MBA vs. MS Programs

Universities have offered specialized master’s programs for business professionals for decades. The University of Texas created its accounting master’s program in 1948 and the University of North Carolina has offered an accounting master’s degree since 1985. Similarly, the University of Illinois has offered degrees in finance and accounting science since the early 1970s.

However, degrees in non-quantitative business fields also have a long history. For example, Stanford University has offered a master’s degree in leadership, and Notre Dame University has offered a master’s degree in nonprofit administration for more than half a century.

What is new is the explosive growth that business master’s degrees have experienced just within the past few years. “Among the adaptations forced upon business schools by 21st-century realities, the rise of specialty master’s programs is likely eclipsed in scale only by that of online education,” wrote Ethan Baron in Poets & Quants. Baron reports that 50 percent of the top 25 business schools introduced new specialized master’s programs between 2013 and 2015, saying that the new offerings have been “popping up across the country like mushrooms, and attracting huge numbers of applicants.”

Fortune pointed out that most schools offer part-time and specialized programs in accounting and finance, and students are increasingly choosing them over a traditional MBA. Furthermore, the Graduate Management Admissions Council (GMAC) reports that almost half of all prospective business graduate students consider a specialized master’s degree as an alternative to an MBA.

But why has this explosion in specialized master’s programs suddenly developed? The Wall Street Journal offers this analysis:

Students saddled with heftier college debt have become more reluctant to leave their jobs for two years to pursue one of the nation’s most expensive degrees, school administrators say. That has spurred schools to offer a flurry of specialized master’s programs that take less time to complete or offer greater flexibility for working professionals.

“Ten years ago the M.B.A. was the only option you had, but the market has shifted, and business schools, like any company, have to shift with it to meet the demand of our customers,” said J.P. Matychak, an associate dean at Boston University’s Questrom School of Business.

This guide explores the similarities and differences between specialized masters and MBA degree programs to help applicants decide which type of graduate education best fits their needs.

Specialized Master’s Degrees as “Pre-Experience” Degrees

Typical business master’s degree applicants differ from typical MBA degree candidates. The main differentiator is typically work experience. Most full-time MBA students have at least three to four years of work experience, while many executive MBA students have ten years experience or more. This is a radically different profile from the typical business master’s degree candidate, who according to GMAC often tends to be about 24 years old and usually “pre-experience.” Most business schools target their specialized master’s programs towards recent university graduates who have limited professional experience.

Because these business programs are not geared toward applicants with experience, they almost exclusively require the Graduate Management Admission Test (GMAT) or the Graduate Record Exam (GRE). Technical degrees in quantitative fields like accounting, finance, supply chain management or data analytics also generally require undergraduate prerequisites. The dean of Vanderbilt University’s Owen Graduate School of Management, Eric Johnson, told Poets & Quants “We don’t see these programs as sort of ‘MBA-lite.’ They really are much closer to undergraduate programs on steroids.”

Career Benefits of Specialized Master’s Degrees

Specialized master’s degrees can give graduates substantial advantages over those with only an undergraduate degree. They can help place graduates in better positions with higher pay and connect them with a school’s alumni network. Business master’s programs can also provide access to career services—such as connections, interviews, and job opportunities.

Popularity of Specialized Degrees

Which disciplines are the most popular among these business master’s degree programs? Based on GMAC data, the most popular non-MBA programs are in finance, data analytics, accounting, international management, marketing, management, and project management. Information technology, entrepreneurship, supply chain management, human resources, engineering management, taxation, health administration, and real estate round out GMAC’s list.

Similarly, which disciplines are most common? Among the top 100 business schools in the Poets & Quants study, most are in accounting (including specialties in taxation). Finance comes next, which includes specialties in financial analysis, risk management, and financial engineering. Business analytics is the third most popular program, followed by marketing, supply chain management, and less frequent specialties like healthcare, biotechnology, and human resources.

Specialized Degrees Can Enhance MBA Program Applications

Certain academic degrees are considered to be terminal degrees. These generally mark the end of most graduates’ academic career because the degree is the highest level of academic achievement one can attain in these fields. Examples include medical doctoral degrees (MD), Juris Doctor (JD) degrees in law, and doctorates of philosophy (PhD).

MBAs are generally considered terminal degrees as well, but specialized business master’s degrees are not. For this reason, savvy applicants who might not have the work experience or academic track record to gain admission at a top MBA program can use specialized master’s degrees to enhance their attractiveness to better business schools. “For many, their business master’s degree is a stepping stone to continued professional development that may include an MBA down the road, in either a full-time or part-time format,” according to GMAC President Sangeet Chowfla.

Differences in Outcomes: Skills and Capabilities

These talent pools also distinguish themselves from each other in other ways. GMAC Research Director Gregg Schoenfeld explained that the students in specialized master’s programs have very different objectives for the skills they hope to attain that differ from the skills MBA students seek to acquire:

So we see for the quantitative master’s, it’s really the technical skills they’re seeking from these non-MBA programs—whereas, from the MBA programs, they’re looking for those more general leadership, managerial skills. They’re utilizing the business master’s degree to hone their technical skills to get a finance, accounting, or data analytics position, and then those that are coming back into the pool for a second master’s are looking more to the MBA degree.

Differences in Outcomes: Compensation

Recent data on compensation is hard to come by. One report that appeared in Fortune relying on data from the University of California at Los Angeles and the University of Texas in late 2015 suggests that non-MBA salaries ranked above those for undergraduates, but ranged anywhere from about $25,000 to $40,000 below the offers extended to those business schools’ MBA graduates.

For example, the UCLA data for the financial engineering specialized master’s program reported average base starting salaries of $85,000 for the class of 2014, compared with salaries between $95,000 to $100,000 from 2010 to 2013. During this time, their MBA graduates obtained average starting salary offers of $110,000.

The University of Texas data focuses on the school’s master’s program in business analytics. That program reported a starting salary for 2013 and 2014 graduates without any business experience before gaining admission of only $75,000. However, Texas also reported a median salary for all students in both classes that amounted to $89,000. By contrast, their 2014 MBA graduates obtained offers of $107,000.

In sum, MBAs and other specialized master’s offer varying benefits. For candidates seeking a more targeted education who may have less work experience, a specialized master’s degree may be preferred; if a candidate wants a generalist degree in business, which is applicable across a range of industries, and the highest earning potential, an MBA may be the best route.