Payback On MBA Degree Takes Longer
“Business school is a waste of time and money. If you want to blow $100K, go to Vegas.”
That’s what one Class of 2008 MBA alum from New York University’s Stern School of Business told Forbes when surveyed for the magazine’s latest return-on-investment ranking of the best business schools.
If the Stern alum wasn’t feeling the love, you can’t blame him. Like his classmates, he graduated just months before the Great Recession hit. Many newly minted MBAs who headed for Wall Street found themselves on the street once Lehman Brothers imploded. Some even had to return their signing bonuses.
The economic contagion that spread through the world economy impacted just about everyone--not merely MBA holders. But the grip of that recession had its toll on the historical payback of the degree. MBAs in the Class of 2008 found that it took more time than ever for the degree to earn out: three to five years for the 70 U.S. schools ranked by Forbes. Even at Forbes' No. 1 U.S. school this year, Stanford University's Graduate School of Business, it took 4.1 years for the degree to earn out, compared to 3.5 years in 2011.
Besides the slower payback periods, the magazine noted that five-year gains attributed to the MBA also have fallen over the past decade. The average 5-year gain for grads at the top 25 schools was $118,000 a decade ago, but only $68,000 this year. “Five-year out salaries averaged $159,000 this year, but that represents an annual gain of only 1.8% since 2003, which was slower than the rate of inflation,” the magazine noted.
Despite the drop, there's still no doubt that the degree--especially from a top business school--pays off. As Forbes concluded, “Students at a our top 10 U.S. schools entered their programs in the fall of 2006 with an average salary of $72,000. Five years after getting their degrees, they were banking $185,000 on average."
Nice money if you can get it.
To see our analysis of Forbes' new 2013 MBA ranking out today, check out PoetsandQuants.com:
Therapist and Executive Coach
11 年The alarming thing I have to say about MBA's (full disclosure: I do not have an MBA) is the uneven skill level of MBA's with whom I've come into professional contact. I've met at least 2 MBA's in recent years who could not write their way out of a paper bag with a flashlight, kind of leaving me a bit cold on an MBA being any relevant 'stamp of approval'. On a personal note: I've been told that an MBA was the desired credential over my clinical Master's degree and nearly 20 years experience in healthcare for healthcare administration in the job search realm at least once. But you have to consider the source of such rejections. Go figure.
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11 年Well, An MBA should not break your pocket. Now days 2 year of MBA program is along time and cost a lot. We have MBA for one year that will not break your pocket and will give you more opportunity to net work. Get your MBA at Paris School of Business in France https://www.studyabroadineurope.com/university.aspx?id=24&t=Paris-School-of-Business
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11 年Philip ,Your statement is brilliant, Matter of fact statement.Well said
President at PHILANYA, INC.
11 年There are many ways to value an MBA. Whatever degree you seek should involve looking at yourself to determine if it's really what you want. I see people everyday looking to make more money by getting into a career or following a degree path but hate what they do. Take for example the cost of a 5 or 7 series BMW, it depreciates quickly, yet costs as much as a degree from many quality schools that pay out over your lifetime. The only thing you'll have is the memory of you driving a 735i and how much you spent and lost when you trade or sell it.