Is the Forbes list accurate?

Question

Forbes lists "average years to Break Even" and states that most top schools take about 4-4.5 years to pay off debt. Does that sound legit? I was under the impression that most people took 10+ years to pay off their loans, even at top schools. Can anyone shed some light on this?

Av · Answer

In my opinion, this ranking is completely useless for  schools within the top 15  all schools. Years to break-even is a calculation of tuition costs, pre-mba salary, and post-mba salary.

Obvious Flaws 
  Tuition costs are comparable at all of the top 15 schools (before scholarship considerations) 
 Pre-MBA salaries are dictated by the individual, not the school 
 Post-MBA salaries are largely dictated by the individual (some exceptions)

You can decrease your years to break-even by decreasing tuition cost or by increasing your post-MBA salary. Since top MBA employers recruit at nearly all of the top 15 schools, you're odds of improving your post-MBA salary via school selection are not good. You might be able to increase your post-MBA salary through careers in Private Equity, Hedge Funds, or Venture Captial, but you'll need to attend the very best programs (H/S/W, etc.). Of course, attending a higher ranking program often means that you're less likely to receive a scholarship offer. You're basically squeezing squeezing a balloon.

To maximize your ROI, you should go to the school that's good enough to bring your target employers to campus, while offering a lower cost of attendance than comparable schools (through scholarship or cost of living). Having a full-ride to a low-ranking business school might yield a low years to break-even, but what good is an early break-even if you can't get the career that you wanted or the significantly improved salary.

There are many was rank and choose a business school for each person's goals, but break-even estimates for an entire MBA classe is not a useful measurement (it won't even tell you your own break-even).

thejz · Answer

I took a look at their rankings and I can't find how they calculate break even. I would suggest you build your own spreadsheet to calculate this based upon your circumstances. Make sure to capture your opportunity cost as well as the fact that you pay tuition or loans using post-tax money. Period to recoup an investment does not have to match how long it takes to pay off loans.

staind · Answer

And don't forget that interest starts accruing from the day you take the loan

rpratt620 · Answer

If there is data containing average and median salaries from various schools shouldn't there also be data on average and median time to pay off student debt somewhere? I know it will be different for everyone but so is salary data, yet that seems to be abundant. 
I am just looking for some kind of rough ballpark figure here. This is a big decision and I am amazed at how little info there is on the topic.

staind · Answer

Aren't there are a lot more variables involved in pay off times - whether you stay single for ten more years or get married, your spouse's income, how many kids you have, your past savings, medical issues, whether you decide to buy a house valued at $400,000 or $800,000, I could go on for ever! I think more comparable stats would be avg salaries and avg debt burden.

Av · Answer

If you want to calculate your break-even, but you're unsure of the variables to consider, try ryguy904's MBA ROI Tool.

True Value of YOUR MBA v2.0

Is the Forbes list accurate?

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