Wharton Tops Forbes Rankings for the First Time with Highest Compensation World Wide

John Byrne - Wed, 10/11/2017 - 03:29
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The University of Pennsylvania’s Wharton School claimed the number one spot in Forbes’ 10th biennial ranking of U.S. business schools, released yesterday. The Philadelphia school shot up six spots from its seventh-place 2015 finish to claim first for the first time ever in a ranking that focuses primarily on return on investment for MBA graduates. Wharton did rank second twice before, in 2001 and 2005.

For the ranking, Forbes surveyed more than 100 schools and 17,500 alumni from the Class of 2012 regarding their pre- and post-MBA compensation, career choice, and location. Responses received from 25 percent of those alumni (4,375) determined schools’ ranks in terms of five-year MBA gain, which Forbes defines as “the net cumulative amount the typical alumni would have earned after five years by getting their MBA versus staying in their pre-MBA career.”

Wharton took top honors with a $97,100 five-year MBA gain, coming in more than $4,500 above the next highest school. Wharton’s Class of 2012 grads also reported the highest total compensation of any other school—$225,000 five years post-MBA. As for where the Wharton grads went to work, 79 percent took finance or consulting jobs, with 53 out of 805 Wharton graduates going to work for McKinsey. Other major employers for the Class of 2012 included the Boston Consulting Group, Bain, Deloitte, and Goldman Sachs. Top employers for the most recent Wharton graduating class were largely unchanged, apart from Amazon.com replacing Goldman Sachs.

As for the runner-up school, Stanford Graduate School of Business (GSB) fell one spot from the past two rankings with a five-year MBA gain of $92,500 and total compensation of $215,000. For the Stanford Class of 2012 graduates, one of the main components of the total compensation package was hefty stock options, with a third of respondents from the Class of 2012 reporting receiving options with a median value of $380,000. So what explains Stanford’s drop for this Forbes ranking? It has to do with the high cost of living in the Bay Area. When the Stanford Class of 2012 salaries were adjusted for living costs, the five-year gain took a considerable hit given that 60 percent of Stanford grads stayed in the Silicon Valley area after graduation.

Harvard Business School (HBS) came in at third with a five-year gain of $89,600. In the last biennial ranking, HBS didn’t even make it into the top 10. Holding HBS back, historically, has been the school’s notoriously expensive tuition and fees, which reached $154,000 for the Class of 2018. But students in the Class of 2012—those surveyed for this most recent Forbes ranking—benefited from a massive $3.3 billion endowment, which resulted in almost half of the 900-person class receiving a scholarship award of more than $65,000, on average, to offset the cost of attendance.

Forbes 2017 top 10 U.S. business schools ranked by five-year MBA gain:

  1. University of Pennsylvania Wharton
  2. Stanford Graduate School of Business
  3. Harvard Business School
  4. Northwestern Kellogg School of Management
  5. Dartmouth Tuck School of Business
  6. Columbia Business School
  7. University of Chicago Booth School of Business
  8. MIT Sloan School of Management
  9. University of California Berkeley Haas School of Business
  10. Cornell University Johnson Graduate School of Management

Overall, tuition and fees at the top 25 MBA programs averaged $119,000—a 60-percent increase over the last 10 years. But more than ever before, business school costs are being offset by scholarship awards, which have doubled during the same time. As a result, the average five-year gain at the top 25 schools is $70,100, up $8,400 from the last Forbes ranking.

LBS Leads the Way Among International Two-Year Programs

Forbes also released a separate ranking of international business schools, compiled using the same methodology to measure ROI. Among international two-year MBA programs, London Business School (LBS) came out at number one, with alumni of its Class of 2012 realizing a five-year gain of $119,100, the highest of any two-year program in the world. The typical LBS graduate took 3.4 years to pay back their investment. Wharton’s five-year gain was $20,000 less, and it took that school’s graduates four months longer (3.8 years) to pay back their investment.

LBS has held the top spot in the Forbes ranking five consecutive times out of the ranking’s 10 publications. The median salary for the LBS Class of 2012 when it entered was $73,000, and total compensation five years out was $212,000. Spain’s IESE Business School followed at No. 2, with a five-year gain of $97,100. Next up was China’s CIEBS, with a five-year gain of $95,000. HEC Paris took fourth (five-year gain, $85,300), and Spain’s ESADE Business School rounded out the top five (five-year gain, $58,700).

Leading the way among international one-year MBA programs was Switzerland’s IMD, with a whopping five-year gain of $194,700. Of course, the opportunity cost associated with attending a one-year program is significantly lower than a two-year program given that tuition is less and lost income is also minimized by less time out of the workforce. Second among international one-year programs was France’s INSEAD, with a five-year gain of $150,400, followed by IE Business School in Spain (five-year gain, $145,400), Cambridge University’s Judge Business School (five-year gain, $140,000), and Italy’s SDA Bocconi rounding out the top five, with a five-year gain of $138,100.

As always, those of us here at Clear Admit encourage prospective applicants to use rankings as just one of many resources when trying to determine the right business school to meet their individual needs and goals.

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