Are Top MBA Programs Truly Worth The Money?

here is an informative nugget snuggled into the Financial Times ranking. It is called “Value For Money.” Here is how the FT defines it: “Calculated using salary today, course length, tuition and other costs, including lost income during the MBA.” 

This nebulous category is expressed in a simple rank without any underlying cost data revealed. Even more, it accounts for just 3% of the ranking’s weight – the same as six other categories. Still, it reveals something worth considering: the top MBA programs don’t necessarily yield the highest value…at least in the FT’s definition. 

Just one Top 10 program – INSEAD – ranked among the best for Value For Money…and it finished 9th. HEC placed 11th – and #5 CEIBS managed to reach 39th. Beyond that, the best values came from the lower rungs of the overall ranking. Look no further than #100 Georgia finishing 18th for Value! In fact, value schools come from the widest possible spectrum of the FT list, with mix of international and American schools – plus a surprising mix of both two-year and one-year programs. 

The University of Florida tops the Value list – despite the fact that it is a two-year program (i.e. slower rate of return than a one-year program with lower opportunity cost). This could stem from low tuition. In 2018-2019, for example, in-state students paid $12,737 a year in tuition, with out-of-state residents forking over $30,130. Cost of living and books came to an estimated $17,680. Better yet, less than half of graduates carried debt, which came to $37,035 on average. 

Compare that to MIT Sloan, which ranked 84th in Value For Money. Think $74,200 in tuition and a cost of living of $37,593 – a year – or more than what Florida grads pay on each count. Like Florida, just 48% of MIT Sloan’s 2018 Class carried debt. Still, that debt averaged $115,139 – or nearly three times what a Florida Warrington MBA carried.

Of course, the flaw in this calculation involves long-term pay. Just look at the Class of 2018. In their first year, these graduates pulled down $159,245 in total compensation compared to $121,558 at Florida Warrington. At the same time, base pay still favors MIT Sloan by a 135,105 vs. $104,538 margin. That’s just the first year. Focusing strictly on base pay – using equal 10% increases – the gap grows to $193,199 vs. $139,084 between Sloan and Warrington over four years. In other words, it takes a Florida Warrington grad nearly four years to exceed the starting base that a MIT Sloan MBA receives after graduation.

Still, value is in the eye of the beholder. For MBAs seeking a faster return that’s not ridden with debt, the FT ranking shows the best avenues may be Penn State Smeal and Brigham Young Marriott (United States), Durham University and Cambridge Judge (United Kingdom), Shanghai University of Finance and Economics (China), Melbourne University (Australia), and Mannheim University and INSEAD (continental Europe).

CEIBS Is The Real Deal…For Now

In 2019, CEIBS made headlines in the FT ranking by placing 5th in the world – ahead of legendary incumbents like Chicago Booth, MIT Sloan, and the London Business School. To put this in context, CEIBS didn’t even rank among the Top 100 with The Economist. While CEIBS earned the top spot in Bloomberg Businessweek’s Asian ranking, its index score would place it 71st among America programs (alongside the likes of Hult and the University of Mississippi). 

Alas, CEIBS has been on a steady climb with the FT, ranking 15th just seven years ago. Based on the 2020 ranking, CEIBS is here to stay, repeating as the 5th-ranked full-time MBA program in 2020.

Sure enough, CEIBS stands out in an area where Asian MBA programs dominate: Pay increases. CEIBS MBAs enjoy an 187% jump in compensation over their pre-MBA compensation – sixth-best in the world (with Chinese schools holding six of the eight biggest increases in the 2020 ranking). In addition, CEIBS grads snapped up weighted pay of $185,103 starting out – 10th-best in the world. To put it another way, CEIBS grads earn more than grads from storied American programs like NYU Stern, Yale SOM, Dartmouth Tuck, and Michigan Ross. Their checks also outpace international juggernauts like INSEAD, London Business School, and HEC Paris. In fact, there is only one non-American MBA program – Indian Institute of Management Ahmedabad – whose graduates make more than CEIBS alum starting out.

With weighted salary and salary increase accounting for 40% of the FT rankings – and only faculty research (10%) amounting to any weight above 5% – CEIBS holds a distinct advantage that will make it difficult to dislodge it from the five spot.

At the same time, CEIBS’ 94% placement rate (a point above the year before) is comparable to high-ranking rivals like MIT Sloan and Wharton. The school also continues to inch towards the Top 10 in Career Progress (alumni progress in sizable firms), while remaining among the top third of the FT ranking for being recommended by alumni. What’s more, nearly two-thirds of its faculty and over half of its board members hail from outside China. On top of that, 100% of its full-time faculty hold doctorates.

Here’s one more stat to remember: 27% of its faculty are women. While this number lags behind many Asian business schools, the number is still higher than American stalwarts like Stanford GSB and the University of California-Berkeley.

That said, CEIBS may have hit its ceiling at #5. Why? Think faculty research, where the school ranks 75th in the world. Compare that to the four programs that rank above CEIBS: Stanford, Wharton, Harvard, and INSEAD. Three rank in the Top 10 in this category (with INSEAD coming in a respectable 18th). With research holding a tenth of the FT ranking weight – and the programs above CEIBS also reporting higher pay – the school may have to be content with staying in place.

Just not too content. In 2011, the Hong Kong University of Science and Technology (HKUST) ranked 6th in the FT ranking thanks to similar strengths as CEIBS. This year, HKUST placed 19th. Fact is, Asian MBA programs produced 10 of the 20 highest-scores in career progress – and the four highest placement rates. What’s more, the National University of Singapore has climbed 16 spots in the past five years to rank 15th in 2020. In other words, nothing is assured once you get past the Stanford, Harvard, and Wharton triumvirate.