As the San Fran Fed recently explained, when it looked at the upside of a college education, it found that the average college graduate earns over "$800,000 more than the average high school graduate by retirement age." What was ignored is the offsetting cost to this upside in terms of hundreds of thousands of college loans bearing compounding interest that are just as sticky and in increasingly more cases also remain with the graduate until retirement. But what about business schools? For those professionals who have already picked a career in finance or business, and who are willing to spending even more ridiculous amounts of money for a piece of paper and a rolodex, which business schools offer the best bank for the buck?
According to an analysis by Economist, the business schools that generate the highest IRR for students aren't the traditional MBA mainstays of Harvard and Wharton (which as it turns, was the worst school from a return perspective in the sample), but far less popular vanues such as HEC in Paris, Aston in Britain, the University of Hong Kong and the Indian Institute of Management, Ahmedabad in India.
The Economist reports:
Which MBA offers the best return on investment? That depends on whether you are after a long- or short-term gain. Our chart shows the cost of an MBA at selected business schools after taking into account tuition fees and forgone salary. Two-year courses at prestigious American institutions are the most expensive. An MBA at Wharton costs $330,000 on average, in part because it enrolls well-paid executives. But the immediate return on such degrees is small. Graduates tend to land jobs just a few notches above the ones they left. Cheaper, shorter MBAs around the world offer better returns. Students at HEC make enough extra money upon graduation to pay off their degrees in less than two years. Schools, such as IESE, that enroll lots of students from poor countries who then find jobs in the West also fare well. Still, Wharton alumni are more likely to top the greasy pole in the long run.
And the verdict in chart format: those who wish to get rich quick by going to the most popular US MBA programs at Penn, Harvard, or Stanford will most likely have nothing but even more debt to show for it for a very long time.