New Poets&Quants' Study Reveals 20-Year Income Value Of MBA Degrees

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The Most Lucrative Seven-Figure MBA Degrees in the U.S.

"The analysis clearly shows the incredible value of the MBA degree," says John A. Byrne, editor of PoetsandQuants.com, a higher education website that covers graduate business education.

A new study of the earnings potential of the MBA degree shows that graduates of leading business schools earn significantly more over a 20-year timeframe than others in the workforce. The analysis--commissioned by higher education website PoetsandQuants.com--also found that graduates of highly ranked MBA programs made much more money over 20 years than those from lower-ranked business schools.

Highly ranked, big brand schools tend to deliver the highest earnings over a 20-year period. Harvard Business School’s MBAs come out on top, with median income of $3,233,000. Stanford MBA holders are next with $3,011,000, and Wharton comes in third with $2,989,000. Harvard MBAs, in fact, earned nearly twice as much as MBAs from Texas A&M’s Mays Business School who pull in $1,781,820 over 20 years.

The analysis, done exclusively for PoetsandQuants.com by PayScale, which collects salary data from individuals through online pay comparison tools, shows that the MBA delivers hefty seven-figure income over a 20-year period. PayScale used its database of MBA graduates at the top 50 U.S. schools to calculate an estimate of median pay and bonus over the entire 20-year span.

Employees who have only bachelor’s degrees are estimated to have earned a median $1,301,000 in the 20 years since graduation. All the MBAs in the sample earned $1,771,000–nearly half a million more than BAs. The greater the prestige of the business school, however, the more earnings a graduate accumulated.The median pay for those with an MBA from a Top 50 school was $2,266,000–another half a million more. MBAs from Top Ten business schools earned $2.8 million over the 20-year timeframe, while those with a Top Three MBA earned more than $3 million.

"The analysis clearly shows the incredible value of the MBA degree," says John A. Byrne, editor of PoetsandQuants.com, a higher education website that covers graduate business education. "And the more highly selective a school is, the more likely the graduate will earn more money over the studied period."

The estimates of 20-year earnings, moreover, are conservative. They do not include stock-based compensation of any kind, the cash value of retirements benefits, or other non-cash benefits, such as health care coverage. The estimates are for base salary, cash bonuses and profit sharing in today’s dollars over a 20-year period from from 1994 to 2014. They are not a projection of future earnings. But the estimates show that the MBA degree–despite all the second-guessing over its value since the Great Recession–is one of the surest paths to a lucrative career.

"For a rough estimate of lifetime earnings, all you have to do is double these numbers," explained Byrne. "At Harvard Business School, for example, the average age of an MBA at graduation is 29 years old. So calculating the 20-year payout for that person brings you to only 49–with at least 16 more years to go, given a retirement age of 65. So it would not be unusual for a Harvard MBA to earn another $3.2 million during those years to bring total lifetime earnings after the MBA to something approaching $6.5 million. This is a conservative number because it fails to include stock compensation which can very well equal or exceed salary and bonus over a lifetime for many MBA graduates."

Several business school deans at top schools confirm the analysis. “It is not surprising that where you get your MBA has a strong association with your income potential,” said Robert Bruner, dean of the University of Virginia’s Darden School. “There is a winners-take-all self-reinforcing cycle in higher education: certain schools attract excellent student talent, which in turn attracts intense recruiter activity and high-salary offers. The employment results make it easier for those schools to attract excellent student talent…and the cycle continues.”

Here are the top ten MBAs and their estimated 20-year earnings, according to the new analysis:

1. Harvard Business School: $3,233,000

2. Stanford Graduate School of Business: $3,011,000

3. University of Pennsylvania (Wharton): $2,989,000

4. UC-Berkeley (Haas): $2,858,000

5. Columbia Business School: $2,796,000

6. MIT (Sloan): $2,858,000

7. University of Virginia (Darden): $2,705,000

8. Dartmouth College (Tuck): $2,703,000

9. New York University (Stern): $2,639,000

10. UCLA (Anderson): $2,593,000

To see the 20-year income numbers for 50 business schools in the U.S. and additional analysis, check out PoetsandQuants.com.

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