MBAs Cost More and Are Less Profitable as ROI Falls

Getting an MBA in the US has gotten a little more expensive and a little less profitable, according to a Bloomberg analysis of salary and tuition data. From the report: This year's update of Bloomberg's Business School ROI Calculator, based on surveys of more than 9,500 students and alumni, projects a typical return on investment of 12.3% a year for the decade after graduation. That's down from 13.3% last year. The S&P 500 index, by comparison, returned 14.6% over the decade ending Aug. 31.

The main reason for the decline: This year's respondents reported 6.2% better pre-MBA salaries than last year's, while projected postdegree earnings increased only 1.7%. In other words, the MBA pay edge -- the compensation boost graduates get for the degree -- shrank. In the broader US workforce, the average high-skilled worker's earnings rose 4.7% in the year ended July 31, Federal Reserve data show.

Other factors didn't help: The increase in pre-MBA salaries meant students were forgoing more income during their studies. Tuition and other expenses increased 2.4%, some of that financed with bigger loans at higher rates. In all, the typical total investment to get an MBA in the US rose 6.8%, to almost $300,000.

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