An undergraduate degree is one of the most important — and possibly largest — financial investments in a person’s life. Ideally, it’s a good one. According to research from Pew, right now, about a quarter of adults under 30 have student loan debt. At our 2017 top undergraduate business schools, debt ranges from just under $9,000 at time of graduation to more than $40,000. Those same schools are graduating anywhere from 7% to nearly three-quarters of their alums with some sort of debt. All told, the national student loan amount is now nearing $1.4 trillion.
But not all hope is lost. Pew research also shows that students graduating with loan debt come from higher-income families than their peers without bachelor degrees. And, if you’re graduating from a top business program, you’re usually doing so with a frothy total compensation package. To get a sense of which schools are putting their graduates in the best position to pay off the cost of degrees, we tracked and measured the return on investment based on total average salaries every five years, from five years after graduation to 30 years after graduation.
To calculate a general ROI and not inflate or scramble data, we kept it simple. We took the average salaries for each of the 82 schools ranked, multiplied it by 30 and subtracted the total cost of attending the school for four years with and without scholarships. We found that over 30 years, no other school has a better return on investment than The Wharton School at the University of Pennsylvania, where 2017 graduates would earn more than $2.1 million when subtracting the total cost of the degree, which is more than $290,000 without any scholarships or financial aid. Up next was the University of California-Berkeley Haas School of Business with a return of $2,061,520, based on the total cost of attending UC-Berkeley for in-state residents, which is about $137,600 and the Class of 2017’s average salary of $73,304. Following Berkeley was Carnegie Mellon University’s Tepper School, where 2017 graduates could earn $2,051,092 over 30 years of making the $76,971 salary reported for this year’s graduating class.
When taking into account the average scholarship and percent of students receiving scholarships — data also reported by the schools — Wharton still lands on top, with a return on investment of $2,137,266. However, Tepper’s more generous scholarship package, barely flips them ahead of Berkeley, with a return of $2,072,581, compared to the $2,072,156 for Haas grads.
LOOKING FOR QUICK FINANCIAL RETURNS? GO PUBLIC … AND SOUTHEAST
Of course, the big limitation to measuring at 30 years out is that a lot of things can and do happen in those 30 years. People go to graduate school, change jobs, get promotions, move geographies, among countless other factors. So we also measured at five years after graduation and every five years after that up to a 30-year career. Considering we left the salary the same and didn’t include any wage increases, the numbers are likely conservative. On the other hand, the raw salary averages reported by the schools do not include expenses like taxes and healthcare.
Still, there are some significant changes between five years after graduation and 30. For instance, Wharton ends up having the highest return on investment after 30 years, but five years in, the school sits in the middle with a return of $112,494. At $80,566, Wharton 2017 grads are making more than graduates from any other top undergraduate business school, but again, at $290,000 without scholarships or financial aid, they also had the highest price tag for the degree. Same goes for Carnegie Mellon. After five years, graduates may see a return of $126,817.
The upshot for finding speedy returns on a business degree? Be an in-state resident at a top public university. After five years, Virginia residents attending James Madison University’s College of Business have a higher return than any of our top 82 business schools, at $243,394. A slew of public land grant universities follow. In-state students at the University of North Carolina’s Kenan-Flagler Business School ($235,464), the University of Michigan Ross School of Business ($232,666), the University of Virginia McIntire School of Commerce ($231,263), and UC-Berkeley ($228,920) see the next highest early-career returns. The first and only private school to make the top 15 in five-year returns — Brigham Young University’s Marriott School — shows up right after Berkeley with a five-year return of $211,817.