MBA hopefuls often apply to business school with the expectation that obtaining the degree will help them advance in their career.
Many executives say attending business school contributed to their career success. And according to admissions experts, job applicants with MBAs on their resumes stand out to employers so much so that students don’t necessarily need to attend the most prestigious schools to reap significant professional benefits.
Compensation projections published by the National Association of Colleges and Employers predict that the average starting salary for MBA grads in the class of 2021 will be $87,966 — 11.3% higher than the average starting salary among 2020 grads. NACE says the pay bump is fueled partly by rising demand from the finance, insurance and real estate sectors, which tend to be lucrative industries for MBA alumni.
The NACE salary projection for MBA recipients in 2021 is more than $29,000 higher than the projection for individuals who receive a bachelor’s degree in business this year. An MBA often serves as a gateway to business leadership positions, experts say, and management roles typically involve higher salaries than nonmanagement jobs.
There are some business schools where students have better odds of finding lucrative employment upon graduation. Experts say it’s important to investigate the quality of career services at programs of interest before making a final choice.
[See: Top 40 Business Schools.]
Prospective students will need to keep the events of the past year in mind when looking at class of 2020 compensation figures. Salaries for 2020 grads who had not accepted job offers before the full brunt of the coronavirus pandemic hit the U.S. were reduced as a result.
The Graduate Management Admission Council’s corporate recruiters survey, which was conducted in two phases last year, projected that 2020 MBA recipients who accepted job offers prior to the pandemic would receive a median base salary of $115,000, whereas their peers who took job offers later would receive $105,000 — a pay gap of $10,000. Also, nearly one-third of employers surveyed in the second phase reported delaying the start dates of MBA grads in response to the crisis, though just 8% reported rescinding job offers.
As coronavirus vaccination levels increase and the economy recovers, pay levels for MBA recipients could rise above the amount offered during the crisis.
“Looking into the hiring projections for 2021, there are prospects of a recovery in demand for MBA and business master’s candidates,” GMAC says in its survey findings.
Highest Average MBA Salary
Among the 132 ranked full-time MBA programs that reported salary data to U.S. News in an annual survey, the overall average base salary plus bonus paid to 2020 graduates was $101,034.
At the 10 MBA programs where grads received the highest compensation, which are all among the top 15 highest-ranked programs in the 2022 U.S. News Best Business Schools rankings, the overall average base salary and signing bonus was $172,265.
Meanwhile, at the 10 MBA programs where compensation is lowest, the majority of which are ranked in the bottom fourth of the full-time programs and listed with a ranking range, the average amounted to only $52,338.
U.S. News data shows that grads of B-schools with the most sterling academic reputations are, in some cases, paid a salary and bonus that are more than triple that of grads of the lowest-ranked schools.
Among the 132 schools that supplied salary data to U.S. News, the average base salary among 2020 MBA grads was $91,372, while among the 113 schools that supplied signing bonus figures above $0, the average bonus was $18,546.
When assessing base salaries and signing bonuses, keep in mind that it’s possible for someone to be paid an above-average salary and a below-average bonus, or to be granted a below-average salary and an above-average bonus. Furthermore, some MBA graduates who find jobs do not get a signing bonus.
In some cases, MBA graduates receive base salaries and signing bonuses that are either far under or far above the average among all ranked schools. For example, base salaries for MBA grads of the Stanford University Graduate School of Business ranged from a low of $35,568 to a high of $400,000 in 2020, while bonuses for those grads went from a low of $3,000 to a high of $175,000.
MBA recipients in the workforce are often eligible for performance bonuses if they meet certain targets, and they may also receive stock options.
Average MBA Salary by Industry
MBA compensation varies not only on the basis of where a graduate earned his or her degree, but also on the chosen industry.
On average, MBA grads who enter the consulting industry command the highest base salaries, and those who work in government tend to be paid the lowest base salaries.
U.S. News data shows that a recent MBA grad who works in the consulting industry typically receives an average salary nearly $72,000 higher than a counterpart in the government sector. These salary averages are weighted averages, meaning that salary figures from B-schools that send a large number of graduates into a particular industry are weighted more heavily than salary figures from schools that send a small number of grads into a field.
Obtaining High-Paying MBA Jobs Often Requires Patience
The schools where graduate pay is highest aren’t necessarily the ones where grads get hired the fastest.
Compared with other ranked MBA programs, Stanford had the highest average salary and bonus — $176,083 — for 2020 graduates. However, 54 business schools that provided data to U.S. News had higher employment rates for their alumni within three months of graduation than Stanford, which had a three-month employment rate of 85%.
But MBA grads don’t necessarily have to spend a significant amount of time searching for high-paying jobs. Northwestern University’s Kellogg School of Management boasted the fourth-highest average salary and bonus package of any ranked MBA program for 2020 alumni — $173,057 — with a three-month-employment rate of 93% that surpassed most other B-schools.
Highest MBA Employment Rates by Program
Three schools listed in the U.S. News Best Business Schools rankings reported that all of their 2020 graduates found jobs within three months of graduation, but these schools are exceptions to the norm.
Among the 138 ranked full-time MBA programs that supplied employment data to U.S. News, the average employment rate for 2020 graduates three months after graduation was 78%. But three-month employment rates at these schools varied widely, ranging from a high of 100% to a low of 25%.
Only 56 of these 138 business schools had at least 50 MBA graduates in 2020 who sought employment, and within this subset of full-time programs, the average three-month employment rate was 82%.
Capitalizing on the Career Benefits of an MBA
Recent grads say one way to maximize the benefits of an MBA program is to first contemplate career goals.
Having a firm sense of purpose allows prospective students to write MBA application essays that convey conviction and discipline. Admissions officers want to see proof that business school applicants are employable and have leadership potential, some experts say.
It’s critical for MBA applicants to offer a clear and compelling explanation of why they hope to attend business school in the near future and a description of the unique perspective they could bring to a classroom discussion.
Alumni say business school offers an opportunity for students to either advance in their current career path or switch to an entirely different profession. An MBA can pave the way not only for high-profile general management positions at multinational firms, but also for jobs someone might not immediately imagine when considering the degree, such as data analyst positions, leadership roles at technology companies or entrepreneurship positions.
Though MBA programs typically prefer to admit students who already have work experience, some programs welcome recent college grads and allow students to gain work experience through B-school courses.
Searching for a business school? Get our complete rankings of Best Business Schools.
More from U.S. News
See Which MBA Programs Lead to the Best Return on Investment originally appeared on usnews.com
Update 03/30/21: This article has been updated to reflect ranks and data from the 2022 U.S. News Best Business Schools rankings.