B-Schools With The Fastest Return on Debt

The Marriott School of Management

MBA PAY DOWN: AN OMINOUS TREND…OR AN IMPERFECT METHODOLOGY?

SoFi’s system isn’t perfect. Marriott, for example, reported that Class of 2015 debt came to $22,521 — more than double the average published by SoFi. Often times, the debt numbers are relatively close, as evidenced by programs like New York University Stern ($108,567 in SoFi vs. $107,458 reported by 2015 graduates), Stanford ($86,942 vs. $83,762), and Georgetown McDonough ($107,629 vs. $104,424). SoFi’s salary data experiences a similar dynamic. The Marriott Class of 2015, for example, pulled down starting base salaries of $102,973, just $6,410 less than SoFi’s figures. The difference here can be explained by the inclusion of graduates who are two and three years out of school (and would have undoubtedly made up the gap with annual raises). However, annual raises probably wouldn’t explain the $46,251 pay difference at Columbia Business School between what SoFi reports ($173,888) and the base salaries for the Class of 2015 ($127,637).

In fact, SoFi’s data comes with a couple of caveats. For one, it is self-reported, meaning it was only verified when a loan is underwritten (a closing rate that is unavailable). The methodology also doesn’t specify how many loans must be included for an MBA program to be eligible for SoFi’s rankings. In other words, a program boasting fewer loans could suffer when one graduate carries a higher debt than normal (or vice versa). Even more, salary vs. debt is only part of the story, with SoFi neglecting key factors like opportunity costs tied to previous salaries that further clarify the true cost of an MBA. It also doesn’t factor in pay increases that accrue over time, a major advantage for top flight programs whose graduates traditionally earn more starting out. Let’s not forget that all schools are not created equal when it comes to the percentage of students who hold debt. For example, 69% of MIT Sloan MBAs from the Class of 2015 carried debt compared to just 41% from the same class at Michigan Ross. This would make the Ross program a far more attractive proposition to debt-conscious applicants despite just a $14,000 average debt separating the schools.

Still, the SoFi data uncovered some intriguing nuggets. In particular, despite glowing employment reports boasting higher starting pay, MBA salaries actually declined over the previous year at 14 of the 19 top MBA programs that SoFi segmented last year. For example, Stanford grads saw pay plunge from $177,590 to $160,916 over last year’s stats. You’ll also find smaller, though no less significant, losses at Wharton (-$10,543), MIT Sloan (-$10,336), Columbia (-$9,584), and Harvard (-$8,447). One theory: due to their loans, SoFi clients likely include those graduates who paid a higher sticker price, an indication that they may not be as attractive to employers as more accomplished peers who landed better financial aid packages. Another theory: sign on bonuses artificially inflate compensation in the first year. As noted earlier, SoFi’s data represents a relative subset of each program’s full-time MBA population. This sample size makes the data vulnerable to individuals who fall outside the mean.

Go to next page to see how 2016 MBA debt data compares to 2015 numbers.