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All You Want to Know About Return on Investment in MBA Programs

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Why would you enrol for an MBA program? The answer, in most cases, would be on the lines of trying to gain in-depth knowledge of various aspects of business, develop the leadership and other qualities needed to emerge as a top executive or successful entrepreneur. There is also the dream of a substantial increase in post-MBA earnings.

What is Return on Investment for MBA programs?

You must remember that the MBA program involves a substantial amount of money by way of fees and other expenses. In the case of full-time MBA programs, you may have to leave your job and remain without pay and allowances for the entire duration of the program.

Thus, you should consider whether you would be able to recoup not only the money you spend on the MBA but also substantially increase your earnings post-MBA.

This is where the Return on Investment (ROI) comes in. Apart from the financial aspects, it also includes several other benefits like a substantial increase in knowledge, networking opportunities and adding value to society.

The brand value of the MBA as well as the B-School’s reputation and rankings also play a role. It could also include the quality of the peer group and the faculty besides the opportunities for interaction with business leaders.

How is Return on Investment for MBA programs calculated?

ROI is calculated by taking the mean, median and mode of the stipends or salaries offered to the students during summer internships or the final placements and compare it with the fees and other expenses for the program.

However, the ROI may not be substantial for most people immediately after graduation despite an increase in salary and other allowances. The gains will become apparent after a few years.

Those in the one-year MBA programs would be able to recoup their investment faster than their two-year counterparts on account of lesser time spent away from full-time employment.

Along with the substantial salary increase, you will have to take into account the dividends paid in both short term and long term into the ROI calculations.

Which MBA Programs offer the best Return on Investment?

According to QS TopMBA.com Return on Investment Report: Full-Time MBA 2018,  Stanford Graduate School of Business stands first with the students getting a 10-year ROI of US$1,023,150, more than seven times the domestic tuition fees for the 2-year MBA program. The graduates also notched up a three-month post-graduation salary average of US$140,600.

Imperial College Business School in London is number two in the rankings for its one year MBA with a 10-year ROI of US$870,200, almost 14 times higher than the domestic tuition fee rate. Three months after graduation, 92% of graduates had accepted job offers with a difference of US$48,500 between their pre and post-graduation salaries.

Third-ranked University of Hong Kong is the only Asian B-school in the Top 10. It has a 10-year ROI of around US$845,350 for its 14-month MBA. Almost 96% of the graduates had accepted job offers three months after graduation at around US$48,000 higher than their pre-MBA salary.

At fourth place is Vlerick Business School in Belgium with its one year MBA graduates notching up a 10-year ROI of US$836,775, which is almost 20 times higher than the original tuition fees for domestic students. The average salary, three months after graduation, is US$33,000 higher than the pre-MBA salary.

Ross School of Business at the University of Michigan, US, is ranked 5th with its 20-month program getting a 10-year ROI of around US$826,300. Sixth-placed is Tepper Business School, Carnegie Mellon University with an average salary of around US$117,700, about US$63,70 higher than the pre-MBA salaries.

MIT Sloan School of Management is ranked 7 with a 10-year ROI of around US$788,950. INSEAD is ranked 8th with an average ROI of US$768,500 and salary of around US$103,700.

Ranked 9th is Mannheim Business School, Germany. Its 12-month program has a fee of US$41,500. Graduates take only 21 months to recoup the amount as after graduation, they get around US$93,600, which is about US$57,900 higher than the average salary pre-qualification.

Goizueta Business School of Emory University in Atlanta, Georgia is ranked 10 with an average 10-year ROI of US$755,150. The graduates get a salary of around US$116,200, an increase of approximately US$58,700 when compared to the pre-qualification earnings.

Source 1, 2

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