Where To Get The Best Return On An MBA Degree, According To A New "ROI Calculator"

Bloomberg Businessweek has published an ROI calculator that is supposed to help students assess if pursuing an advanced degree is worth the investment.

Using data from MBA graduates in the annual Best B-Schools Rankings, it considers factors like loan interest and lost income during enrollment to try and determine whether a degree from a certain institution is worthwhile. 

Highlighting one example, Bloomberg writes that the median cost of a degree from the Wharton School at the University of Pennsylvania is $266,000, the highest among 77 US schools in the 2023 rankings.

Despite this, Wharton ranks eighth in the 10-year post-MBA compensation increase and 19th in signing bonuses. According to Bloomberg estimates, a typical Wharton graduate can expect a 10-year net ROI of about $678,000, with an average annual compounded rate of 9%.

Stanford Graduate School of Business, however, had the third highest expenses, about $250 less than Wharton. But, it led in the 10-year post-MBA compensation difference, at $295,000 compared to Wharton's $220,000, despite a 32nd place median signing bonus. This results in an ROI of over $1 million and an annual rate of 11.9%.

Bloomberg did their own ROI analysis and found the University of Kentucky’s Gatton College of Business and Economics offers the best ROI among the schools listed, with an impressive annualized ROI of 23.8%. This is largely due to its relatively low cost of $46,500 and its accelerated 11-month program, which allows students to re-enter the workforce more quickly. Located in Lexington, KY, Gatton provides an exceptional return on investment, making it a standout choice for prospective MBA students looking to maximize their financial outcomes.

Following closely is Syracuse University’s Whitman School of Management, with a 22.0% ROI and a cost of $73,300. While more expensive than Gatton, it still offers a substantial return due to its strong post-MBA earning potential. The University of Mississippi also performs well, with a 20.7% ROI and the lowest cost in the list at $39,500. These schools exemplify how selecting a program with a high ROI can significantly impact one's financial future, offering excellent returns compared to their costs.

The tool lets users put in their own data (or use median estimates) for any of 77 US schools or the combined median estimates. It provides a 10-year net ROI in dollars and an annualized ROI percentage. You can compare top-ranked schools with more affordable ones like the University of Kentucky’s Gatton College, which has median expenses under $50,000 and the highest annual ROI at nearly 24% due to its shorter 11-month program. 

While ROI is important, choosing a school or deciding to pursue an MBA also involves other factors like career goals, networking opportunities, location, and personal considerations.

Gale Nichols, executive director of the MBA program at Indiana University’s Kelley School of Business commented: “It’s important for a student to enter any education program with a whole heart, and feeling that this is the right decision for them. They have to be prepared to put in the effort that’s needed to succeed.”

You can use Bloomberg's new ROI tool here.