New salary data shows that business school graduates from top-tier programs continue to have strong earning potential, despite the ongoing pandemic.
For example, the median base salary among class of 2020 graduates from the MIT Sloan School of Management is $150,000, a 7% increase compared with the class of 2019. At Duke’s Fuqua School of Business, average first-year total compensation for graduates reached an all-time high of $171,000.
“An MBA as a credential offers a differentiation and a salary premium,” says Rahul Choudaha, director of industry insights and research communications for the Graduate Management Admission Council. “Then, there is a segment of schools which are commanding a further premium.”
A six-figure salary can make business school a worthwhile investment. But a high income may also be a necessity if you took on a lot of MBA student debt.
Employment trends for MBAs
Choudaha says graduates from top business school programs typically have an advantage in earning potential and job prospects, especially based on their specializations.
He says Sloan, for example, has an edge by being a premium school and having a technology-based reputation.
“In this economy, the ability to handle technological disruption is a core competency,” Choudaha says.
Within 90 days of graduation, more than 95% of the Sloan class of 2020 seeking employment received job offers, according to a November report from the school. Other schools have shown similar success.
For example, 93.5% of the class of 2020 at the Wharton School of the University of Pennsylvania received a job offer. That rate was 94% for the Tuck School of Business at Dartmouth College.
Students from less prestigious business schools may not have that level of success. But the overall outlook for MBAs remains strong.
A September GMAC survey of corporate recruiters projected a $105,000 median base salary for new graduates. It also found that 89% of recruiters plan to hire MBAs in 2021.
Managing MBA student debt
The average student debt among business school students in 2015-16 was $66,300, according to the most recent data from the National Center for Education Statistics.
But a Bloomberg Businessweek survey found that nearly half the class of 2018 students at schools such as Fuqua and Tuck took out at least $100,000 to finance their education.
If you owed $100,000, your monthly bill would be roughly $1,110, assuming a 10-year repayment term and interest rate of 6% — an amount that should be affordable if you earn six figures.
“Compared to the salary, (the debt) is not that big a number,” says Bill Kooser, a director at Fortuna Admissions, which helps students apply to business schools, and a former associate dean at the University of Chicago Booth School of Business.
Federal student loans are currently in an interest-free forbearance. Don’t refinance those loans until that break ends. But if you opted for private student loans to pay for your MBA, there’s little downside to refinancing.