The MBA Premium: What MBAs Earn Over A Lifetime Will Shock You

SOME SCHOOLS ARE PUNCHING WELL ABOVE THEIR WEIGHT CLASS, OR RANKING

The analysis also showed that many schools are clearly punching above their weight class, or ranking. MBAs from Santa Clara University’s Leavey School of Business, for example, earned enough money–$2,670,000–to put them 22nd on the list, even though Leavey doesn’t have a full-time MBA. Instead, those impressive numbers are achieved by graduates of Leavey’s part-time evening MBA program, its’ Executive MBA and its Online MBA option.  The school’s location in the heart of Silicon Valley obviously plays a big role in the successful outcomes of its graduates.

But a school doesn’t have to be in Silicon Valley to defy expectations when it comes to MBA pay. MBA graduates of Georgetown University’s McDonough School of Business placed 17th on the list, with 20-year median pay of $2,980,000, even though the school’s full-time MBA program is ranked 24th by Poets&Quants. Students who earned their MBA degrees from Babson College just outside Boston find themselves 27th in the pay sweepstakes list, while the school’s MBA program is ranked 30 places lower at 57th.

Similarly, George Washington University MBA grads place 23rd on the list of the top 50 in 20-year pay, with an estimated total of $2,590,000, though the school’s MBA program is ranked 50th best. And just as surprising, the MBA graduates of Johns Hopkins University’s Carey School of Business, which is not ranked in the top 100 by Poets&Quants, ended up 35th on the list, with 20-year pay of $2,360,000.

NO MATTER HOW YOU CUT IT, MORE EDUCATION PAYS

One of the long-standing selling points of leading business schools is the unrivaled access they provide to lucrative, highly selective careers. Students have long gone to business school to gain entry to high-paying jobs in consulting, investment banking, private equity, venture capital, and hedge funds. Put simply the MBA has been the ticket to some of the best money-making careers in business.

No matter how you cut it, more education pays, regardless of what you choose to do (see above chart on median lifetime earnings by highest educational attainment). The research shows conclusively that higher education not only opens up the highest-paying jobs, but also that there is a range of pay within jobs and that more highly-educated people usually earn considerably more than their less-educated counterparts even in the same occupation.

When Georgetown University’s Center on Education and the Workforce looked at these pay differences, it found that a person with a professional degree would make roughly $3.6 million in lifetime earnings. That category includes medical, law and business degrees, including the MBA. The Payscale study shows that most MBAs beat the overall averages in lifetime pay, regardless of which school grants the degree. Payscale estimates that those with an MBA will earn an estimated $4.1 million over a lifetime, about half a million dollars more.

MBAS EARN MORE THAN MANY OTHERS WITH PROFESSIONAL DEGREES

And as shown earlier, the bigger the brand attached to your MBA, the larger the rewards. An MBA from any of the top five schools should allow a graduate to earn about $5 million more over a post-MBA lifetime than the averages for all professional degrees. That is a handsome return on one’s investment.

Industry choice and geography obviously plays a huge role in how much a person can make. An MBA who marches onto Wall Street and builds a Master of the Universe career will make a lot more money than the graduate who joins the leadership development program at P&G or 3M and rises to a senior leadership role. Business schools that pour MBAs into jobs in New York, Boston, Washington, Los Angeles and Silicon Valley also are likely to do much better than the schools whose MBAs settle in the midwest or south where the cost-of-living is lower but so are the salaries.

Even so, many academics believe there are few other degrees with better return-on-investment rates. “I know of no other educational experience that can match the total value proposition of a two-year full time MBA,” says Paul Danos, former dean of Dartmouth’s Tuck School of Business. “It is a transformative experience that enables an engineer to become a financier, a high school teacher to become a marketing executive, or an auditor to become a mergers and acquisition specialist for a top corporation. And the options available to graduates keep expanding globally and the monetary return remains strong.”

(See following two pages for the full data on lifetime earnings of MBA grads from 50 business schools)