Graduate Management News

March 2016

The Newsletter of the Graduate Management Admission Council

Alumni Report High Returns on Their Business School Investment

Graduates of full-time two-year MBA programs report a median initial boost in base salary of US$30,000.

High Returns

The public discourse surrounding the value, or returns, of a higher education are generally focused on money. There’s a good reason for this—over the past several decades, the average cost of bachelor’s and master’s degrees have risen, leading many to question whether or not they remain to be good investments.

Data collected from more than 14,000 graduate business school alumni as a part of the 2016 Alumni Perspectives Survey reveal that a majority of alumni are satisfied not only with the financial returns of their business school investment, but with the nonfinancial returns as well.

Financial Returns

As a part of the survey, alumni provided salary data for three periods in their career: pre-business school base salary, post-business school base salary, and current base salary. The analysis reveals that graduates of full-time two-year MBA programs get a median boost in base salary of US$30,000 coming out of business school and see an average annual salary increase of 7.1 percent over the course of their careers.[1] Taking into account investment costs—including tuition and foregone wages—alumni of full-time two-year MBA programs recoup their total business school investment in an average of 3.5 years.

The analysis also reveals that 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 three percent annual salary increases.

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.

For more on the financial return on investment of business school, including analyses on professional MBA and specialized business master’s alumni, click through the below SlideShare presentation.

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, more than 3 in 4 alumni agree that 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.

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.

Read more about alumni return on investment and other topics by downloading the 2016 Alumni Perspectives Survey summary report, or explore the alumni data for yourself using our interactive tools on the value of a graduate management education and must-have workplace skills. You can also check out additional SlideShares on essential skills for today’s workforce and employment and salary.

[1] Compound annual growth rate (CAGR) is calculated as ((current salary/post-degree salary)^1/number of years post-degree employment))-1.