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Posted by Chioma Isiadinso
Forbes’s latest round of MBA rankings is out, with pleasant surprises for IMD and Wharton in particular. Forbes divides their rankings into three categories: United States MBA programs, international one-year MBA programs, and international two-year programs.
In the international one-year category, IMD came out on top:
Among international two-year programs, London Business School placed first:
Finally, for U.S. schools, Wharton took first place:
So how are these rankings determined? As it turns out, Forbes’s methodology is about as straightforward as it comes for B-school rankings.
Forbes considers only one factor, something it calls “5-year MBA gain.” This is a measure of how much students gain financially in the five years following graduation as a result of their degrees.
Specifically, it’s calculated by taking students’ total compensation in the five years after graduation and subtracting tuition, fees and compensation they missed out on while they were in school.
At IMD, the highest-ranked international one-year MBA program, the 5-year MBA gain is $197,400. At Wharton and LBS, the other top-ranked programs, that number is $97,000 and $119,100 respectively.
One- and two-year programs are ranked separately because, as Forbes points out, the methodology gives one-year programs an advantage: since students at these programs spend less on tuition and miss out on less time working, their 5-year gain is naturally going to be higher.
This difference can be seen in how long it takes students to make up the money they put into getting MBAs. For one-year schools, what Forbes calls the “years to payback” is less than 3 at all of the top five programs. For MBA programs in the U.S., the number hovers around 4 years for the top five schools.
Another point to note is that “5-year gain” is extrapolated from what students were making before enrolling in MBA programs.
For example, among U.S. schools, compare fourth-ranked Kellogg and ninth-ranked Haas.
For the Class of 2012, which these rankings are based on, Haas students paid $113,000 in tuition and were making an average of $212,000 in 2016. Kellogg students, meanwhile, paid $138,000 in tuition and were making $195,000. Based on these numbers, Haas might appear to be a better deal.
However, it turns out that Haas students were already making $93,000 before starting their MBAs while Kellogg students had an average pre-MBA salary of $80,000. So in the end, Kellogg fairs better on the 5-year gain metric, at $84,800 vs. $72,400.
Of course, this doesn’t give a final answer to the question of whether Haas or Kellogg is a better value – no doubt the schools have different advantages for people with different priorities.
But the Forbes ranking does give one way of quickly measuring and comparing ROI from MBA programs. For more information, see the full rankings here.