How Much Does An MBA Really Cost?
Educators are fond of describing an MBA degree as an “investment.” But it doesn’t soothe the blow when the bill comes due. Of course, some investments fare better than others over time. If you’re cost conscious – and only looking at the short window – Europe is the place for you.
That was one finding released by The Financial Times from reviewing the data used to compile their 2016 Business School rankings. Based on their “Best Value” ranking, which is calculated by brewing together a mix of current alumni salaries, course lengths, fees, and opportunity costs, nine of the top ten “Best Value” programs are located in Europe.
FINANCIAL TIMES METRICS AUGMENT THE STRENGTH OF 1-YEAR PROGRAMS
You get what you pay, of course. And you won’t find any household names at the top of the list. ESMT, better known as Germany’s European School of Management and Technology, takes the honors here, with students boasting weighted salaries of $107,234 within three years of graduation, a 62% increase over their earnings before starting their MBA program. They were followed by the Lisbon MBA ($123,854 representing a 100% increase) and France’s Edhec ($106,761 representing a 66% increase).
Naturally, this ranking plays to European strengths. A one-year MBA cuts opportunity cost by a year while tacking on an additional year of earnings – a $150,000-$300,000 turnaround over the Financial Times’ three year window for the Class of 2012.
Opportunity costs especially benefit European MBAs, as they lose $34,000 less than North Americans ($123,000 vs. $89,000) while entering business school with roughly equal pre-MBA salaries ($71,000 vs. $69,000 for North Americans) according to the Financial Times. As a result, American schools couldn’t possibly hope to compete with such an inherent short-term disadvantage. The two-year investment takes more time to mature – but then compounds as the years pass.
That said, three of Europe’s biggest names – INSEAD, Cambridge Judge, and IMD rank among the ten best values. Most notably, INSEAD grads see a 96% salary increase over pre-graduation earnings after returning to the workforce. And their weighted salaries — $166,510 – are seventh best in the world, even topping Kellogg, Sloan, Booth, and the London Business School.
BRIGHAM YOUNG MBAs DOUBL EARNINGS THREE YEARS AFTER GRADUATON
So which school ranked as the best value on American soil? That would be, to on one’s surprise, Brigham Young Marriott, where students enjoy a 120% jump over pre-MBA enrollment wages to the tune of $123,665. Iowa Tippie (113% increase to $103,058) and Wisconsin (111% at $110,745) follow Marriott as best values.
And here’s a shocker – and this is said with sarcasm – some of the worst values rank as some of the most prestigious (and expensive) American MBA programs. At rock bottom is the University of Southern California Marshall, where students still experienced an 87% salary increase to $128,782. Those are two numbers that would grab attention in any prospectus! In fact, you could argue that ranking in the bottom 20 of the Financial Times’ “Best Value” programs is a badge of honor. It features such luminaries as #80 Yale (108% increase to $152,232), #82 Harvard (94% increase to $172,501), #83 Stanford (87% incrase to $185,939), #84 Booth (107% increase to $158,259), #89 Kellogg (93% increase to $162,923), #91 Tuck (95% increase to $156,652), #92 Columbia (99% increase to $169,866), #95 Wharton (84% increase to $177,877), and #96 MIT Sloan (90% increase to $159,909).
Overall, American programs represent seven of the ten highest-paying MBA programs after three years (and 16 of the top 25). Three years after graduation, the average MBA salary is $135,000, with Stanford and Canada’s McGill Desautels ($88,345) representing the top and bottom extremes.
NORTH AMERICANS LAND LION SHARE OF FINANCIAL AID
While the “Best Value” ranking may be relatively worthless – to measure full-time American MBA programs at least – the Financial Times’ data dump does provide some key tidbits on cost – even if it is based on nearly four-year old data solicited from the Class of 2012.
For one, the Financial Times found that the average paid tuition and fees (worldwide) came out to $78,000 – with Harvard, Stanford, Wharton, and Columbia topping out at $135,000. Overall, the average total cost of North American programs came in at $222,000 (at a $177,000-$264,000 range), while European programs averaged $166,000 (at a $130,000-$186,000) range.
One area where North American students held an advantage, however, is financial assistance such as scholarships and grants. Here, 61% received aid compared to 44% in Europe and 37% in Asia (with the overall average being 52%). North American MBA students also enjoyed higher assistance, with 56% receiving $37,000 on average – making them the envy of Europe, where students where only 33% pulled down $20,000. Overall, 45% of students globally received financial aid, with the average package being $32,000.
Click on the Financial Times link below to learn more.
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Source: Financial Times