Average Debt and Starting Salary for Business School Graduates

Submitted by natesezgoblue on June 8th, 2015 at 11:15 AM

Chart: Average Debt and Starting Salary for Business School Graduates

 

Saw this come across my Linkdin feed today.  Hadn't seen it posted, intersting stuff.

 

The chart below shows the average debt and debt-to-salary ratio for the 10 MBA programs where 2014 graduates earned the highest starting salaries. Schools that didn’t submit the average debt of 2014 graduates to U.S. News in an annual survey were excluded from the chart. The salary and debt data in this chart are correct as of June 4, 2015.

 

Stanford University is the No. 1 business school and graduates who are employed within three months after graduation tend to earn the highest annual salary, according to what the school reported to U.S. News.

In North Carolina, students who borrowed to attend Duke University's Fuqua School of Business, ranked No. 16, left school with more debt than they are likely to earn in salary. The average starting salary for Duke graduates is $114,109 and the average debt $115, 201.

 

 

 

 

http://www.usnews.com/education/best-graduate-schools/articles/2015/06/…

Comments

ypsituckyboy

June 8th, 2015 at 11:27 AM ^

I always find info like that really interesting. And because money is such a conversational taboo in the USA, it's nice to see behind the curtain a bit.  

Since there are a lot of lawyers on here, thought they might find this infographic of interest too:

LSAClassOf2000

June 8th, 2015 at 11:58 AM ^

While not a lawyer, I will say that the top-paying specialties did not shock me at all, although I wouldn't have guess product liability was the top one per se. Then again, when you look at some of the massive recalls on various things lately, I can sort of see where being in that particular field can mean some nice change at the end of a suit. 

ypsituckyboy

June 8th, 2015 at 12:43 PM ^

They are. The Detroit market sucks for pay, even for a secondary market. For instance, starting pay for large firms in Charlotte is between $130k and $145k. Would you rather be making that or $105k-$110k in Detroit, where cost of living is higher (particularly home prices)? Almost all other major secondary markets pay more than Detroit. That may be due to the fact that there is a very small presence of national firms. Looks like that's changing now, so we'll see if the pay changes along with it.

Hail-Storm

June 8th, 2015 at 2:33 PM ^

in Detroit.  I know two people who worked for a Detroit Law firm right out of Michigan Law where the base pay was around $150,000 and salaries rose quickly from there.  This was before the bottom fell out, but I'm guessing top law firms still pay top dollar.  Could be wrong though. 

ypsituckyboy

June 8th, 2015 at 1:26 PM ^

I realize that people often judge the relative worth of a person based on their wealth (or lack thereof) despite the obvious faults with such a judgment. That may be part of the reason why such taboo's exist.

That being said, I think transparency is a great thing for the average worker. I'm fortunate to be in a field (lawyering) where there's less of a black box vis-a-vis salaries given that (1) the salary and bonus info for most large law firms is publicly available and (2) headhunting firms have good resources for in-house salaries as well. And you often see associates switching firms when they realize their current employer is stiffing associates compared to competitors.

However, many fields don't have that transparency and that usually works to the advantage of employers. Just my $.02

bronxblue

June 8th, 2015 at 1:34 PM ^

Interesting chart. I haven't worked in the MI market in years, but when I was there I remember seeing some of these stats and cocking an eyebrow because they are a bit misleading.  Not that they are incorrect on their face, but they infer that lots of these positions exist anywhere, which isn't really true.  The number of attorney positions in any state tend to be less than the available pool of attorneys, so you get a fair number of individuals with law degrees who either make less or are completely out of the market.  So while a starting associate makes good money, there might only be 600 of those positions across all firms in the state at any given time (I'm spitballing that number so it may be off, but I'm guessing not by much).  Yet, the number of bar passers in a year seems to be around 1,000 if you combine the two periods.  

I guess my point is that if you are looking to make money as your main goal, business school seems like a better ROI, and I'd argue if you don't get into a top-15-ish law school or have some specialty to fall back on, it probably isn't worth it.  

Huma

June 8th, 2015 at 4:48 PM ^

Just taking the median for each data point reflected for salary is incredibly misleading. The chart would be better off broken out by size of firm. I would guess that for the large corporate or general service firms these numbers are way off. Likewise the hourly rate by firm size chart is meaningless without being broken out by seniority. Certainly a first year associate will be billing at a much lower rate than senior partner. Last, product liability and medical malpractice are definitely skewed up by the fact that they are usually based on contingency as opposed to time and materials. There are probably some very big plaintiffs firms (e.g., Sam B) that push the average up.

MGoOhNo

June 8th, 2015 at 5:07 PM ^

Born and raised in Michigan and went to UM law and LSA before that - intended to practice in Michigan and interned at 4 highest paying firms in Michigan (2 firms each summer, between 1L and 2L). When it came time for "final answer" it was big law in Chicago - because it was more like Michigan than NYC and the pay differential between the latter at the time was like $10k while COLA was multiples of that. It's not just starting salary differential between Detroit and other markets, but also year over year salary/draw stagnation in Detroit. Ultimately decided I could always return to Detroit after I got trained up at mega firms. That said, I ended up in Brentwood on the LA coast in CA. For law, it's go top 10 and graduate top 25% or bust. Could always do plaintiff's work but need to go a totally different route for that.

jblaze

June 8th, 2015 at 11:28 AM ^

The problem with the stats is that the type of job you take out of school is more important than the school itself. For example, there are plenty of I-bankers from all of these schools that make around $200 starting (my guess as I graduated years ago), while a marketing guy may only make $110. The averages are skewed towards which jobs people choose/ the fields the school focuses on.

ElBictors

June 8th, 2015 at 2:52 PM ^

That is what I was going to say.  I have an MBA from a "Top 50" B-School but more important to me than "ranking" was the marketplace I was going to be working in afterwards.  My experience was that the MBA program allowed me to interact with peers that ultimately landed me a job in the industry I wanted.  And because the program wasn't some "nationally elite" MBA, I graduated with relatively little debt (actually used the Stafford Loans to pay for some other bills while in school) and very significant income.

For me, going back to get an MBA is the single best career decision I have ever made.

Number_2

June 8th, 2015 at 11:32 AM ^

MBA's are an investment.  The question is do you see the payoff over the course of a career that outweighs the cost (debt/opportunity cost).  

For most of the top programs (Mich, Duke, NW, Harvard) the answer is unquestionably yes.  Add in the networking benefits, and it is generally a no-brainer.

VicTorious1

June 8th, 2015 at 11:44 AM ^

No standard dev?  Who knows if there is a high number of individuals towards the high end and low end of the spectrum or if everyone is clumped around the median.

Golfandskibum

June 8th, 2015 at 11:46 AM ^

People never account for *where" you work and live with these statistics. Making $200k a year in NYC or San Francisco is pretty much middle class.  If you're making $200k a year in the midwest you can pretty much buy whatever you want.

Golfandskibum

June 8th, 2015 at 9:47 PM ^

Well, take $200k in New York for example. On $200k of income you'll be paying federal taxes of ~$45k,  SS and Medicare of about $10k, New York state taxes of about $12k and New York City taxes of about $7k.  So you'd net about $125k.

Add in an apartment at $5k a month (which is modest by NYC standards), that's $60k a year right there. Then throw in transportation, food, entertainmentt etc, and you might be about to put away $20-30k a year.  All this assuming you don't have any student debt to pay off either.

Are you scraping by on $200k a year? No. Are you living the high life? Probably not. Thus, middle class...maybe upper middle.

 

mabeaton

June 8th, 2015 at 12:04 PM ^

IMO, those Ross numbers on the income side are probably skewed downward a bit; a good chunk of us Ross Alums  do willingly stay in Michigan.  Starting salaries in Michigan are a tad lower than elsewhere; but, the low cost of living and relatively high salaries Post-MBA make it tough to leave Michigan.  An MBA should be considered an investment . . . but recognize that 500-1000 a month payments for 30 years isn't fun.  Still, I'd do it all over again . . . Ross has been great!  

bgoblue02

June 8th, 2015 at 12:22 PM ^

does it bug anyone else that for debt they called it "average" but for salary they called it "mean"? 

I know they are synonyms but why not list them as the same since they are on the same chart?  

So its just me thats bugged by this?  I thought so

 

 

meechiganman14

June 8th, 2015 at 12:36 PM ^

They should do this for medical doctors. Might open some eyes. Especially when that lawyer chart above shows medical malpractice attorneys making as much as they do.

jmblue

June 8th, 2015 at 1:21 PM ^

The average starting salary for Duke graduates is $114,109 and the average debt $115, 201.

That's still a considerably more enviable position than that of a lot of liberal-arts grads, who carry similar debt but have far lower starting salaries.

bronxblue

June 8th, 2015 at 1:42 PM ^

I think the article misstates the value of an MBA.  Nobody graduates from medical school with a salary that covers his/her student debt, yet we always encourage people to become doctors because the longer-term value added justifies the cost.  So if you can graduate from a top-ranked business school, sure you'll be sitting on some hefty debt, but you'll also have a degree in your pocket (and connections) that will provide a nice multiplier to your earning potential down the line.

Ultimately, I guess, it doesn't much matter to most people; at some point you'll make enough money to afford what you want and live comfortably, and the stresses associated with a "better" job (increased pressure on performance, traveling, time commitments, etc.) outweigh the financial gains.  

Lakeyale13

June 8th, 2015 at 2:06 PM ^

Serious quest in regards to return on investment. What if someone is already making $100,000 a year. Does it make any sense whatsoever to get your MBA (not talking about the educational or networking component, simply ROI)? Perhaps wrongly, I would imagine an MBA primarily benefitting those starting a career or in the $55,000-$65000 range looking to jump to the next level. If I am way off base please enlighten me.

sideways8

June 8th, 2015 at 2:19 PM ^

An MBA only makes sense for me if: 1) I go to a top 10-type program AND 2) I decide I want to be in banking or consulting because the debt + foregone wages are too big of a loss to cover the increase in salary w/ an MBA (even including faster rate of comp growth w/ an MBA).

My advice: if you want an MBA, try for a top 5/10 program (HBS, Stanford GSB, Wharton, Kellogg, etc.), and if you don't get in/don't want to get an MBA, see if your employer will pay for your EMBA. Every EMBA I've met is company-sponsored and works full-time, so you won't have any debt and you'll be making $$.

bgoblue02

June 8th, 2015 at 3:18 PM ^

a lot depends on career trajectory.  If you are rising quick and getting promoted with lots of raises and making 100K then I would say hold off on the MBA because the two years working will be way more beneficial.  

If you have career stalled it may be worth going back even if the money at the end is same as current as it raises the ceiling on your earnings potential.  

As someone noted above its not a point in time current figure.  Your debt repayment will be fixed / month (unless you have a floating rate loan obviously), while your earnings should (hopefully) be going up every year.  If going back (or to school) doesn't provide that then its frankly not a good investment; I would say look to community or smaller colleges part time that give you the line on your resume but don't carry the flash.  

obviously thats like my opinion man

mabeaton

June 8th, 2015 at 4:36 PM ^

MBA at Ross makes sense at nearly every level.  The breadth of courses and the networking abiltiy is beneficial immediately .  .  . but, what it can do in terms of helping your 10-25 years down the road is amazing.  A decade later and I have flexibility in terms of what I want to do and when I want to do it . . . There are more benefits than the money . . .  All that said, if you are going MBA, go Top 10 otherwise, the justification get's fuzzier.

late night BTB

June 8th, 2015 at 6:19 PM ^

still pretty hard to beat an engineering degree in terms of an ROI.

Bust your ass for 4 years, and nearly any career path is open, and you can be making what an MBA grad makes without dropping $100k and missing out on two years of lost income.

upper 20s here, and i'm making ballpark what these MBA grads are, working easy 35-40 hr weeks.  No consulting, Sunday night-Friday traveling, 60 hour weeks staying in a La Quinta in BFE for 3 months.  

Would love to add an MBA to be more well rounded, but it just doesn't make sense financially.

bgoblue02

June 9th, 2015 at 10:04 AM ^

I don't have an engineering degree, but got a BS with a math major; close to a similar result. 

I honestly don't understand why every degree isn't viewed as an ROI.  I get that not everyone is cut out to be an engineer or MBA or whatever, but studying something that has limited job prospects just doesn't seem to make sense for me.  There are plenty of local schools or instate schools or more affordable ways to get a degree than full time out of state or private schools with heavy debt loads.

2timeloozer

June 8th, 2015 at 8:11 PM ^

I asked Dombrowski once about big baseball contracts and he pointed out that MLB revenues go up 10% a year and $20mm in 8 years won't seem as big. Same thing with MBA salaries. I got my M MBA in the late 80's and had $30k in debt. $42K was the average starting salary. I am average at best in MBA earnings, but 25 years later I make more in a month than my MBA cost. The same will happen with today's grads in 25 years.

ElBictors

June 9th, 2015 at 11:27 AM ^

An MBA used to be equivalent to "10yrs work experience" but that is not the case today.

And I think it's also important to distinguish between those 22yr olds with a BA/BS heading directly to Grad School and those who get hard experience and then go back to school.

Part of that is because the maximum earning power for a professional (man) is between age 35-58. So whether you're an MD, a JD or Wall Street exec., you stand to make more as time goes on and you gain experience. More than equivalent experience now, I see having an MBA when I am interviewing job candidates as an indication of work ethic and drive.

And if they're 25 with an MBA, they're definitely getting paid/offered less than a 35yr old with an MBA and 10yr relevant work/world experience