Alumni Report Lifelong Returns on the B-School Investment

Feb 25, 2016
Tags: Business School, Value of an MBA

A good investor or entrepreneur understands the full cost of an investment before making it, and has a realistic expectation of what the returns may be based on available data.

The same holds true for making the decision to invest in graduate management degree. A savvy prospective student understands that the full investment of business school is more than merely the cost of tuition, but also opportunity costs in the form of forgone wages that may not be earned while enrolled. In addition, nonfinancial expenditures need to be taken into account, such as time and energy—both of which are finite commodities and may be in limited supply if you’re also juggling a family, friends, or even running your own business.

Just as the costs of the b-school investment include nonfinancial variables, so do the returns. In addition to increased earnings, also consider how a graduate management degree will impact the expansion of your professional knowledge, skills, and abilities; your personal development; career acceleration; and job satisfaction.

To help you gain a better sense of both the financial and nonfinancial returns associated with investing in a graduate management education, GMAC surveyed more than 14,000 business school alumni and collected data related to their salary, employment, skill development, professional satisfaction, and their assessment of the value of their degree.

Financial Returns

Coming out of business school, alumni report significant initial boosts in base salary and timely investment recoup times, which vary by program type.

2016 Years to ROI

Opportunity cost and the length of the program are major factors affecting investment recoup time. For example, alumni of full-time two-year MBA programs tend to have the largest investment costs because they typically miss two years of employment while enrolled full-time. Graduates with lower opportunity costs, including those who attend shorter (typically one-year) specialized business master’s programs, tend to recover their investment faster.

Overall, 81 percent of alumni agree that their graduate management education increased their earnings power and 75 percent agree that their business education was financially rewarding.

Business school alumni earn a median of US$2.5 million in cumulative base salary over 20 years following graduation. This is a half-million dollars more in median cumulative base salary than they would earn if they did not go to business school and had consistently earned 5 percent annual salary increases, and a million dollars more than if they did not go to business school and had consistently earned 3 percent annual salary increases.

Nonfinancial Returns

Beyond the financial returns are the benefits of a business school degree that affect alumni personally and professionally. Overall, 93 percent of alumni agree that their graduate management education was personally rewarding, and 89 percent agree it was professionally rewarding.

Specifically, a majority of alumni agree their graduate management education prepared them for leadership positions (80% of respondents), offered them opportunities for quicker career advancement (73%), and developed their professional networks (70%). From a skills perspective, over 3 in 4 alumni agree attending business school developed their qualitative analysis skills (88% of respondents), quantitative analysis skills (84%), and soft skills (76%). Two-thirds of alumni (68%) are satisfied with their current job and employer.

Like the financial returns of business school, how alumni assess their personal and professional returns vary by program type. Using this interactive tool, you can filter the data by the program types you are most interested in.

Interactive Salary ROI Tool
Would Alumni Make the Same Investment Again?

Looking back on their decision to invest in a graduate management degree, 9 in 10 alumni (93%) say they would do it again, and they are very likely to also recommend it to their peers as well. Overall, the Net Promoter® score (NPS®)—a widely used metric of customer loyalty—is strong among graduates of all types of business programs, with an overall NPS of +45.

Want to experience the returns on a business school investment  for yourself? Start your journey by exploring what business schools have to offer using GMAC’s School Finder tool.