Undergrad Biz Programs With The Best ROI

Education is an investment. Like any investment, you spend money up front, hoping for a big return down the road. But it’s not always easy to be patient. For starters, the average undergraduate debt is $29,400. That figure may not seem overwhelming – until you figure in costs like rent, food, insurance, clothing, and a vehicle. Most likely, you won’t be living like a shut-in, either.

And that means you need a major that pays off sooner than later. That may be one reason why business is the most popular undergraduate major, with schools churning out over 365,000 business grads a year. And these grads are earning an average starting salary of $41,000 a year, according to a recent study by Georgetown University.

There are many factors that influence your ultimate return on a degree. Your specialty is one, with students who major in finance ($47,000) or accounting ($45,000) earning more than general business ($41,000) to start. But it’s not where you begin, but where you finish that matters. That’s why many pursue an advanced degree to boost their income. An MBA, for example, can raise earnings by $470,000 (minimum) over 20 years– and even double your income if you attend a top-10 program. And the industry and company where you land has an impact too.

Whether it is reputation, network or geography, your school choice can drive your earnings, too. That’s one reason why PayScale publishes its annual College ROI Report. Here, you can evaluate your 20-year earnings against factors like average tuition costs and student loan burdens. In addition, you can compare earnings and costs by majors and careers, along with amending results based on variables like financial aid and campus housing.

The College ROI Report data is based on PayScale’s global salary surveys, which collect data on compensation, and demographic and educational backgrounds. The database includes over 1.4 million college graduates, with the average sample per school being 325 graduate profiles (with some schools featuring as many as 4,000 profiles).

The data sets, which focus exclusively on American college graduates, include only business degree holders who have not pursued advanced degrees such as an MBA. In addition, salaries consisted of “base annual salary or hourly wage, bonuses, profit sharing, tips, commissions, and overtime.” However, salary figures did not take into account equity or stock compensation (a major reward for CEOs or professionals working in high tech and entrepreneurial ventures). PayScale’s methodology also didn’t incorporate benefits like pensions or healthcare benefits into salaries.

Each month, PayScale averages nearly 150,000 new salary survey responses from graduates of all majors. Some records included business majors with a bachelor’s degree. And their numbers made an impact in the 2014-15 school statistics.

Last year, the University of California held the top two spots (with in-state and out-of-state students ranked separately). In 2014-15, those rankings changed slightly, with in-state business graduates ranking No. 1, netting $1,199,600 over 20 years. Out-of-state graduates placed third, earning $1,108,100 net. Those numbers are actually up $94,600 and $101,600 respectively. In reality, in-state and out-of-state Berkeley grads earn the same. The real difference is tuition, with out-of-state residents paying $91,500 more in tuition. Strangely, both segments carried the same amount of tuition debt ($23,360).

That said, Berkeley’s in-state ROI only rose by 0.5 percent over the previous year when you apply the same formula (assuming students are living on campus and are receiving financial aid). When housing costs and financial aid benefits are removed, however, Berkeley holds the top two spots. For in-state residents, for example, cutting out housing increased ROI by $17,800, while removing financial aid cut ROI by $66,500. Overall, in-state Berkeley business grads realize a 16.3% net annualized return on investment, just a shade below business graduates from the University of Virginia (19.4%) and the University of North Carolina (16.7%).

The University of Pennsylvania’s business school, also known as Wharton, was the big surprise among undergrad business graduates for 2014-15. Not ranked in the top 25 the year before, Penn came in second with business graduates making $1,189,400 net within 20 years of graduation (with an annualized return of 14.8%). Despite being a private school and an Ivy League school, graduates only walked away with $27,760 in debt (with Clemson and Baylor graduates carrying the highest debt loads at $51,600 and $50,400 respectively). This figure is particularly impressive as only 51% of Penn business majors receive grant money (compared to 60% of Berkeley B-school grads).

Penn business students also maintained the highest graduation rate among business majors (96%), just ahead of private school powers like the University of Notre Dame (95%), Washington University of St. Louis (94%), and Cornell University (93%). Public programs like the University of Virginia (93%) and the University of California-Berkeley (91%) also delivered high graduation rates among business majors.

When it comes to 20-year net ROI, Penn tops the list, with $1,129,400, just $60,000 below its business majors (or $3,000 less per year in earnings). Stanford University, which (like Harvard) doesn’t offer an undergraduate business major, ranks second, with an annualized ROI Of $976,900 . . . just $1,200 more than third-place Cornell University ($975,700), where non-business majors actually enjoy a higher 20-year ROI than actual business majors ($865,700). John Hopkins University ($960,300) and Columbia University ($934,600) round out the top five.

California-Berkeley in-state graduates also bring home an enviable 20-year ROI at $889,600, though this still falls nearly $310,000 short of business majors. Harvard ($842,100) and Emory ($838,400) also make the top 10. However, non-business majors from New York University ($666,100), Northwestern University ($622,100), UCLA (in-state – $588,300), and the University of Maryland (in-state – $549,500) tend to struggle, though (in its defense) Northwestern doesn’t offer an undergraduate business major.

To see the rankings and data for the top 50 Value Colleges for Business Majors and the top 25 Best Value Colleges For Business Careers, check out PoetsandQuantsforUndergrads.com:

Business Programs With The Best Return-on-Investment