The Best Paid MBA Alumni

Berkeley's Haas School of Business

Berkeley’s Haas School of Business

EARLY CAREER PAY EXPOSES FLAWS IN METHODOLOGY

How reliable is the data? That’s a dicey question after looking at early career median pay. Here, U.C.-Berkeley MBAs lead all comers at $130,000 within the first five years of their career. They are followed by MIT ($128,000), Wharton ($125,000), Harvard ($122,000), Northwestern ($122,000), Stanford ($121,000), Cornell ($117,000), Yale ($115,000), Virginia ($114,000), and Columbia ($112,000).

If you think those numbers skew low, you’re not alone. Take Harvard. According to the school, 2015 graduates made roughly $149,700 in average salary and bonus in their first year — a $27,500 difference from what PayScale survey respondents shared. At Chicago, that difference was roughly $31,500 ($143,475 vs. $112,000). You’ll find a similar pattern elsewhere from Cornell ($144,800 vs. $117,000) to North Carolina ($129,000 vs. $102,000) to Penn State ($114,035 vs. $80,000) to Iowa ($102,619 vs. $73,200).

Cornell University's Johnson Graduate School of Management

Cornell University’s Johnson Graduate School of Management

What’s behind these discrepancies? First, MBAs often receive sign-on bonuses when they join a company after graduation. That can come to $25,000 to $35,000 for graduates from top flight schools. Not surprisingly, that approximates the differences seen in the previous examples. However, even school numbers can understate pay. In a recent analysis conducted by Poets&Quants, for example, students sometimes earned more than what schools report due to such incentives as tuition reimbursements and paid relocation expenses and auto allowances. Those perks may not have been factored into the survey by respondents.

Another issue likely stems from the nature of PayScale’s audience. Though employed, survey respondents are seeking information on pay. That signals that they are less likely to be in stable, satisfying, and financially fruitful positions. That audience is markedly different from MBAs who are progressing and not looking to make a transition (and thus unlikely to visit PayScale’s site).

MBAs DODGE THE DEBT OF THEIR LAW SCHOOL COUNTERPARTS

Despite this flaw, PayScale’s data carries one big advantage: You can plot out how much your early- and mid-career pay should grow. At Stanford, for example, pay rose from $121,000 to start to $176,000 at mid-career, a 45.5% year-over-year return — exactly the same as Duke. In terms of growth, some schools are better than others. Take the low end. At Brigham Young, for example, MBAs only saw their income rise by 24% between their early career and its mid-point. That was true of many of the highest-ranked programs, including Yale (30%), Virginia (32%), U.C.-Berkeley (34%), Michigan (37%), MIT (43%), Wharton (45%), Stanford (45%), and Chicago (54%). The highest growth, however, was often found at lower-ranked programs. The best performance was turned in by West Virginia, where pay rose from $52,900 to $130,000 (i.e. 146%). It was followed by Pace (135%) and the University of Dallas (118%). Just three Top 50 MBA programs saw growth above 80% according to PayScale data: Rochester (88%), Maryland (85%), and Texas A&M (84%).

The Salary Report also illustrates the MBA’s strong financial return in contrast to other graduate degrees. MBAs accounted for 10 of the 20 highest-paying graduate degrees, with JDs representing the other 10. When you factor in debt, an MBA’s true value shines through. In a 2014 report from the New America Foundation’s Education Policy Program, MBAs incurred an average debt of $42,000, compared to $88,000 for law school grads. While this difference is an eye-opener at a macro level, it takes even greater urgency at a micro one. Just look at U.C.-Berkeley. At Haas, 54% of the Class of 2015 graduated with debt, with the average being $70,568. Compare that to Berkeley Law, where 71.6% of students borrowed and left with a debt of $144,981. You’ll find a similar dynamic at private programs, with 59% of Emory MBAs coming away with $77,343 in debt, compared to 69% of Emory Law students in hock for $121,278.

Here’s one more factor to consider. Along with lower debt, MBAs also enjoy an extra year of earning power compared to law school (with top programs such as Northwestern, Cornell and Notre Dame even offering one-year MBA options).

To see the Top 50 graduate programs for pay, go to next page.

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