Whether a prospective MBA student can secure a scholarship, land a job with a good wage, and pay off their student debt quickly, are now essential to their decision to apply for business school.
Racing tuition fees, and pressure to stay in work, mean MBA candidates are more discerning about the flagship management qualification.
“People are putting a lot of financial resources into an MBA,” says Conrad Chua, head of MBA admissions and careers at the UK’s Cambridge Judge Business School. “The opportunity cost of leaving employment is something students must also consider.”
Calculating return on investment is vital. Each year, the Financial Times releases an MBA ranking of the world’s best 100 best business schools. This year’s ranking, published today, also tots up schools’ “value for money” rank. That is compiled by using the salary of alumni today, course length, fees and other costs, including the opportunity cost of not working for the duration of the MBA.
Hough Graduate School of Business at University of Florida is top in value for money, even though its alumni’s average salaries are relatively low at $106,000. But the 16-month course has among the lowest tuition fees — around $30,000 — and a low opportunity cost as the course is the shortest on average in the US.
Business schools in Europe dominate the “value for money” ranking, as their programs are typically just around one year long, meaning graduates can recoup the cost of tuition more quickly than those in the US. Seven of the top-10 schools for value for money are based in Europe; three are in the US.
Return on investment has increased for several years, but has slowed since the financial crisis, according to FT data. Between 2008 and 2014, the average salary three years after graduating from an MBA increased by just 4%, from $122,000 to $127,000. During the same period, the average cost of two-year MBAs ranked by the FT rose 44%, from $72,000 to $104,000.
In more recent years, salaries for MBA alumni have been higher, reaching an average of $142,000 in 2017, a 12% increase on 2014, according to the FT’s calculations. And average salaries last year increased by $7,000, the highest boost in more than a decade.
This year the average salary is $146,000, $4,000 higher than the year before.
Scholarships are also now more widespread, helping students saddle the rising cost of getting an MBA degree. More than 60% of students in 2018 are receiving scholarships, which are awarded on merit, financial need or both, according to data from the Graduate Management Admission Council. That is up from 41% in 2014.
At a time when employer funding for business school qualifications is falling, the data are welcome news for prospective MBA students.
To help candidates choose the right school for them, we’ve listed the best MBAs based on value for money, below.