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Return On Investment: MBAs Earn $1M Salary Boost A Decade After Graduation

New GMAC report also says MBAs get $2.6M boost over 20 years

Tue Feb 23 2016

The value of an MBA remains strong, according to the results of the Graduate Management Admission Council’s 2016 alumni survey report released Tuesday.

Based on responses from more than 14,000 business school alumni representing more than 275 programs worldwide, the survey found that, on average, b-school alumni achieve a return on their investment (ROI) less than four years after earning their graduate degree.

Taken as a whole, b-school alumni earn a median of $2.6 million in cumulative base salary over 20 years after graduation. That’s $500,000 more than they would have earned without a graduate degree.

MBA alumni can expect to earn almost $1 million in cumulative base salary 10 years after graduation.

Full-time MBA students, who invest an average of $105,000 on two-year programs, can expect to recoup their investment in 3.5 years, with their base salary increasing by an initial $30,000.

One-year MBA programs offer a speedier ROI, with students recouping an average investment of $50,000 in 2.5 years, and profiting from a base salary boost of $20,000.

Students on part-time, online or EMBA programs are likely to recuperate their $25,000 investment in 2.5 years, with an initial base salary boost of $10,000 on average.

Specialized master’s programs offer a cheaper alternative to MBAs with quicker ROI. Students on master in management programs can expect to recoup their $30,000 investment in a year and boost their base salary by the same amount.

Although affected by economic conditions — ROI declined during the recessionary period of the early 2000s, for example — b-school degrees have retained their value and students are understandably satisfied with the quality of their graduate education.

Three in four students said that their degree allowed for faster career advancement, while 93% said their experience was personally rewarding and that they would do it again.

The report also highlighted the demographics of b-school alumni. While men typically represent around 60% of the applicant pool, a growing number of women are showing an interest in graduate business programs.

Although both male and female salaries tend to increase at the same rate after business school — with a median post-graduate salary boost of $20,000 — women’s starting salaries tend to be lower and thus the gender gap persists, with men in the US earning more money than women at all job levels, according to GMAC.

In terms of industry, the report found that out of the 92% of b-school alumni in employment, the majority worked in products and services or finance, 19% each, followed by technology, at 17%.

Around one in 10 respondents were self-employed or entrepreneurs, who tended to found start-ups in products and services, consulting, finance and tech. They work an average of 49 hours per week, taking home the equivalent of $145,000 per year in salary.

B-school alumni highlighted the skills they considered the most important to their current job, with soft-skills reigning supreme: 94% mentioned communication, 91% problem solving, 87% critical thinking and 82% teamwork.