‘Business School Is A Waste…If You Want To Blow $100K, Go To Vegas’

A Stern MBA wishes he spent his tuition money in Vegas instead of on an MBA

A Stern MBA wishes he spent his tuition money in Vegas instead of on an MBA

“Business school is a waste of time and money. If you want to blow $100K, go to Vegas.”

That’s what one disgruntled Class of 2008 MBA alum from New York University’s Stern School of Business told Forbes when surveyed for the magazine’s latest return-on-investment ranking of the best business schools.

If the Stern alum wasn’t feeling the love, you can’t blame him. Like many of his classmates, he graduated just months before the Great Recession crashed into what was a booming economy. Many newly minted MBAs who headed for Wall Street found themselves out of jobs once Lehman Brothers imploded. Some even had to return their signing bonuses to the firms that put them out on the street.

SLOWER PAYBACK PERIODS & LESS PAY FOR MANY MBAS

Ultimately, the economic contagion that spread through the world economy impacted just about everyone–not merely Wall Street professionals or MBA holders. The enduring grip of the Great Recession took its toll on the historical payback of the degree. MBAs in the Class of 2008 found that it took more time than ever for the degree to earn out: three to five years for the 70 U.S. schools ranked by Forbes.

Besides the slower payback periods, the magazine noted that five-year gains attributed to the MBA also have fallen over the past decade. The average 5-year gain for grads at the top 25 schools was $118,000 a decade ago, but only $68,000 this year. “Five-year out salaries averaged $159,000 this year, but that represents an annual gain of only 1.8% since 2003, which was slower than the rate of inflation,” the magazine said.

And in a fair number of cases, median salaries actually went south. The biggest declines in reported median salary occurred at IMD. Five years after graduating with their MBAs, the Class of 2008 claimed annual salaries of $211,000, a $35,000 drop from the $247,000 pay reported by IMD’s Class of 2006 two years ago. MBA grads at Harvard Business School and Cornell University’s Johnson Graduate School of Management both saw their salaries fall by $25,000. At HBS, the Class of 2008 reported median pay of $205,000, down from $230,000 for the Class of 2006. At Johnson, the Class of 2008 reported median pay of $155,000, down from $180,000.

YET SOME SCHOOLS BUCKED THE TREND

For whatever reason–perhaps because of industry choice, geography, or the sample of alumni responses gathered by Forbes–some schools reported increases in median salary for the Class of 2008 over the class that graduated two years earlier. The biggest gain–$17,000–was reported by London Business School’s class which posted median salary five years after graduation of $214,000, up from $197,000 for the Class of 2006. Stanford MBAs also fared well, seeing a $16,000 jump in median salaries to $221,000 from $205,000.

Out of the 34 business schools in the world where the Class of 2008 made the most money, roughly a third–11 schools–bucked the trend. They included Italy’s SDA Bocconi, Michigan’s Ross, Georgetown University’s McDonough School, and UT-Texas at Austin McCombs School of Business. And despite the setback for some, MBA alums at 59 of 70 ranked U.S. schools and 22 of 24 ranked international schools are all in six-figures.

And although it was a Stern MBA who wished he gambled his tuition in Vegas, Stern grads did okay. The members of the Class of 2008 actually reported median salaries of $165,000, up $5,000 from the $160,000 median reported by the Class of 2006. You can bet they’re glad they spent their money on a prestige MBA.

(See the following page for a comparison of median salaries between the Classes of 2008 and 2006)

About the Author...

John A. Byrne

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.