The ROI Of An MBA

Back in the ’90s, there was no question as to whether a masters in business administration (MBA) was worth the investment. The sticker price of your typical two-year program was substantially lower, graduates were fewer, and it was seen as the gilded passport to a quick climb up the career ladder and a six-figure salary. Now, however, the cost is prohibitive, and the recent abundance of MBA grads has led some to argue that the luster of the degree has been tarnished by oversupply. So what is the ROI of an MBA , and is it still worth it?

How much will it cost vs. how much will I make?

Even with financial aid, any masters program is going to put a significant dent in your bank account and will likely saddle you with debt for years after you leave campus. But costs vary wildly by school, and there are still some respected programs out there that are much more affordable than others (plus, some of the more generous financial aid can cover about half of the tuition fees). For example, University of Chicago’s MBA program costs over $150,000 (not including accommodation and other living costs), but according to Bloomberg’s most recent roundup, graduates make an average of $102,000 per year when they get out. At Harvard, tuition and fees come to about $112,000, and graduates end up making $110,000 on average, while the less well-known Brigham Young University (Utah) MBA program costs just $41,120 (half that if you’re Mormon, by the way) and earns graduates an average of $88,550 per annum on graduation.

If you’re worried about loans, it’s worth considering that part-time MBAs may offer a better return on investment. Part-time students can usually work at the same time, paying their own way (or obtaining sponsorship from their companies) rather than taking out crippling loans.

Hard numbers and value for money

It’s a sad fact that although you may be trailing the pack without one, the value of a masters degree in general is a fraction of what it was in the past -- less than $400,000 over 30 years (with no financial aid) according to Bloomberg. The drop can be attributed to lower bonuses, recent grads opting for lower-paying positions in a stalled job market, and previously high-earning employees laid off and working lower-paying jobs.

Choose wisely, though, and you’ll be making the best investment of your life. For example, a low-cost school with a high rate of return could have you looking at a 30-year ROI of more than $1.8 million (at the California Institute of Technology, for example).

For the best ROI on an MBA, however, the hard numbers say heading abroad is your best bet. At the top of the list, the IE Business School in Madrid, Spain, costs around $150,000 for the full MBA program, but graduates earn a whopping $96,500 per year in increased salary, so the degree cost is recouped in less than two years. The same can be said for the Cranfield School of Management, Manchester Business School and Cambridge in the UK, which all offer MBA degrees resulting in a $50,000 pay increase after graduation, meaning total costs are recouped in three years. Other smart investments abroad include IESE in Barcelona, HEC in Paris and IMD business school in Switzerland (courses taught in English).

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