lucas sees the MBA's smaller class sizes as a plus for in-person learning. "You're better to have face-to-face learning than investing in an online course. It's the ability to pick the lecturer's brains that you're paying for."
Oliver Wade, head of marketing and partnerships at small business lender OnDeck Australia, completed his MBA at Macquarie University.
He says he widely researched different business schools, selecting Macquarie based on the cost, location and course structure, which allowed him to work full-time and study part-time.
Wade was in his mid-30s when he enrolled in an MBA, and he believes having career experience was a good thing. "The MBA reintroduced me to concepts like balance sheets and business ratios, which I had touched on in my undergraduate degree. But having worked for a number of years, these things really meant something to me in my MBA courses - it deepened the MBA experience."
Wade admits that completing an MBA is no walk in the park. "It's absolutely full-on, especially if you're also working full-time. And it can be tougher if you're managing a family and a career."
An MBA is also expensive. "I paid around $4000 per subject, and while this can be paid via HECS, it's still a huge investment, and it certainly forces people to think 'should I really do this?' "
For Wade, the investment has paid off. "Returning to the classroom and listening to the experiences of CEOs and CFOs allowed me to learn from others and exchange ideas and experiences. I am more confident and feel much more empowered to be part of boardroom and executive discussions.
"The breadth of learning has been especially useful in the context of my current role at OnDeck, as a member of the leadership team, it lets me bring my experience and insights to the wider business."
Master's degree suits managers
An MBA may be a compelling option if you're aiming for a career in management. If that's not the case, other qualifications can be cheaper and better suited to your goals.
A master's degree can cost less than $20,000. Robert Half's Nicole Gorton says completing a master's can be a good choice if you're looking for niche roles as it can deliver the "nuanced skills required in a specialised position."
She adds that another educational route is pursuing specific industry certifications such as CPA for accountants or CFA to accelerate a finance career.
PhD popularity grows
A PhD used to be regarded as a ticket to work in academia. That's not the case these days. The number of PhDs completed annually has doubled in the past 20 years, up from less than 4000 a year in 2000 to about 10,000 today.
Part of the appeal is that tuition fees can be covered by the federal government's Research Training Program (RTP) fees offset, meaning a PhD can be a very cost-effective qualification.
Shane Oliver, chief economist at AMP Capital, believes completing a PhD helped him land his current role. "I considered an MBA," he says. "But I didn't want to be a manager, so it wasn't relevant for me."
While he admits that completing a PhD is challenging, he still refers back to his doctorate research. "The framework I used for analysis has helped me on numerous occasions."