Are business schools really providing a good return on investment?
Over the past three cycles, applications for graduate management education programs have plummeted, bounced back, and then held steady as prospective students weigh their cost-benefit in a wide-open job market.
Amid a lot of uncertainty sparked by the pandemic and roller-coaster economy, one thing is clear: Those who have gone the GME route and pursued business master’s degrees said it has paid off in terms of upward mobility, financial growth and earnings increases. According to a new survey released by the Graduate Management Admission Council (GMAC), 90% of those who graduated from programs from 2010 to 2021 rated their degree’s value as good, excellent or outstanding.
“In the face of an ever-evolving work environment, international travel restrictions and rising education cost, many are asking the question: ‘is a business degree worth it?’ ” said Sangeet Chowfla, president and CEO of GMAC. “An overwhelming majority of [individuals survey] testified that their business degree increased their employability and earnings power, prepared them for leadership positions, and supported their desired lifestyle. Without a doubt, their answer to the question is a resounding ‘yes!’”
Indeed, around 85% said they saw strong returns on investments, including job promotions. Just under 70% said they had met financial targets. While none of the positive numbers can reverse the downward trend of domestic students steering away from U.S. business schools (international students applying to the U.S. are back up again), it does prove that institutions are in fact doing their job for those who attend, providing a decade-long benchmark to show success.
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Though the GMAC noted a few limitations in its study, namely the changing shape of the market and industry since polling began in 2010, it is still fairly robust, with some 3,600 individuals being surveyed both before and after they completed their studies. More than 113 countries were represented in the global study, with GMAC indicating a heavier lean toward institutions in North America.
For business school leaders looking for student trends, “The Value of Graduate Management Education: From the Candidate’s Perspective” offers quite a lot of interesting data.
- The majority of former graduate students cited job advancement, growth and income potential as reasons for attending, while also indicating the opportunity to explore new fields, become entrepreneurs, study internationally and assist in community-improvement efforts.
- Women want to enhance their career prospects a bit more than the men (77% to 72%), while men see GME studies as a way to help develop entrepreneurial skills and build relationships (41% men vs. 28% women). Men also see more vast opportunities to enhance their job chances internationally with business school degrees than women (56% to 46%). “The findings suggest that in today’s evolving work environment, women—perhaps more risk-averse and resource-deprived—shy away from starting their own companies and choose to work closer to home,” said Maite Salazar, Chief Marketing Officer of GMAC. “Understanding this dynamic could inform business schools on how to encourage more women to pursue graduate management education by providing them access to and addressing their challenges in entrepreneurship.”
- While almost all indicated that GME helped them rise from entry-level positions, more than 50% also rose from mid-level positions. Another third got promoted from senior levels and another 25% went past executive levels.
- Nearly two-thirds of graduates shifted roles within their companies, while around 50% completely changed industries.
- More than a third of underrepresented students sought to improve conditions in their communities, nearly 20% higher than other degree candidates. “In the backdrop of today’s global health and economic crisis, many career-minded individuals are shifting their perspectives, looking for social impact in their own communities and becoming their own boss to achieve financial freedom,” said Sabrina White, vice president of School and Industry Engagement at GMAC.
Graduate management programs saw a 0.4% rise in demand in 2021, rebounding from a 3.1% decline caused by the COVID-19 pandemic. In-person and online programs have seen nearly 20% more applications from prospective female students than male students since 2019.