How true is this?

My understanding is that Anderson and Haas are fully funded by MBA student tuition and corporate consulting services. While they may be associated with a public institution, they do not receive public funds to help offset their costs. I'm not familiar with either Ross' nor Darden's cost structure.

I have to say, I completely disagree with this. The financial ROI of business school varies greatly from person to person, because it's all about the change your salary/opportunity. Think of it this way:

John got a 3.8 from Princeton, scored 760 on the GMAT, and worked for GS for 5 years. He made $120K pre-MBA. When he goes to HBS, the degree costs him ~$380K all-in (including opportunity cost). When he graduates he lands a consulting gig, but is making $130K (just $10K more than he did pre-MBA) -- that's a brutal financial ROI.

Now consider Bill, who got a 3.1 from his local state school, a 630 on the GMAT, and worked in HR for 2 years. He made $35K pre-MBA. When he goes to Babson, the degree costs him $225K (including opportunity cost). When he graduates he lands an analyst role that pays $85K ($50K more than he made pre-MBA).

In the end, John and Bill paid the same amount in tuition and living expenses, but Bill had a significantly better ROI.

Your point is well taken, though just as generalizations are misleading in that they are averages, particularizations are misleading in that they are just one example. My main take-away from what you're saying is that some people are getting a huge ROI at schools outside of the top 20, which I agree is a super important point to make.

I think John's case is rare however, and even in his situation, he may likely come out on top. The longterm benefits of a higher salary post graduation are exponential. One's raises from year to year compound off the original, so John's ROI is not a static data point. We need to look at his salary 3, 10, and 20 years after graduating.

Another point to make is that there's no data showing how much someone actually paid for their MBA and how much they made after graduating. So we know that HBS is super generous with scholarships, so John may actually only pay half the sticker price.

There are lots of factors at play here.

Absolutely agree with everything you just said. I'm only using extreme (and imaginary) examples here to really drive home my point - one cannot say 'the fact that lower ranked programs cost as much as top tier programs is ludacris' solely based on the post-MBA opportunities available to each school's graduates. It's all about the delta!

Fair enough, BUT... you'd also have to take potential future earnings into account. The person coming out of HBS has a greater chance of accelerating their earnings quickly due to the companies they tend to land in.

5 years down the line, on average an HBS grad makes 230K (according to P&Q for number collected in 2010, should be higher now), how about Babson?


When lifetime earnings come into play, it's tough to argue that a Babson MBA has a better ROI then a HBS MBA regardless of pre-mba salary.

Now sure, you can argue that the caliber of talent coming into HBS would have had a higher earning potential to begin with...

This article - https://poetsandquants.com/2011/06/14/mbas-that-return-more-than-3-million/
States that in 20 years, on average, an HBS grad will earn over 3million, Babson is not listed, but would at least be under 2.4 million.


There will always be outliers of course. The Babson grad who uses that new entrepreneurial outlook on life, and hits the ground running. He launches an internet startup and sells it to facebook for 5m in 3 years. The HBS grad who works in non-profit, and brings in sub 100K each year for the foreseeable future.

Fanatical Times publishes ROI of a degree, they do not take opportunity cost into consideration, but just basic %increase of salary post MBA. HBS = 121%, Babson = 98%. I'd be pretty happy with either.

Of course it is a case by case basis, but on average, the numbers are pretty clear.

If person A get into Babson and HBS, they will get a better ROI from Harvard, but be paying close to the same price. Babson may be worth the money for Bill, but Harvard would be worth much more.



Edit: Essentially... what machichi said... Without all of the data that I wasted time collecting...

I'm with you, man (or woman)! I'm not at all surprised to hear that the all-in ROI is better for Harvard than Babson. Just saying that, for many people, the cost of attending business school outside the Top 20 is totally worth it (i.e., the ROI is positive), even though the price tag is equivalent to Harvard's.

True true. Also, I'm not knocking programs outside the top 20 at all, just hammering home the fact that they (along with everything outside the top 3 or 4) are overpriced when compared to H/S/W.

On a side note, I'd love to see a study on gmatclub members... I bet we tend to be more driven, and do better then the average at our programs of choice...

I'd argue that H/S/W are underpriced :D but yes, I completely agree with you.

UVA in general gets pretty dismal funding from the state of Virginia, even for undergrads (I want to say it's in the 10% to 12% range). Darden itself has its own endowment separate from UVA and seems to be pretty similar if not exactly the same as you describe Anderson and Haas. It is for this reason that, in state residents only get about a $5k per year break versus out of state.

The reason elite state MBA programs charge elite prices is because that's what the free market for business school education supports. People are willing to pay it. Yes, these are non-profit organizations (just like private b-schools), but more tuition means more funding for better professors, facilities, and scholarships. No school is going to pass this up. It shouldn't matter if a school is private/public in determining tuition but the free market of demand for the education and career opportunities the school provides. This is econ 101.

You could certainly argue that Darden shouldn't cost the same as Harvard but a) not everyone gets accepted into Harvard and b) this seems more of an argument that Harvard is under priced given that Darden is easily at full capacity even with its current tuition, while Harvard only accepts 1 in 11 applicants. Darden, Anderson and Haas are funded by their tuition and endowment, just like private schools....the only difference is they are affiliated with public universities.

Kelley, McCombs, and K-F are great schools and the lower price tag may make them worthwhile. However they tend to be much more regional than top 15 schools (private or public) and offer different employment opportunities. The differences in these opportunities is much bigger between the 20-40 range and among the top 15. To illustrate, this past fall I was at an invitation networking event for a top 5 investment bank. Darden had about 12 people there (similar to Booth), wheares Kelly and McCombs had 1 each, K-F had 3. This obviously is one data point but I do think it speaks to the fact that private/public status is really irrelevant. Not all private and not all public schools are equal.

In any case, I'm not really sure maximizing ROI one year out should be the main concern of selecting an MBA program. If you even look at ROI, the earnings of a 30 year career are more relevant. Still, fit, employment opportunities, culture, and net work are much more important.