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Planning for MBA in The USA? Consider ROI First

The difference between an MBA course and most other courses is that it is completely job-oriented. As an MBA student, your ultimate goal is to advance your career and land yourself a management job.

However, pursuing an MBA from a B-School in the USA is an expensive affair that often requires you to carefully plan your finances and look for every avenue to finance your MBA education, right from taking loans to seeking aids.

Therefore, it becomes very important to determine that the MBA course you are about to pursue is worthwhile from the investment point of view. You can determine the investment value of your course by determining ROI. Let us delve deeper.

Average Cost of MBA in The USA

Despite the Covid-19-induced uncertainties and the global economic slowdown, the demand for MBAs is far from slowing down. As a result, the MBA programmes of top universities in the USA remain high from the Indian perspective. Following is the latest list of top B-schools in the USA with their respective tuition fees for the full-time MBA programme of two years duration.

Rank Name of the Business School Tuition Fees Per Year 

(in USD)

1 Stanford University 74, 706
2 University of Pennsylvania (Wharton) 80,432
3 University of Chicago (Booth) 73,440
4 Northwestern University (Kellogg) 74,871
5 Harvard University 73,440
5 Massachusetts Institute of Technology (Sloan) 77,168
7 Columbia University 77,376
7 University of California – Berkeley (Haas) 68,444
9 Yale University 72350
10 Dartmouth College (Tuck) 77,520

Source: US News

It can be noted that apart from the tuition cost enlisted above, you will have to incur a significant cost in the form of books, course activities, projects, standard living costs, etc.

What Can You Expect to Earn Post MBA?

The average base salary among MBA graduates in 2020 from the US university was $91,372 per annum. This number is significantly higher than the average salary offered to MBA graduates back in India during the same period barring a few honourable exceptions. 

While the B-school from where you are graduating does affect the initial salary, it also depends upon the chosen industry. In the USA, MBA grads who enter the consulting industry or financial services can get a significantly higher salary than those who choose non-profit or government businesses. 

However, such trends are likely to change or alter over time. Your best bet would be to choose the industry which excites you the most and where you think that you can excel.

How to Calculate ROI of MBA

Since the cost of MBA courses from the USA B-schools is steadily increasing, it is important to look at these courses as an investment toward enhancing your career goals. Therefore, you should have a clear picture of the return on investments or ROI of doing an MBA from the USA before embarking on your academic voyage.

The following factors are analysed by experts to derive the ROI of an MBA course.

  • Cost of living.
  • Debt accrued during the study period.
  • Tuition Cost of the MBA program run by the institution.
  • The average time taken by the alumni of that institution to pay off their debts after they join the workforce.
  • The average salary of the students once they start working.
  • The long-term return prospects of the MBA degree acquired. For instance, a probability-based comparison between your possible salary 10 years down the line with an MBA degree than that without an MBA degree.
  • Lost compensation during the time you invested in MBA rather than working

While all the aforementioned points are macroscopic, there is a simpler way of calculating ROI by deriving the salary-to-debt ratio. The salary-to-debt ratio can be calculated by dividing the average salary offered to the students of an institution by the total debt on the students.

Following are the US management colleges with the best ROI as per the salary-to-debt ratio-

Sr. No. US B-Schools Salary-to-Debt Ratio
1 University of Georgia (Terry) 6:1
2 University of Florida (Warrington) 5.7:1
3 University of Washington (Foster) 4.8:1
4 Arizona State University (W.P. Carey): 3.9:1
5 University of Connecticut 3.6:1
6 Pennsylvania State University—University Park 3.5:1
7 University of Wisconsin- Madison 3.4:1
8 University of Texas 3.4:1
9 Brigham Young University (Marriott) 3:1
10 Purdue University—West Lafayette (Krannert) 2.6:1

Source: US News

While the institute-wise date of ROI does help in deciding the worthiness of an MBA programme, you should refrain from judging an institution solely on one data. 

As you might have already noticed that some big names, like Harvard or Yale universities, are missing from this list. This can simply be attributed to the fact that the cost of courses might be higher in such top-tier institutes, which drives their ROI down.

Do read this article where I list down the top MBA programs with the highest employment rate.

MBA Specialisations That Offer Best ROI

Apart from being a global superpower, the USA is an economic powerhouse and flagbearer of modern capitalism that is home to the largest number of big multinational companies. As a result, pursuing an MBA from the USA can provide you with the necessary leverage to get initiated into the world of high-paying corporate jobs across different industries.

Still, current trends and global socio-economic factors will always favour a particular industry over another, which will keep changing every few years. Following is the list of industries that have offered the highest average salaries in the year 2020.

Sr. No. Industry Average Base Salary Offered (in USD)
1 Consulting 1,52,470
2 Finance 1,29,889
3 Technology 1,24,289
4 Healthcare 1,18,004
5 Media/Entertainment 1,09,846
6 Energy 1,08,730
7 Retail 1,08,270
8 Real Estate 1,07,522
9 Consumer Packaged Goods 1,06,719
10 Transportation and Logistics 1,06,250

How to Maximise your MBA ROI?

You can prepare the following checklist to maximise your MBA ROI

  1. Be clear about the particular goals and objectives you plan to achieve through the course.
  2. You can either choose a full-time 2-years course or you can go for a one-year executive MBA. Decide the course format that best suits your needs.
  3. Consider your financial standing. If you are on a budget, go for the college that charges relatively lower tuition fees without compromising on quality.
  4. Make sure that the degree will add value to your earning potential in future.
  5. Network with former alumni of the institute to get an idea of what to expect. They could provide a treasure-trove of information.

Crack the Top B School with Scholarship

Scholarships can help you bring down the overall cost of an MBA drastically. Most top B-schools announce scholarships based on your scores and profile. Getting a scholarship is not only about saving money, but it also helps you get a badge on your profile which can further increase your employability once you complete your MBA. 

Watch this video where I share 3 key tips to get a scholarship to the best MBA school.

Remember, it is not just a degree but your hard-earned money that is at stake. Therefore, nothing is wrong with asking as many questions as you can and enquiring about the topics and parameters discussed herein. You can also take help from a good MBA consultant who can guide you in decision-making. And if you’re confused about choosing the right consultant, read through my blog to get some tips. 

Eventually, have faith in your abilities and get ready to take the big leap.

Read More:

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For over 15+ years as an Entrepreneur, and India’s Top Educationist, Jatin has led a range of initiatives in the Education Industry. In this role, he has created many successful educational services and products geared towards generating success for professionals aspiring to join IVY League and global Top Tier Universities for MBA Programs, Masters Programs, and undergraduate courses. He is the Founder and CEO of PythaGURUS Education, and has been recognized as a thought leader in the Higher education sector. Economic Times, Hindustan Times, Times of India, India Today, Business Today, Tribune, and many other national newspapers have recognized his work, and have given him numerous opportunities to be a regular columnist. He has also served as a panelist for NDTV, and other national news channels.

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