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Smaller Paychecks for MBAs? Not for Graduates from Top Schools

A Wall Street Journal article yesterday called into question the value of the MBA, suggesting that pay for recent graduates is stagnant or falling while tuition and fees continue to escalate. Indeed, tuition rates do seem to be climbing everywhere. But at top-tier schools, starting salaries are increasing as well.

The WSJ article cited survey results from the Graduate Management Admissions Council indicating that median salary for newly minted MBAs was flat between 2008 and 2011. The GMAC survey included results from more than 130 MBA programs. Data collected by Clear Admit from 20 of the most elite MBA programs in the United States, meanwhile, revealed that at all but three schools, average starting salaries for graduates of the Class of 2011 were higher than those for the Class of 2010, by between 2 and 10 percent.

Tuition increases, however, are outpacing salary increases at these top schools. Total costs – including tuition and fees – rose at all 20 of the schools from which Clear Admit collected data between 2011 and 2012. And in almost all cases, the increase in costs was greater than the rise in average starting salary.

The WSJ article highlighted another important fact about the MBA landscape, namely that there has been an explosion in the number of degrees granted in recent years. Citing Department of Education figures, the WSJ article reported that the 126,214 MBAs granted in 2010-11 by U.S. schools represents a 74 percent jump from a decade earlier. As Brooks Holtom, a management professor at Georgetown University’s McDonough School of Business, told the WSJ, “An MBA is a club that is now not exclusive.”

Indeed, just as the number of MBA degrees has grown, so, too, has the number of alternatives to the traditional two-year MBA program. Now the graduate management education space is crowded with full-time, part-time, executive and online MBAs, as well as many new specialized masters degree programs.

These trends together mean that now as never before it is important to consider reputation, accreditation and location among several other key factors before taking the MBA plunge.

Read the WSJ article, “For Newly Minted MBAs, a Smaller Paycheck Awaits.”

Posted in: MBA News

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