This month, King’s College London said it would not offer an MBA because there was not enough employer demand for the flagship business qualification. In September, Tippie College of the US similarly deserted the full-time MBA. Meanwhile, the Graduate Management Admission Council (GMAC) reported that applications to the majority of US business school courses fell for the third year on the trot.
Is the MBA, long thought of as a golden ticket to the executive suite, still worth the time and tuition? Surveys reveal a significant salary hike for MBA-holders. The average for those who attended schools ranked by the Financial Times is $70,000 three years after graduation. But the increase differs greatly between business schools.
Those from the Indian Institute of Management, Ahmedabad have among the highest graduate salaries, at around $182,000. For others, the rewards are not so rich. Alumni of Queen’s Smith School in Canada make about $93,000 after three years.
It is important to take into account course fees. Anyone hoping to enrol on a program at a top US school can expect to fork out around $118,000 — 81% more than they would a decade ago. The price of an MBA from a top-100 business school is now equivalent to nearly nine months of gross annual salary three years after graduation. The true cost is higher still.
A student on the MBA at Stanford Graduate School of Business, for example, will have sacrificed $160,000 in forgone salary over the two-year program. If you add living costs, the total bill for a top two-year MBA in the US exceeds $300,000.
Plenty of MBA graduates insist the degree got them where they wanted to go. There is more to the qualification than making money, though enhancing one’s career prospects is the top motivation, says a survey of 10,000 prospective students by GMAC. “The MBA is a chance to acquire a global business perspective, and to do amazing networking with people from multiple countries,” says EDHEC Business School MBA Luciana Mendes.
“For me, it is also an opportunity to refocus myself and redefine what I want from my career.”
The best returns are often found at schools with shorter programs, which are predominantly based in Europe. Take the 12 month MBA at Cambridge Judge Business School in the UK. Its students pay £53,000 in tuition fees. They earn around $167,000 after three years, a 107% increase. In theory, they can recoup the cost of tuition in four months. “Investing in an MBA made sense to me,” says Maxime Couturier, a Cambridge MBA. “I realized that it would allow me to meet my career goals and reach a higher position.”
It is of little surprise, then, that most MBA programs in Europe are growing their application volumes, GMAC reported. There is growing pressure to complete courses more quickly and to recoup a quicker return on investment, says Graham Hastie, associate dean for INSEAD’s 10-month MBA course in France and Singapore.
Other data suggest those returns keep on coming. Business school alumni earn a median of $2.5 million in cumulative base salary over 20 years following graduation, GMAC claims. This is $500,000 more than they would otherwise earn if they did not go to business school.
We are unlikely to see the death of the MBA anytime soon. But it seems likely that rising stars will consider a wider range of degree options than they have in the past, with quicker courses increasingly rising to prominence.