Ranking Top MBA Programs By ‘Credit Ratings’: Is Your School A+?



Marriott is ranked 31st by Poets&Quants, with its best showing in the Forbes return-on-investment ranking where is places 17th, while it’s weakest rank is from The Financial Times which put the school 46th among U.S. schools and 93rd globally in 2014. Marriott lost its FT ranking this year, falling off the top 100. T

he University of Wisconsin’s School of Business, though rated A, had an even better debt coverage ratio than BYU: An impressive 34.68, highest of any MBA program measured. Pollock explained that its lower rating occurred because the school’s employment prospects “are not commensurate with an A+ rating.” Some 88.7% of Wisconsin’s MBAs were employed three months after graduation, the lowest percent employed after three months of all the programs ranked at least A. BYU’s percent employed three months after graduation is 95.40%, which is one of the highest of any MBA program in the nation.

“I’m not expecting that if someone gets into Brigham Young and Harvard, he is going to walk away from Harvard Business School,” concedes Shinewald. “But there is a massive debt problem in the U.S. So focusing attention on it is important and helpful.”

Adds Pollock, “I think it should have an effect on people. It depends on your ultimate aspirations. If you want to work for Goldman Sachs, you know which schools you want to go to. But there are a lot of people who want to work in an industry where you aren’t working 12 hours a day, seven days a week. You just might want to choose BYU over Harvard. If you are taking a huge debt load at Harvard or Stanford, you might want to think twice about it.”


Then, there are the schools, including Wharton, Columbia, and Chicago Booth, that decline to provide student debt numbers, presumably because those figures cast those MBA programs in a less positive light. “You might ask why a school doesn’t disclose stuff? I don’t know why. But when I see a company not disclosing something, sometimes the reason is innocuous and sometimes it’s because the number reflects poorly on the company,” believes Pollock, whose background is in the bond rating business. “They don’t publish it and they should.”

Poets&Quants asked M7 Financial to run the Wharton and Columbia analysis, using P&Q estimates for average debt of $117,200 and $114,800, respectively. Pollock says that both MBA programs warranted an A- with the weakest graduate debt service coverage ratios among all the A- programs at 7.11. A Wharton MBA’s annual loan payment of $16,482, while a CBS graduate would have an annual loan payment of $16,145.

Of course, all the ratings are based on averages. A student getting a partial or full-ride scholarship would in all likelihood face debt payments below the averages. A student paying full freight, on the other hand, would likely have debt payments significantly above the averages. So in some sense, a credit rating for both of these extremes would differ from the actual credit rating M7 Financial is assigning to a school’s MBA program.


The other obvious drawback is that the rating is based on immediate starting salary and bonus–and not the long-term impact of the degree on one’s career nor the value of the actual education itself or value of the alumni network on job prospects and opportunities. As such, it doesn’t measure the lifelong impact an elite and prestigious educational brand can have on a working professional.

With the Great Recession in the not so distant past, it’s hard not to forget how the top rating agencies completely blew it by rating mortgage-backed securities so highly when the debt was as safe as a junk bond.

Nonetheless, it’s an intriguing–if flawed–way to look at the top business schools. Will a credit rating ranking ever supersede the most often consulted lists? That’s unlikely. After all, at the end of the day, you get what you pay for.

Source: M7 Financial

Source: M7 Financial

(See following page for the full rating results)

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