Kellogg | Mr. Big Beer
GMAT Waived, GPA 4.0
Harvard | Ms. Indian Quant
GMAT 750, GPA 7.54/10
Darden | Mr. Corporate Dev
GMAT Waived, GPA 3.8
Duke Fuqua | Mr. CPA To Finance
GMAT 700, GPA 3.5
Wharton | Mr. Big 4
GMAT 770, GPA 8/10
Wharton | Ms. General Motors
GRE 330, GPA 3.2
Stanford GSB | Mr. Venture Lawyer
GRE 330, GPA 3.4
Wharton | Ms. Project Mananger
GMAT 770, GPA 3.86
Stanford GSB | Ms. Digital Health
GMAT 720, GPA 3.48
Yale | Mr. Philanthropy Chair
GMAT Awaiting Scores (expect 700-720), GPA 3.3
Stanford GSB | Mr. MBA Class of 2023
GMAT 725, GPA 3.5
Foster School of Business | Mr. Construction Engineer
GMAT 710, GPA 2.77
Ross | Mr. Stockbroker
GMAT 700, GPA 3.1
Harvard | Mr. Harvard Hopeful
GMAT 740, GPA 3.8
Stanford GSB | Mr. LGBTQ
GMAT 740, GPA 3.58
Kellogg | Mr. Risky Business
GMAT 780, GPA 3.5
Kellogg | Mr. CPA To MBA
GMAT Waived, GPA 3.2
UCLA Anderson | Mr. Southern California
GMAT 710, GPA 3.58
Harvard | Ms. World Explorer
GMAT 710 (aiming for 750), GPA 4.33/5
Ross | Mr. Brazilian Sales Guy
GRE 326, GPA 77/100 (USA Avg. 3.0)
Kellogg | Ms. MBA For Social Impact
GMAT 720, GPA 3.9
London Business School | Mr. Consulting To IB
GMAT 700, GPA 2.4
Berkeley Haas | Mx. CPG Marketer
GMAT 750, GPA 3.95
NYU Stern | Mr. Washed-Up Athlete
GRE 325, GPA 3.4
Kellogg | Mr. White Finance
GMAT Not Taken, GPA 3.97
MIT Sloan | Mr. NFL Team Analyst
GMAT 720, GPA 3.8
Stanford GSB | Ms. Russland Native
GMAT 700, GPA 3.5

Can An MBA Add $1 Million To Your Income? A New Study Says So

The peak ROI on an MBA after three years was reached in 1993 when graduates recouped their entire investment within three years Source: GMAC 2016 Alumni Perspectives Survey

The peak ROI on an MBA after three years was reached in 1993 when graduates recouped their entire investment within three years Source: GMAC 2016 Alumni Perspectives Survey

As the chart above shows, ROI is often dependent on the time period in which an individual graduates because outcomes vary by graduation year. Over a 20-year period between 1991 and 2012, the chart shows that three-year ROI peaked in 1998 and has been all over the place in the past two decades. Even so, it was only zero in the years between 1991 and 1993. In the last year charted, 2012, three-year ROI was 40%.

GMAC found predictably that the 20-year trend in return on investment for a full-time two-year MBA program is showing some decline, due in part to rising investment costs and slower growth in post-degree starting salaries. GMAC tracked the numbers based on a three-year rolling median adjusted for inflation in 2012 dollars), with data from class years 1991 to 2012 (see below). The gap between the cost of an MBA and starting salaries was largest in 2006, but is beginning to narrow somewhat, though it is far from what it was back in 1993.

Total Investment Costs Are Growing At Faster Rates Than Starting Salaries

Source: GMAC 2016 Alumni Perspectives Survey

Source: GMAC 2016 Alumni Perspectives Survey

And then, there is that bottom line outcome of what a graduate business degree is actually worth over time (see chart below). Over 20 years after graduation, business school alumni earn a median cumulative base salary of $2.5 million. This is a half million more in cumulative base salary than they would earn if they did not go to graduate business school and consistently received 5% annual salary increases, and nearly $1 million more than if they did not go to business school and had consistently received today’s more typical 3% annual salary increases over 20 years.

The solid line shows the median cumulative base salary of alumni, which is offset by the opportunity and educational costs during the enrolled period on the chart. Each of the dotted lines show the hypothetical median cumulative base salary of alumni if they did not attend business school, continued working, and received either 3% or 5% salary increases annually. As shown, during the two-year period of school enrollment, alumni cumulative base salary decreases due to lost wages and educational costs, while the hypothetical “no degree” lines show continued growth. After seven years following graduation, business school alumni earn more than both of the no-business degree candidates experiencing either 3% or 5% annual salary increases.

Business School Alumni Earn Cumulative Salaries Of $2.5 Million Over 20 Years After Graduation

Median cumulative base salary (excluding bonuses) accounting for opportunity and investment costs, and hypothetical growth rates of 3% and 5% based on pre-degree earnings, all program types, class years 1986 to 2012 Source: GMAC 2016 Alumni Perspective Survey

Median cumulative base salary (excluding bonuses) accounting for opportunity and investment costs, and hypothetical growth rates of 3% and 5% based on pre-degree earnings, all program types, class years 1986 to 2012 Source: GMAC 2016 Alumni Perspective Survey

About The Author

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.