The Most Lucrative Seven-Figure MBA Degrees

THE BIG QUESTION: HOW MUCH MORE DOES A B-SCHOOL GRAD MAKES OVER THE COURSE OF A CAREER?

The PayScale numbers certainly confirm that belief. At Harvard Business School, for example, the average age of an MBA at graduation is 29 years old. So calculating the 20-year payout for that person brings you to only 49–with at least 16 more years to go given a retirement age of 65. So it would not be unusual for a Harvard MBA to earn another $3.2 million during those years to bring total lifetime earnings after the MBA to something approaching $6.5 million. This is, moreover, a highly conservative number because it fails to include stock compensation which can very well equal or exceed salary and bonus. Given the higher percentage of Stanford MBAs who head into startups and tech companies that dangle both restricted equity and stock options before employees, it’s very possible that if those numbers were included in the analysis Stanford could be on top.

The big question, of course, is how much more a B-school grad makes over the course of a career because he or she graduated with an MBA from a top school? Bruner, for one, has no doubt about the degree’s career benefits. “Based on the evidence we see, the value of the MBA degree remains robust,” he says. “Employment rates for Darden graduates are high (94% for the Class of 2014) and the average starting salary is up 12% since 2010, well ahead of inflation.”

When the U.S. Census Bureau estimated lifetime earnings for people with various levels of education, it found that people with a master’s degree brought home $2.5 million from the age of 24 to the age of 64. So HBS alums are likely to nearly triple the expected lifetime earnings of the typical person with a master’s degree. In fact, even someone with an MBA from Texas A&M would be expected to make slightly more than a million over the typical person with a master’s degree.

HIGHLY RANKED MBAS EARN MUCH MORE THAN THE AVERAGE ALUMS OF MASTER’S PROGRAMS

The Census Bureau calculated that over an adult’s working life, high school graduates can expect, on average, to earn $1.2 million; those with a bachelor’s degree, $2.1 million; and people with a master’s degree, $2.5 million. Persons with doctoral degrees earn an average of $3.4 million during their working life, while those with professional degrees–mainly doctors and attorneys–do best at $4.4 million. What the Payscale research shows is that getting a highly ranked MBA can leave even the docs and lawyers in the dust. In fact, an MBA from at least 28 business schools–from Harvard to the University of Georgia’s Terry College of Business–will earn a person more than the average medical or law school graduate.

PayScale’s numbers differ from the Census Bureau estimates of lifetime earnings, but still show a big payoff for the MBA degree. The employees in its database who have only bachelor’s degrees are estimated to have earned a median $1,301,000 in the 20 years since graduation. All the MBAs earned $1,771,000–nearly half a million more than BAs. The median pay for those with an MBA from a Top 50 school was $2,266,000–another half a million more.

Industry choice and geography obviously plays a huge role in how much a person can make. An MBA who marches onto Wall Street and builds a Master of the Universe career will make a lot more money than the graduate who joins the leadership development program at P&G or 3M and rises to a senior leadership role. Yet it may be surprising that half of the top ten schools in compensation now send the largest single contingent of their MBAs into either the technology or consulting industries–and not financial services (see Where Top Schools Send Their MBAs).

Business schools that pour MBAs into jobs in New York, Boston, Washington, Los Angeles and Silicon Valley also are likely to do much better than the schools whose MBAs settle in the midwest or south where the cost-of-living is lower but so are the salaries.

‘NO OTHER EDUCATIONAL EXPERIENCE CAN MATCH THE TOTAL VALUE PROPOSITION OF A TWO-YEAR MBA’

But those factors govern the annual pay and salary numbers published by career development centers at every business school, too. As Kenneth Freeman, dean of Boston University’s School of Management, explains, “Rankings include starting salary among the metrics and many MBAs from higher ranked schools go into the higher paying finance and technology fields, with fewer taking lower paying roles in non-profits for example. Cost of living differences will impact and should benefit urban schools at least slightly, and the mix of international and domestic students likely also has an impact.”

Even accounting for those differences from school to school, Tuck’s Danos believes there are few, if any, other degrees with a better return-on-investment. “I know of no other educational experience that can match the total value proposition of a two-year full time MBA,” he maintains. “It is a transformative experience that enables an engineer to become a financier, a high school teacher to become a marketing executive, or an auditor to become a mergers and acquisition specialist for a top corporation. And the options available to graduates keep expanding globally and the monetary return remains strong. Our 2014 graduates have done exceptionally well in the marketplace, with 98% of them having job offers three months after graduation.”

One other interesting side note to the numbers. In a number of cases, graduates from some schools were post significantly higher gains over the course of their 20-year careers to overcome lower starting salaries and bonuses. At the University of Georgia, for example, the Class of 2013 averaged just $86,096 in salary and bonus, the lowest starting pay of any of the 48 schools for which PayScale provided data. Yet, the 20-year pay number for MBAs from Georgia was $2,166,000, 30th best. No non-U.S. schools were included in the analysis because PayScale did not have adequate data to come up with estimates for those schools.

(See following page for the PayScale numbers on median 20-year salary and bonus for MBAs by school)