A major investment decision requires some amount of due diligence to figure out the risks as well as the returns involved, so that you have an idea of what’s in store for you and you have no unpleasant surprises later.
An MBA degree, especially from an international location, is a huge self-investment. So, you’d definitely be interested in evaluating what ROI (Return on Investment) this degree has to offer.
Benjamin Franklin once said ‘An investment in knowledge always pays the best interest.’ Absolutely true! However, it’s worthwhile to compare the various programs and get a picture of long it’d take to pay off your MBA debt and start receiving positive returns on your investment. After all, you’re not only investing your hard-earned money, but also your precious productive years and endless effort in procuring an MBA degree.
To calculate the ROI of MBA programs, you’d need to know the average post-MBA salary and then weigh it against the program cost. The program duration is an important factor as the expense would significantly increase for a two year MBA as against a one year program.
Financial Times (FT) releases its annual global MBA rankings for colleges/universities. Various parameters are also analysed and colleges ranked accordingly. Value for money which is indicative of a program ROI is one such parameter. This value is calculated by dividing the post-MBA alumni salary three years after graduating by the total cost of the program. This cost would take into account the MBA tuition, and related expenses as well as the opportunity cost (forgone income during the duration of the program) minus the scholarship or any financial aid obtained.
Based on FT’s ‘Value for money rankings’ (2018), here’s the list of schools according to their geography.
|1.||University of Florida: Hough|
|2.||University of Connecticut School of Business|
|3.||Brigham Young University: Marriott|
|4.||University of Texas at Dallas: Jindal|
|5.||Wisconsin School of Business|
|6.||Georgia Institute of Technology: Scheller|
|7.||Ohio State University: Fisher|
|8.||Pennsylvania State University: Smeal|
|9.||Michigan State University: Broad|
|10.||Purdue University: Krannert|
|11.||Arizona State University: Carey|
|12.||University of Pittsburgh: Katz|
|13.||Rutgers Business School|
|14.||Rice University: Jones|
|15.||Emory University: Goizueta|
|16.||University of Notre Dame: Mendoza|
|17.||Indiana University: Kelley|
|18.||Vanderbilt University: Owen|
|19.||Washington University: Olin|
|20.||University of Washington: Foster|
|21.||University of Rochester: Simon|
|23.||Stanford Graduate School of Business|
|24.||Boston University: Questrom|
|25.||University of California at Irvine: Merage|
|26.||Boston College: Carroll|
|27.||University of Texas at Austin: McCombs|
|28.||Cornell University: Johnson|
|29.||University of Minnesota: Carlson|
|30.||Babson College: Olin|
|31.||University of California at Berkeley: Haas|
|33.||University of Chicago: Booth|
|34.||University of San Diego School of Business Administration|
|35.||University of North Carolina: Kenan-Flagler|
|36.||University of Michigan: Ross|
|37.||Harvard Business School|
|38.||Yale School of Management|
|39.||Carnegie Mellon: Tepper|
|40.||Dartmouth College: Tuck|
|41.||University of Maryland: Smith|
|42.||University of Virginia: Darden|
|43.||Columbia Business School|
|44.||Northwestern University: Kellogg|
|46.||Georgetown University: McDonough|
|47.||New York University: Stern|
|48.||University of Pennsylvania: Wharton|
|49.||Duke University: Fuqua|
|50.||University of Southern California: Marshall|
|1.||University of Cambridge: Judge|
|2.||Durham University Business School|
|3.||Lancaster University Management School|
|4.||Leeds University Business School|
|5.||Warwick Business School|
|6.||University of Oxford: Saïd|
|7.||Cranfield School of Management|
|8.||University of Strathclyde Business School|
|9.||University of Edinburgh Business School|
|10.||City University: Cass|
|11.||Imperial College Business School|
|12.||University of Bath School of Management|
|13.||Alliance Manchester Business School|
|14.||London Business School|
|1.||EDHEC Business School||France|
|5.||Mannheim Business School||Germany|
|6.||Rotterdam School of Management, Erasmus University||Netherlands|
|7.||University of St Gallen||Switzerland|
|8.||The Lisbon MBA||Portugal|
|9.||University College Dublin: Smurfit||Ireland|
|12.||EMLyon Business School||France|
|14.||Copenhagen Business School||Denmark|
|15.||ESSEC Business School||France|
|16.||ESADE Business School||Spain|
|17.||IESE Business School||Spain|
|2.||HKUST Business School||China|
|3.||Shanghai Jiao Tong University: Antai||China|
|4.||Renmin University of China School of Business||China|
|5.||Nanyang Business School||Singapore|
|6.||National University of Singapore Business School||Singapore|
|7.||Sungkyunkwan University GSB||S Korea|
|8.||Singapore Management University: Lee Kong Chian||Singapore|
|10.||CUHK Business School||China|
|11.||Fudan University School of Management||China|
|12.||Indian Institute of Management Calcutta||India|
|13.||Indian Institute of Management Ahmedabad||India|
|14.||University of Hong Kong||China|
|15.||Indian Institute of Management Bangalore||India|
|16.||Indian School of Business||India|
|1.||Western University: Ivey|
|2.||McGill University: Desautels|
|3.||University of Toronto: Rotman|
|1.||Melbourne Business School|
|2.||AGSM at UNSW Business School|
Top business brands including Wharton, Fuqua, Kellogg, Columbia figure at the bottom in the above table. This is because the methodology used for calculating these rankings takes into consideration the salary three years after graduation. Due to higher program costs, the loan repayment time would be longer for these top MBA programs, however with an MBA degree from one of these top ranked schools, you may be better equipped to earn a higher salary in the long run.
There are other publications and companies who’ve have shared their opinion on the MBA ROI topic.
According to a GMAC survey, it’s not just the salary that measures the ROI. Along with salary, alumni acknowledge that other aspects such as personal development, managerial knowledge and technical skills contribute towards ROI assessment. Another observation has been that MBA graduates, on an average, are able to recoup their MBA investment in a period of less than 4 years post-graduation.
SoFi (Social Finance, Inc.), a personal finance company has compared MBA programs through data gathered from MBA grads with an average of three years work experience. The calculations compare the ratio between the average salary and the average debt for each school; the higher the value the better the ranking for the b-school.
Whatever the method employed for calculating the ROI factor, the results derived may be used for reference purpose and should not be looked upon as an absolute guide for short listing your business schools. Finally, there are other key factors more likely to influence your decision including how much of a fit you are for the MBA program and to what extent the program can help you meet your post-MBA goals.
Again, you never know, if you were to get a fantastic scholarship offer from any of the top schools, the ROI calculations would surely tilt in your favour!
– Payback time for the top MBA colleges in the world
– Best value MBA programs
– Experience of a candidate who competed with top-tier MBA students to make it into Google
– What is the RoI of an MBA from USA?
References: 1, 2, 3