Recently we’ve been talking about is the MBA worth it — the whole “is there a bubble?” thing is the perennial topic. It’s fun to bash the MBA when people like George Bush and Mitt Romney and Jon Corzine and Raj Rajaratam have them and Steve Jobs and Bill Gates and Richard Branson did/do not. And the MBA ain’t cheap. The “is it worth it?” question is very important — it’s a valid debate for society but it’s especially important for you.
Our admittedly biased position is that the MBA is, in fact, still worth it.
But others who answer the question — like, academics and scholars and smart people who study this — are implicitly saying an MBA from a Top 20-ish school is worth it. The conclusions from “those who know” when factoring in the ROI on an MBA and starting salary and all that jazz are usually the same: If you go to a top school, then the MBA will pay off financially. If not, the numbers aren’t there to justify it.
You can get a solid business education at a slew of non-Top-20-ish schools, and they’re usually MUCH cheaper. A Penn State MBA will teach you the same things as a U Penn one. At both places, you’d get to do all that networking that you think is so important to talk about in your essays. Smeal is $35k in tuition per year and Wharton is $62k. Then on the other end of it, Smeal reported that 84% of their 2011 grads had full-time job offers three months after graduation. Not so shabby, right? Wharton said that 95% of their grads had offers in that timeframe.
But the Smeal class is only 84 students, so that’s about 70 people with offers three months out. And only 64% had offers at graduation. Talk about stressful. You go through that whole process and then you’re unemployed. Ouch.
Wharton had about 661 grads seeking employment that year (out of a class of about 850 – the others were going back to the original employer or starting companies or other such fun things). Of the 661, 97% of them — or 638 people — had full-time offers by three months out. An even more telling statistic is that 95% (628) had accepted the offers. That tells us that they were good offers, that the person wasn’t settling.
What is even more striking is the difference in average student profile at these schools — median GMAT at Penn State is 650 compared to U Penn of 720.
For those rankings-obsessed, as of this writing, Smeal is pegged at #31 by USN&WR, 44 by BW. Smeal is a good school.
Here’s a table to make these comparisons easy.
| Smeal | Wharton | |
|---|---|---|
| 2010 BW ranking | #44 | #3 |
| 2011 class size | 84 | 850 |
| median GMAT | 650 | 720 |
| median GPA | 3.3 | 3.5 |
| # apps | 500 (est.) | 7,493 |
| acceptance rate | 37% | 17% |
| annual tuition* | $35k | $62k |
| # grads seeking employment | 84? | 661 |
| % employed 3 mos out | 78% | 95% |
| % with offers 3 mos out | 84% | 97% |
| # with offers 3 mos out | 70 | 636 |
| median base salary | $87k | $120k |
*Tuition data is for the class entering in 2012; the 2011 grads probably paid less. Tuition at most schools seems to be rising a ridiculous 3% per year. You will pay more than these numbers.
Back to what an MBA is: an education. Remember that tenured bschool faculty have PhDs. Smeal has some smart cookies; some of their profs went to high-end schools like Carnegie Mellon. These faculty are no slouch.
We are not singling out any specific schools based on any awesome or awful factors they may possess. We just chose Penn State and U Penn for this exercise because they both have Penn in their names. We’re obviously trying to make a point.
If the only school you can get into is one further down the rankings, based on factors of GMAT score or age or what have you, you’ll still likely get a good EDUCATION at that school (if you pay attention and do the work). You’ll certainly have a different experience in a class of 85 compared to one of 850; there’s pros and cons to both. And if you’re coming from a developing country and an $87k starting salary makes you a little lightheaded in comparison to what you’re able to earn today, then absolutely, a school like Smeal can be an awesome choice.
But the doors leading out of Smeal may not easily take you to the same lofty salary destination as those coming out of Wharton. They’re only 200 miles away from each other, and within the same Top 50 on the school rankings, yet they seem to exist in parallel universes.
You don’t have to go to a Wharton to have a fabulous life. Other schools represent real options that should be carefully considered. Just make sure you’re accounting for ALL the realities of this bschool proposition as you determine where’s the right fit for you.
Tell us what you think.