MBAs With The Highest First-Year ROI

ROI

 

MBA Programs with the Highest First Year ROI

Looking to get rich quick after graduation? Don’t go to Wharton, Stanford or Kellogg…Go to HEC Paris  (or the University of Pittsburgh’s Katz Graduate School of Business), instead.

That’s the lesson from a new study produced by The Economist, which examined an MBA’s first-year return on investment. Using a formula that pitted average first-year salaries against tuition and lost earnings, The Economist pinpointed the programs that offered the best value early in graduates’ careers.

Not surprisingly, the top performers were moderately-priced international schools with shorter curriculums that drew students earning modest incomes. For example, French powerhouse HEC Paris topped the list, with a 66.5% ROI. Here, students gave up $49,788 in salary to participate in the program’s 16-month curriculum. Along with its reasonable $61,709 price tag, students graduated into positions paying $123,694, more than tripling their previous salary. If you factor out tuition, HEC Paris grads will make more in one year than they would’ve in three years if they hadn’t enrolled. Talk about an admissions pitch!

The United Kingdom’s Aston Business School finished second to HEC Paris, boasting a 64.5% ROI after one year. Rounding out the top five were the University of Hong Kong  (60.2%), Italy’s SDA Bocconi (55.5%), and the International University of Japan (52.4%).

So how did North American institutions fare? Not so well. Canada’s Schulich School of Business at York University actually finished sixth, with a 52% return. In the United States, however, the aforementioned University of Pittsburgh (Katz) ranked 19th, with a 41.9% return. Other American programs with respectable showings include: The University of Minnesota (Carlson) (33.6%), Notre Dame (Mendoza) (32.8%), Arizona State (Carey) (31.9%), Emory University (Goizueta) (27.4%), and Rice University (Jones) (27.0%).

And how do the American big shots rank on early ROI? Well, you can bet these numbers aren’t part of the admissions brochures:  Wharton (6.3%), Kellogg (9.8%), Columbia (13.0%), Stanford (13.5%), and Harvard (14.8%).

Why is that? For starters, American institutions, generally, offer two-year programs, which nearly double their price tags against other institutions, particularly in Europe.  What’s more, The Economist points out that American programs like Wharton tend to enroll executives who are already “well-paid.” As a result, they tend to land jobs just a few notches above the ones they left.” Despite this, The Economist notes that “Wharton alumni are more likely to top the greasy pole in the long run.”

Despite having the lowest first year ROI, Wharton leads the way in total cost, with tuition and fees of $129,656 and lost earnings of $200,040 (against post-MBA pay of $120,702). Stanford University, Northwestern (Kellogg), MIT (Sloan), and Columbia University also made the top five in the most expensive list.

Wharton also topped the list when it comes to the average compensation that students give up to enroll in their program ($200,040). Stanford and Kellogg students also made big sacrifices, foregoing $178,694 and $176,998, respectively.

Highest tuition? Again, Wharton leads the pack (notice a theme here?). Their program tuition and fees stand at $129,656 according to The Economist. Surprisingly, MIT (Sloan) and Rochester University (Simon) trail closely behind at $122,800 and $121,138, respectively.

When it comes to post-MBA salaries, Wharton only finishes eighth, with Australia’s Queensland Business School ($155,482) and Macquarie Graduate School of Management ($152,256) taking top honors. The third and fourth slots are filled by the Swiss: The University of St. Gallen ($135,675) and IMD ($131,566). Among American schools, the top average earners are Stanford ($129,652), Harvard ($124,085) and Wharton ($120,702).

To check out early ROI at the top American institutions, check on the table on the next page. To access full list, click on The Economist link below.

  • MBA_Learner

    The metric Return on Investment is favourably biased towards short investments. Which means if you spend less amount and get decent return your ROI will be higher than say getting return 4-5 years down the line. And yes it is a silly metric even if a lot of people use it. A better metric would be NPV for say 5-10 years.

  • Absolutely agree with devils0508 (I do think they probably wanted to get more readers with a sensational notion). Looking at long term performance is absolutely critical when judging an MBA investment (or any for that matter).

    Also I wonder how much more money Harvard, Wharton, etc give out in fellowships and scholarships compared to other “lower” tier schools?

  • Norbert Weiner

    Don’t forget Yale has a smaller class than most other schools and arguably admits more non-traditional candidates (non-profit, military, etc) than any other top 15 business school. So the numbers are skewed. Don’t judge a book by it’s cover.

  • Norbert Weiner

    Yale sends almost exactly the same % of students into consulting, finance, marketing, etc. as other top business schools. Get your facts right.

    This is in part due to the high caliber students, as evidenced by their high GMAT/GPA stats. Its rank is lower than it should be as Yale is punching above its weight.

  • 2cents

    I have a collection of 1981 pennies worth approximately 2 cents (no pun with the user name) for the copper they’re made of. 100% ROI. Why even go to business school?

    might be the additional $million+ median those schools (less NYU) bring historically over a 20 year period…

  • Hamm0

    Fair enough, and good point on the overlapping sets. It seems there is either some noise in the data that we’re not privy to, or a difference in how forgone salary is calculated (w/ bonus vs. w/o?)…either way, I think its pretty clear that ranking based on the “forgone salary” column might not be the best strategy.

  • 2cents

    That’s a fair point in a vacuum, but I’m operating under the impression that all of these schools recruit from a national or international and overlapping pool (or at least a substantial US sub-region). For example, I don’t imagine the average student at Yale comes from a lower cost of living place than the average student at Michigan (23K), Duke (11.5K) or UVA (9.5K). I also don’t think it was fair to single out Yale or Cornell (why not UCLA? or Booth?). I actually find Booth the most interesting out of all the income gaps – 40K difference compared to its Chicago brethren?

  • Hamm0

    Care to substantiate how Yale does “very poor” in recruiting?

  • devils0508

    The market has. Yale does very poor in recruiting relative to its peers, which is why its rank is so out of sync with it’s GMAT/GPA stats.

  • halo

    Sure there is a difference. Hult is only a one year program and Harvard is two. In that sense, it matters quite a bit.
    A year out of the program very few companies care about where you got your MBA. Then, it becomes all about performance. That’s all I am saying.

  • Hamm0

    If they are such questionable students, then why are big name companies paying them $105,000 on the back end of their MBA? Certainly the market would balance itself out if the case were that Cornell and Yale students were questionable because of their pre-MBA salary.

    For what its worth, $60k in a lot of non-NYC/SF cities gives a pretty good take home pay…

  • jimismash

    When selecting schools from a student’s standpoint, lost income shouldn’t be considered. If you’re going to go to a full time MBA program, you’re going to give up the income whether you end up at Hult or Harvard. devils508 is pointing out that the elite schools are penalized in the calculations used for this specific set of rankings because they accept students who have had much greater financial success pre-MBA than students attending non-prestige schools. Also, this analysis is extremely shortsighted; with lifetime ROI elite programs are much higher on the list.

  • halo

    Silly Metric? God forbid BUSINESS SCHOOLS would be measured by a metric that every single for-profit business lives and dies by.
    Pitt, Minn. ASU, Hult and Emory as best US ROI schools, Wharton, Harvard, Northwestern, Columbia and NYU as worst. It must really suck to overpay for prestige, doesn’t it?

  • 2cents

    To be fair, a host of schools are in the 55-65K range pre-mba (not just Yale and Cornell). With that said Yale does have a noticeable gap and Wharton a significant advantage on their respective peers. For anyone who doesn’t think salary pre-mba tracks career success – you’re pursuing or pursued the wrong degree? There clearly are other valuable contributions a person can make, but salary should be an indication of an individuals value to a for-profit organization (and disconnect between salary and performance is often one of the chief complaints in any organization). Some of the pool though as devils0508 points out might be younger, or they could weigh more towards developing countries or more rural students. There could be plenty of reasons, it’s just an interesting observation.

  • devils0508

    I’m not making my statement in a vacuum, I’m making it relative to it’s peers. Those two schools have considerably lower pre-mba salary than it’s peers. You’re being ridiculous if you think that has no impact on the quality of the student body. Yale in particular is taking people with high stats, but below-average work experience (in relative to its peers), which explains its post-mba recruiting troubles.

  • Dexter

    That’s just an absolute ridiculous statement. You apparently don’t understand salary mix, cost of living, and the many other factors that would go into this. I’m also surprised that anyone thinks that salary=success. Disgusting.

  • turnmassively

    very well thought out!

  • rich

    yale maybe, not cornell

  • DetailsDetails

    It depends on the mix right? Students coming straight from Peace Corps would have a $0 salary or whatever their stipend was. Students coming from TFA would be fairly low on the salary pole as well. Not to mention that despite having very good benefits the actual salaries for officers in the military are fairly low (40s?) so I can imagine this being the case.

    Not to mention that even for grads in finance or consulting their base is probably going to be in the 80s while their bonus is much larger so they don’t even offset the salary figure THAT much.

    All this to say that you may have a point, but it doesn’t necessarily follow from the statistic.

  • turnmassively

    “career” success with a whole 2 or 3 years of work experience, which may include government and/or non-profit work amongst other interesting and low pay sectors. Your kidding I hope and assume? Yale and Cornell students are universally excellent so let’s get real on this one, as i suspect most would agree…

  • devils0508

    It’s certainly a measure of their career success prior to MBA…

  • Damir

    Value vs. Growth investing, there are two ways to go about obtaining an MBA degree. Everyone has their own preference and neither is particularly right or wrong.

  • WompWomp

    Yeah, because I’ve heard a person’s salary is an entire measure of their worth! It’s clear that these kids had NOTHING else going for them because their salaries were so low.

  • devils0508

    The ROI figure is pretty useless, all it does is penalize schools for taking students with a high salary to start with. Pretty silly metric. If a potential student making $100k per year chooses to go to USC, they are going to get a personal ROI lower than if they chose Wharton (on average). Average starting Salary and/or Salary 5/10/20 years out in relation to tuition is a MUCH more useful metric.

  • devils0508

    Wow, Cornell and Yale are taking some really questionable students if the average students salary was only $60k per year. I made more than that my first year out of undergrad, and I didn’t even get that overly prestigious of a job back then.