MBAs Still Offers Great Return On Investment
MBA students can expect to pay a hefty amount for an MBA education. Yet, for many students, an MBA is a means to increasing their salary. And, as recent data shows, many students can expect a solid return on investment.
Laurent Ortmans, a business education statistician at Financial Times, recently analyzed how an MBA still offers tremendous financial reward.
“Students tell us that the main reason they study for an MBA qualification is to increase their salary,” Ortmans says. “Personal development, interpersonal skills and ethics matter to them, but students still expect a return on investment.”
2017 saw largest salary growth for MBAs
Average MBA alumni salary in 2017, according to Financial Times, was $142,000. That’s a 12% increase from 2014. Across three-quarters of schools, average alumni salaries have seen increases year after year. In 2008, MBA salaries saw a minor hiccup due to the financial crisis. According to Financial Times, between 2008 and 2014, the average MBA salary three years after graduation increased by merely 4% to $127,000. Tuition costs of two-year MBAs also increased by 44% to $104,000.
Despite the minor increase from 2008 to 2014, average salaries in 2017 increased by $7,000 — the largest increase in more than 12 years. Financial Times reports that the healthcare and industrial industries saw the biggest year-on-year increase, both up by 10% at an annual average salary of $143,000.
However, it’s also important to consider how early career pay influences long term pay. According to the 2016-2017 College Salary Report from PayScale, students who specialize in strategy earned the highest early career pay after graduation at $96,200. Poets & Quants found that strategy grads also reported the highest earnings at the mid-point of their career, with a median pay of $149,000.
Chicago Booth grads hold record for highest salary jump
Financial Times also records salary increases over pre-MBA levels.
Graduates from University of Chicago’s Booth School of Business had the biggest jump in annual salary from pre-MBA levels. According to Financial Times, Booth MBAs witnessed a 252% salary increase over the 2002 ranking.
Financial Times reports that, since 2014, MBAs have at least doubled their pre-MBA salaries within three years of graduation.
“The global average salary increase moved back above 100 per cent again in 2017,” Ortmans says. “Just over half of all ranked schools had salary increases greater than 100 per cent. In 2018, almost two-thirds of alumni cohorts more than doubled their salaries.”