The case for an MBA: is a graduate business degree worth the time and money?

• Author: McKimmie, Kathy
• Position: Education

A Wall Street Journal; article titled "Is Business School a Waste of Time?" caused quite a stir when it ran with its top MBA school rankings last fall. Was the time, effort and--most of all--money spent on the degree really worth the expected payback? Jeffrey Pfeffer, a professor in the graduate school of business at Stanford, posed the controversial question, pondering the $100,000-plus cost of some degrees.

Salaries for grads fresh out of full-time B-school are far-ranging, with an average of about $75,000, down slightly from previous years. The prestige of the school is a big factor in salary, with top-ranked grads (including those from Stanford) typically bringing in $100,000 a year plus bonuses. But the soft economy has hit some new MBA grads hard, holding salaries flat, reducing bonuses, eliminating some perks such as stock options and leaving many jobless. So, does Pfeffer have a point?

Not for Indiana's top-ranked full-time business schools, according to Business Week's 2002 biennial survey. IU, Purdue and Notre Dame all made it to the list of 30 top-ranked schools, and were also among the top 10 schools for fastest return on investment. The magazine notes, however, that tuition has dramatically outpaced inflation in the last couple years and could rise further in state-supported schools to make up for cuts in funding.

Even though the ROI period may be longer in the future, the Graduate Management Admission Council's 2002 survey shows an average 56 percent salary increase over pre-MBA salaries. It also reports that MBA salaries are $25,000 more than those of grads in other master's programs.

MORE THAN MONEY AND RANKINGS

Focusing on salaries is frustrating to Ken Armstrong, dean of the school of business at Anderson University, with a 10-year-old MBA program for working adults. "The first mistake is trying to put everything in dollars and cents; it's not the only reason people go back to school. It's a chance to think about things differently, be introspective." It's also a tremendous opportunity to network and pave the way for professional opportunities down the road, he adds. "The return is--that you're not overlooked. It really does become the accepted standard." Money, he says, is a big reason many people start on an MBA, "but one of a myriad of reasons they value it when they're done."

Lynne Richardson, dean of the College of Business at Ball State University in Muncie, agrees that an immediate salary boost is not always the...