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B-Schools With The Fastest Return on Debt

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There are two ways to make a big ticket purchase. You can target lowest price, where you emphasize basic functionality and the here-and-now. Or, you can pay for quality, certain that longevity will ultimately yield the bigger return over time. The same is true of business school. Enroll in a T14 program and you’re almost certain to come away with six-figure debt. Then again, your odds of snagging that posh job that offsets your debt increases exponentially.

In other words, business school debt introduces you to the cornerstone concept of any core finance class: risk and return. If you’re risk averse, you’ll enjoy your fastest return at Brigham Young University — at least initially. If you take the long view, there’s no better investment than Stanford.

Those were two key findings in SoFi’s “No BS 2017 MBA Rankings,” which focuses on return on education. Here, SoFi, short for Social Finance and a leader in student loan refinancing, jumps into the salary-to-debt fray, by mining the 60,000 applications it received from January 2014 to September 2016. The data is based exclusively on MBAs with an average of three years of work experience since graduation.

STANFORD OFFERS BOTH HIGH PAY AND LOW DEBT

SoFi CEO Mike Cagney, right, and company CFO/COO Nino Fanlo

SoFi CEO Mike Cagney, right, and company CFO/COO Nino Fanlo

According to SoFi’s data, the average salary for business school graduates is $86,919, which includes MBA programs ranging from Harvard Business School to Virginia Tech to Strayer University. The average debt for these MBAs was $70,614, with the average salary-to-debt ratio being 1.2.

For students hoping to double their pay, BYU’s Marriott School of Management is the place to be. Graduates grossed $109,383 per year early on, more than twice the debt they incurred ($54,704). The reason? Start with low tuition. Last year, LDS members paid just $11,970 a year in tuition. For non-members, the sticker price came to a modest $23,940. Compared to other religiously-affiliated MBA programs like Georgetown ($53,850) or Notre Dame ($48,530), Marriott is a steal. The school also estimates additional costs, such as cost of living and books to come to $20,280, roughly the same as other programs.

Finishing second in salary-to-debt ratio was Villanova University. At this program, graduates averaged $120,241 in pay — nearly $11,000 more than Marriott grads. They also racked up nearly $7,000 more in debt. However, Here’s the twist: Villanova doesn’t offer a full-time MBA program. Instead, it caters to the part-time, executive, and online populations. This exposes a flaw in SoFi’s methodology: it doesn’t separate full-time MBAs from working professionals, who enjoy the advantage of likely remaining in their current firms and receiving finance assistance from them for school.

That isn’t an issue for Stanford, which only offers a full-time MBA degree (along with non-degree executive education programs). Turns out, Stanford rounds out the top three in terms of the best salary-to-debt ratio.  Stanford MBAs earned paychecks of $160,000 according to SoFi, the third highest pay among all MBA programs. At the same time, grads averaged just $86,942 in debt, second-lowest to USC (Marshall) among schools ranked in the top 20 by SoFi. This news should come as little surprise. In a 2014 survey by Poets&Quants, 52% of Stanford MBAs were on scholarship, which averaged $35,830 (highest among the top 25 MBA programs) and covered 31% of gross tuition.

Go to next pay to see Pay vs. Debt data for the Top 20 MBA programs.