Forbes’ 2015 Ranking Of U.S. Schools

Stanford University Graduate School of Business – Ethan Baron photo

STANFORD MBAS TRIPLED THEIR PRE-MBA TOTAL COMPENSATION TO $255,000 A YEAR

Out of the 65 two-year U.S. business schools ranked by Forbes this year, Stanford MBAs reported the highest average gains at $89,100. That may seem puny on the face of it, but those gains came after subtracting out the big investment required for an elite two-year MBA program. The results are far more impressive: Stanford’s Class of 2010 tripled their pre-MBA total compensation to $255,000 five years out of school, up from $221,000 reported two years ago by the Class of 2008. The total comp numbers include base salary, bonus and exercised stock options, which no doubt, pushed Stanford’s numbers higher. Forbes noted that Stanford grads made 5½ times the average U.S. per capita income last year of $46,129.

To put that into more of an MBA perspective, incoming Stanford MBAs were making only $3,000 a year more than those at Wharton. Five years after graduation, the West Coast grads were pulling down $48,000 a year more than Wharton MBAs whose annual compensation last year was $207,000.

What’s more, because Forbes asks MBA graduates directly for this information, it often includes data that schools decline to disclose. In Stanford’s case, students who entered the program in 2008 reported making the highest incoming salaries for any MBA program, $86,000, a sum that is a strong indicator of the quality of the students and the jobs they already had. The school’s top employers were Bain & Co., Boston Consulting Group, Google and McKinsey & Co.

SOME 37% OF STANFORD’S CLASS OF 2010 REPORTED HAVING STOCK OPTIONS WORTH $250,000 EACH

Even more impressive, 37% of Stanford’s Class of 2010 reported getting stock options with a median value of $250,000. Total compensation, excluding options, increased 16% annually on average since graduation for Stanford’s class of 2010. No school had a higher growth rate. In fact, the average for the top 25 U.S. schools is 9.3% a year.

For Yale’s School of Management, this latest gain comes on top of improved rankings from both Bloomberg Businessweek and The Financial Times. For the first time, Yale moved into the top ten on those other two lists. While Yale’s No. 11 status on this year’s Forbes list is big improvement over the school’s 18th place showing two years ago, it’s still far behind its highest ranking ever from the magazine. In both 2005 and 2003, Yale was ranked fifth by Forbes.

Besides Yale, Haas, and UT gains, other significant winners this year include the MBA programs at Notre Dame’s Mendoza School and Texas A&M’s Mays School. Both programs rose six places on the Forbes list to rank 23rd and 24th, respectively. Kellogg’s move up right behind Stanford and Harvard and well above Chicago-metro rival Booth is big news for the Evanston, Ill., school. NYU’s Stern School, in the midst of Wall Street’s collapse, gained five places to rank 18th, a big improvement over its 23rd place showing two years ago.

THE BIG WINNERS AND THE BIG LOSERS

There were even some bigger increases further down in the ranks. UC-Irvine’s Merage School of Business jumped 19 places to finish 42nd in the survey, though at that rank the five-year MBA gain was only $36,700–just 41% of Stanford’s No. 1 total. Merage MBAs reported making $139,000 five years after graduation–54.5% of what Stanford’s MBAs are pulling down. The University of Georgia’s Terry School, Arizona State University’s Carey School and the University of Alabama’s Manderson School all jumped 13 places each to rank 36th, 47th, and 49th, respectively.

And the losers? The largest Top 25 decline was suffered by the University of Michigan’s Ross School, which slid five spots to rank 15th from 10th in 2013. Duke University’s Fuqua School, riding high on its No. 1 Bloomberg Businessweek ranking from last year, fell four places to a rank of 12th this year from eighth two years ago. Georgetown University’s McDonough School of Business also plunged eight places–more than any Top 50 school–to a rank of 41st from 33rd in 2013.

Obviously, the ups and downs on this list are directly correlated with the returns reported by graduates. But for anyone who follows the rankings, it’s just an up-and-down roller coaster ride. Unlike most of the other rankings by U.S. News, Businessweek, The Financial Times, and The Economist, the Forbes methodology tends to produce fewer big swings from one ranking to the next. This year, for example, only five, or 10%, out of the Top 50 schools had double-digit increases or decreases.

RETURN-ON-INVESTMENT DECLINED OVERALL FOR THE CLASS OF 2010

There also was some sobering news in the data collected by Forbes, though it is in the context of the Class of 2010 which fell into the job market at a difficult time. The magazine noted that the average five-year gain at the Top 25 schools was $61,700, down from $68,000 two years ago and $118,000 in 2003. “An MBA is still a good proposition at an elite school, but the increasing cost is making it harder to justify the hefty investment in a post-financial crisis world,” concluded Forbes. “Students are leaving school with more and more debt. The average debt load for students reporting debt to Forbes from the class of 2010 was $80,000 compared to $65,000 two years earlier.”