2011 Forbes Ranking of the Best B-Schools

Harvard Business School across the Charles River

Harvard Business School across the Charles River

Harvard Business School nudged long-time rival Stanford aside for first place in Forbes magazine’s seventh biennial ranking of the best business schools. The results—published today (Aug. 3)—are based solely on the degree’s return on investment five years after graduation. Stanford grads lost ground in the pay stakes, according to the survey. Five years out, pay was $205,000, down $20,000 from the Forbes survey two years ago.

In the new 2011 ranking, Harvard jumped two places to first, while Stanford slipped to second. Chicago was third, Wharton fourth, and Columbia Business School fifth, knocking Dartmouth’s Tuck School of Business, which was ranked second two years ago, from the top five. The biggest winner among the top ten? MIT Sloan School, which moved up four notches from two years ago from 14th, to place tenth.

Forbes said graduates in Harvard’s Class of 2006 saw their median salaries soar from $79,000 before school to $230,000 in 2010, which was the highest among all U.S. business schools. The $230,000 number was $15,000 more than HBS grads reported two years ago to Forbes. The median gain for a Harvard MBA over the five-year period was $108,000, while HBS grads achieved break even on their investment in the degree at 3.6 years. For all top ten schools, the break even rate was between 3.5 years and 3.7 years, with Stanford, Chicago, Northwestern and Virginia at 3.5 and Wharton and MIT at 3.7 years.

The highest ranked school with the fastest break even mark? No. 11 Yale’s School of Management, with a 3.3-year break even point largely due to the fact that incoming students had pre-MBA salaries of only $57,000–$22,000 less than the pre-MBA salaries of a typical Harvard MBA student.

Another surprise in the survey was the reported incoming salaries of Kellogg students: $68,000, some $4,000 less than Chicago Booth MBA candidates. Kellogg’s incoming salary number was the second lowest of any top ten school. Only the pre-MBA salaries for Cornell Johnson School were lower at $65,000.

To gather its compensation data, the magazine surveyed 16,000 alumni at more than 100 schools. Roughly 30% of the surveyed graduates responded. Forbes then compared their earnings over the first five years out of business school to the opportunity costs—two years of forgone compensation, tuition and required fees–of getting the MBA degree. The schools with the highest returns by dollars ranked highest on the list.

The downside to ranking schools by return is that the numbers don’t fully capture the true value of a graduate business education over one’s career. Moreover, because these estimates are based on survey responses from alumni, it’s possible that small sample sizes at some schools could lead to distortions. It’s also likely that alums who are either unemployed or underemployed may be less apt to respond to the Forbes’ survey.

In many cases as well, Forbes is ranking schools on differences in reported pay that are so small as to be statistically meaningless. HBS beat out Stanford by an incredibly slim $2,000 margin: a gain of $118,000 vs. $116,000. On a break even basis, Stanford grads actually did slightly better: 3.5 years to break even vs. 3.6 years for HBS alums.

Many schools have been aggressively discounting the price of the degree by increasing scholarships and grants to students. Forbes said financial aid to MBAs has risen by more than 50% in the past six years. For the 74 U.S. schools ranked by Forbes, the typical business school handed out an average of $26,000 to 55% of the students in the graduating class of 2010. Harvard led the way, increasing aid by 78% to $49,000 per student in the past six years, according to Forbes.

Forbes said it adjusted the median five-year MBA gain for cost of living expenses and discounted earnings gains using a rate tied to money market yields. The magazine also discounted tuition to account for students who pay in-state rates and for the non-repayable financial aid that schools dole out. Forbes did not deduct taxes from the earnings gains, and only business schools with two-year full-time M.B.A. programs were included in its U.S. ranking.

These adjustments make for some unusual results. Incoming students at No. 22 Emory’s Goizueta School of Business and No. 23 Carnegie Mellon’s Tepper School, for example, have the same $55,000 pre-MBA salaries. Five years after graduation, however, Tepper MBAs earned far more: $147,000 vs. $128,000 for Emory grads. Despite the significant advantage for Tepper MBAs, their time to break even was longer: 3.8 years versus 3.5 years for Emory grads. Why? Forbes doesn’t say, but based on its explanation of the methodology, it appears that Emory is offering more financial aid than Carnegie Mellon to discount the cost of tuition.

(Table on Top 25 Schools in the 2011 Forbes MBA Ranking on next page)

  • Interested

    Ok – thx for the prompt reply!

  • JohnAByrne

    Forbes tells me the release date would be early September this year, though for editorial reasons, the editors may move it to October. So it looks like the new ranking will come out a month, possibly two, later than the last one.

  • Interested

    Hello John – Any news on when the 2013 Forbes MBA rankings will be released? Thx!

  • Rohit Behera

    Need Some Guidance!!!

  • Cutedic


  • Mario

    Hi John,

    I was wondering if you could comment on the THE (Times Higher Education) report that came out just a little while ago. While it isn’t specifically for B-schools, it is interesting to note the similarity in the majority of rankings based on the reputation of the B-school within the university. Since the ranking is based primarily on reputation and global involvement, it seems to correlate well with the B-school standing.


  • Avanti,

    You hit on a few of the major problems with rankings. All of them are flawed because it’s impossible to control for all the variables you mention. So it’s extremely important to look at the methodologies of these surveys and then discount accordingly.


  • Avani

    Clearly forbes believes that ranking schools based on salary is appropriate, but is that what really makes a school great?
    How does this analysis account for:
    A) International studens some of who go back to their countries that are either emerging or under-developed. Their salaries would be less in USD, but given cost of living at these countries might be pretty good.
    B) Students joining non-profit, social or public services. Again their salaries would not be like bankers or consultants. But some of these students could become future leaders capable of changing the world.

    Quality of students and leadership potential should be the factor in B-school rankings and not how much money they make.

  • MJ

    Sampling error much???

    I am a member fo the Class of 2006 of one of these schools. I can say with certainty that there is sampling error. For instance, I was asked to fill out the survey, but didn’t get around to it. Did that push the median for my class higher or lower? Hmmm….

  • Arthur,

    I have to attribute that to sampling error. Neither survey reports a response rate for each school so you have no idea how many alums from a particular school even responded. Some of these numbers could be based on little more than a a few dozen responses. So that could certainly account for the differences. It’s fascinating data but all has to be taken with a few grains of salt. Also, these numbers would be directly impacted by what industries grads enter and by compensation that is not salary. Stanford’s grads in particular, I would think, would likely have far greater access to equity compensation than many MBAs given the propensity of many tech firms and most startups to put greater emphasis on stock rather than cash. So these numbers would miss all that.

  • Arthur Featherstonehaugh Dullsworthy

    You know, there are methodological similarities between this ranking and the FT’s ranking,, although FT also measures crap things like percentage of women and foreigners on the faculty. One difference I notice is that FT’s and Forbes’s numbers for pre-MBA salary are different. In FT’s ranking, the Harvard and Stanford pre-MBA salaries are significantly higher than Wharton’s and Stanford’s post-MBA significantly leads all the rest.

    John, could you figure out why that is? More sampling error and the lies that people tell in providing anonymous responses to surveys?

  • Forbes is Quack

    All you have to do is look at this year’s ranking to last year’s ranking. The large swings makes clear that this ranking is worthless. Schools don’t get that much better or worse in a year – this is a terrible ranking.

  • IgorV,

    Sure. Because financial aid in the form of scholarships, fellowships and subsidized loans are a big part of the business school picture, most schools actively discount their tuition costs by offering financial aid. So there is one price for people who are wealthy enough to pay full freight–the sticker price advertised as tuition and fees–and then there is the price of people who need financial help, ie. the cost of tuition minus the financial aid provided by the school.

  • IgorV.

    Hi John,

    Thanks your timely and astute analysis of the Forbes ranking. Can you please clarify the term ‘discounting the price’. You refer to B-Schools offering scholarships and grants. This is clear as lucky students with scholaships don’t pay the tuition sticker price. But then you mentioned financial aid (=scholarships and grants) or does aid also include student loans offered, but to be repaid to provider? What is the difference btween non-repayable financial aid and scholarships.

  • I agree. These are encouraging stats. Forbes will publish this data for the larger European schools in particular soon. We will analyze those numbers as well.

  • Greg

    Hi guys …
    Would be outstanding to get the same data points for European MBAs such as INSEAD, LBS, IMD, IE etc…
    As a future INSEAD student I will forgo no more than 10 months of income and incurr about 65K$ fees total …

    Overall, I find these figures very encouraging if we consider the troubled economic period over which this breakeven data was measured.


  • Quant

    How about spending 88K @ Thunderbird for an exec MBA-a 12K scholarship? The quant part of me is having doubts…

  • Thanks Mr. Non-Profit!

  • Spearhead,

    Hard to know. It could be a decline given the school’s geographic location and the recession. Or it could be a statistical quirk due to sampling error on the part of Forbes. You just can’t put too much faith in any of these rankings.

  • Spearhead

    What happened to Michigan??!!!!

  • Hi John, thanks for posting the article with your analysis quickly after Forbes released it! I wonder whether you think this ranking will have much influence on employers just like the rankings by Business week or U.S. News, since this one takes ROI more than anything else (academics, employer’s satisfaction, etc). I personally want to go to BYU because of the low cost and possible full scholarship but wonder if employers will take all the rankings into consideration. Thanks!

  • Mr. Non-Profit

    Hey John, this is a really interesting way to rank business schools, one that I’m sure will appeal to quant-finance-what’s-the-bottom-line types who want a quick way to know how much bang they are getting for their buck.

    Your brief note on b-schools aggressively discounting the price of the MBA made me curious. I also remember an article which talked about the MBA debt burden and how Wharton grade usually emerge from B-school with the highest levels of debt. I’m wondering if you could do an article comparing school policies on need-based financial aid, merit based aid and loan-forgiveness and which schools really make it possible for their graduates to enter non-profit/public service/social entrepreneurship.

    Thanks for running such a great site. I’m probably your most avid reader, always waiting to see what your next exciting article will be!