MBA Programs With The Highest 10 Year ROI
Another day, another business school ranking. This week’s ranking is courtesy of SmartClass, an education research site and ranking repository that covers everything from K-12 schools to optometry programs. The site also posts an MBA ranking, which, like Poets&Quants’ ranking, is based on a “weighted average of business school rankings by five publications — U.S. News, Bloomberg, The Economist, the Financial Times and Forbes.” However, SmartClass also integrates other data, “such as acceptance rate, post-graduation salary and average GMAT score.” In other words, the site weighs some data twice, making it, to an extent, unreliable.
The same could be said for its ranking of ROI ranking on an MBA degree – though you have to give SmartClass points for trying. Here’s how their methodology works. They start out by using 2014 U.S. Bureau of Labor Statistics salary information to find the “median salary of full-time workers ages 25 and older with bachelor’s degrees” ($57,252) and used it across all schools as the assumed pre-MBA salary. In other words, the wages earned in the south and Midwest would be the same benchmark used to judge schools from the east and west coasts. Or, to put it another way, the opportunity costs for Harvard MBAs would be the same as those from Penn State or the University of Washington.
Good luck with that.
From there, the ranking built in a “3 percent salary increase rate based on an August 2015 report by CNN Money that states the base pay raises for 2016 will be 3 percent.” From there, SmartClass calculated the “projected 10-year salary of someone without a business degree and subtracted that total from the projected 10-year salary of a business school graduate from each of the top 50 schools.” It also factored in tuition – and did so at the highest point (out-of-state costs) using data from the Association to Advance Collegiate Schools of Business. The ranking also applies average salary information from school reports.
Thankfully, SmartClass is quite transparent about its flaws, admitting that it “didn’t factor in tuition, living costs and debt service,” not to mention “bonuses and other compensation.” In other words, the ranking is a closeup snapshot of two lines: Where you would be, earnings-wise, if you didn’t attend business school (or change jobs and get promoted) and where you’ll be after graduation (sans debt).
Despite these limitations, the outcome was pretty predictable. Stanford tops the list, with a 325% ROI a decade after graduation. As expected, Harvard trailed closely behind at 320%. The surprise, of course, is Brigham Young tying Harvard for second at 320%, buoyed by its low tuition (less than $23K for a non-LDS member – more generous than many in-state tuitions). In the larger context, this is no surprise, with BYU ranked among the top schools for value with low debt, respectable placement and six figure starting salaries (including bonus). Rounding out the top five are Haas (300%) and Wharton (297%).
Looking for a few underappreciated gems? Texas A&M is one with a 271% return, higher than Fuqua, Kellogg, and Stern according to SmartClass’ metrics. Penn State (256%) and Arizona State (249%) also scored higher than their ranking might suggest. Surprisingly, Yale didn’t even crack the Top 25 for ROI, though starting salaries lag here could be explained due to the school’s traditional placement in public service.
To see how your school fares, check out the table below.
Source: Arizona Daily Star