The value of a business school’s brand is well established. A name such as Harvard Business School or Stanford Graduate School of Business commands prestige among corporate recruiters. The very best business schools are highly selective; admission signals that a student is the crème de la crème.
But brand recognition is pricey. An MBA degree at a top-flight business school can run into well over a hundred thousand dollars each year. Those looking for a good return on their investment should consider lesser-known business schools. That’s according to US News and World Report, which ranks graduate schools and has released new data on MBA graduates’ salary-to-debt-ratios.
The data confirm that most prestigious business schools charge high tuition — an MBA from a lesser known school may provide faster returns. For example: Emory’s Goizueta Business School is ranked No 20 overall in US News’ MBA rankings. However, when the ranking is adjusted to salary-to-debt-ratio, the business school is ranked No 3. Goizueta’s MBAs leave school with average debts of around $73,000, but earn average starting salaries of about $116,000.
The return on investment (ROI) compares favorably with MIT Sloan School of Management, ranked No 4 overall. The school’s MBAs earn a hearty $125,000 upon graduation, but they also rack up $121,000 in debt during their degrees, giving MIT a salary-to-debt ranking of No 13.
However, this does not mean those at lesser-known business schools will achieve the same financial rewards as their peers at elite institutions. US News found that students in the bottom quarter of business schools had starting salaries of around 50% of schools in the top quarter. It is entirely possible that the return on investment of graduates from lower and higher-ranked schools will narrow throughout their careers — though starting salaries are not necessarily an indicator of what a graduate will earn at their zenith.
Prospective students should consider more than salary and debt — scholarships can significant improve ROI. And there is more to business school than making money (though that is a key motivation for many MBAs).
But the data suggest that students at elite business schools may not have the advantage they think they do when it comes to wealth creation. Put simply, lesser-known schools often provide more bang for your buck.