In this episode of Business Casual, hosts John Byrne and Maria Wich-Vila, joined by Caroline Diarte Edwards fresh from vacation, discuss why high-earners pursue MBAs despite substantial salaries. They explore the value of an MBA beyond immediate financial returns, highlighting long-term career development and satisfaction. Maria points out that the decision to pursue an MBA should be based on career vision spanning decades, not just the immediate financial outlook.
The hosts emphasize the MBA’s intangible benefits like career flexibility, global opportunities, and a supportive network, which can pivot careers and enhance life trajectories, underscoring that an MBA offers much more than just a financial return.
Episode Transcript
[00:00:04.370] – John
Well, hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co-host, Caroline Diarte Edwards, back from a very vigorous vacation. You should have seen the photos she posted, especially of her on the zip line. Then, a problem for me is trying to face that many MBA applicants apply when they push a submit button at Harvard or Stanford. And of course, Maria Wich Vila. Maria is the founder of Application Lab, where you can go in and get a heck of a lot of advice on how to apply and navigate the mysterious route to a great business school. And Caroline, of course, is a co founder of Fortuna Admissions, one of the leading MBA admissions firms in the business. We want to talk about how much people make before they get an MBA, you would think naturally that someone in their mid-20s wouldn’t be well into the six figures and then decide to go and get an MBA and forego that compensation for two years while they’re in an MBA program. Yet there are 10 US business schools where the average pre-MBA pay is in six figures solidly. At the top of the list, no surprise, it’s Stanford.
[00:01:29.670] – John
Stanford Harvard MBAs left salaries that paid them $124,000 on average. At Harvard, it was 121. At Wharton, it’s 116. Chicago Booth, 113. Kellogg, 110. Dartmouth Tuck, 109. Columbia, 108. Berkeley, 108. MIT Sloan, 106. And then UT Austin, McCombs, 100 even. Then there are a bunch of schools, You included UCLA, Virginia, and Cornell, and NYU Stern that are knocking at the door of this six-figure salary. Does it make sense for someone who’s in their mid-20s and earning 120 grand to forego two years of that and gamble on an MBA? Maria, what do you think?
[00:02:21.140] – Maria
I think that there’s no blanket answer for every single person on Earth. I think there are some people for whom it makes a ton of sense, and then there are some people for whom it doesn’t. I think this is why the business schools do ask for a certain level of introspection. Many of them do ask flat out. The most common essay question across every school is essentially, why are you applying? What’s the point of you doing this degree? There are lots of reasons why they asked that, but one of them actually is like, okay, if you are going to give up these two years of salary, usually two years or one year of salary, and realize that you might not have that immediate ROI, are you still in because you realize that your career is a marathon and not a sprint. While it’s true that perhaps one might look at the pre-MBA salaries at some of the Stanford and Harvard’s and Whartons of the world, and then the post-MBA salaries and say, Wow, there actually was not that huge of a jump, maybe this isn’t worth it. If that’s the mindset that somebody has, that’s great.
[00:03:21.130] – Maria
But then those folks shouldn’t be applying for the MBA in the first place. It comes down to looking at your career over the next, not the next two years, but the in the next 30 years and asking yourself, are the various resources and benefits I’m going to get from the MBA worth it to me? So clearly, I think I can speak for all three of us that all three of us do believe that it is clearly worth it in the long run. But I also acknowledge that for some people it might not be. And that’s great. Those folks don’t have to apply. But I think when people do apply, they are looking at a more holistic view of what they want the rest of their careers to look like. And from that perspective, it is worth it.
[00:03:59.630] – John
And I I wonder if there’s an upper limit on this. I mean, if you are lucky enough and successful enough to work, particularly in a hedge fund, a private equity firm, a venture capital firm, you could be earning well over a quarter of a million dollars, even closer to a half million. Does it still make sense? And to me, it’s no surprise that many of those candidates, when they do apply to business school, they tend to say it’s got to be Harvard, Stanford, or Bust. But what is What do you think the upper limit is on what you should be earning before you even think about getting an MBA?
[00:04:34.960] – Caroline
Well, I don’t think there is an upper limit. And we sometimes work with candidates who have salaries in the range that you just mentioned. And they’re taking a long term view, as Maria said. The MBA is about, first of all, it’s about a lot more than the money, right? It gives you a lot of options in your career that you might not have, even if you’re earning a lot of money, right? It’s nice to have the option that you can change career, that you can move country, that you have this network that is there to support you, that can help you through the twists and turns of life in the future. And so I think the MBA has a lot of value beyond just the pure financial value for that. I think that also MBA graduates feel more comfortable taking a risk in their career because they know that they have the ability to land on their feet if things go pair-shaped. For example, if they join a startup or they start their own company, it doesn’t work out as many startups don’t. So they feel more comfortable and confident in doing that because they know that they have options if things don’t work out.
[00:05:39.580] – Caroline
So I think that there’s huge value in that, and that is hard to to identify. I think the MBA graduates are often more satisfied in their careers, partly because they have options and therefore are able to make choices which they might not otherwise be able to make and pursue a career that is really rewarding for them and be able to change careers if they decide that they want to do something different and they have the opportunity to do that. And so I think, generally, MBA graduates are, on average, more satisfied in their careers than people who haven’t done the MBA. So there’s a lot of intangible benefits that you can’t quantify. And I think that students or candidates who are applying who earn a lot of money and still want to be at the MBA, they understand that. And as Maria said, they’re in for the long game.
[00:06:31.310] – John
Maria, I’m sure you’ve worked with clients as well who are making lots of money and decided, You know what? I still want that MBA.
[00:06:38.550] – Maria
Yeah. This is where I think that this laser-like focus only on the financial ROI might be a bit misguided, because some of the people that I’ve worked with who are making $400, $500, $500, $1,000 a year, some of them actually, they’re so successful that they feel trapped in the route and the path that they’re on. And so some of them actually want the MBA pivot, fully understanding that they will make less money when they graduate, however, being okay with that trade-off because they are just so unhappy in the current field that they’re in. So one person that comes to mind is someone who was a mergers and acquisitions lawyer, making half a million dollars a year, top tier, whatever one of the number one firms was in the US, Crevath or one of those guys. And so you’d think, Well, this person has it all figured out. But they were saying, Look, I’m just exhausted from this work. I fell into it. And now that I’ve doing it for five years, when I try to get another job, the only other job I can get is perhaps an investment banking, maybe. I don’t want that job.
[00:07:37.990] – Maria
I wanted to switch to something totally different. I think there’s an element of this golden handcuffs idea where some of the very high earners… Look, if you’re working in private equity and you want to continue in private equity, an MBA makes a lot of sense because you’re going to get that broader business viewpoint that will then help make you a better investor and a better operator. You’ll be able to add more value on your portfolio company boards or whatever in the future. But there are also some very high earners who just are… They’re making a lot of money, but that doesn’t mean they’re happy. I think this goes to Caroline’s point about career satisfaction more so than just the money. It’s funny. It’s August right now, and I just got an email a couple of days ago from someone who said, Look, I showed up to my business school’s orientation. We’re underway. I came into this thinking that I wanted to do management consulting. All the management consultants, maybe not literally all of them, but so many of them that I’ve talked to have all said, Well, here’s what this means on a pragmatic level.
[00:08:35.550] – Maria
You’re not going to get… You’re going to work really hard. You’re not necessarily going to get this work-life balance that you might already have. There are a lot of trade-offs that come with those high salaries. And so now this person is like, Well, the good news is I figured this out now. The bad news is now I’m scrambling for what I want to recruit for when recruiting starts in a month or two. But the point is, it’s not necessarily about just the financial return. I think that maybe some of these folks who are the very high earners coming in, they may continue on that path. But some of them are actually using the MBA to pivot to something that gives them more personal career satisfaction and not necessarily just that paycheck number.
[00:09:12.330] – John
So true. The more money you make, the less you have to borrow. Because the other side of this equation here is people who haven’t made a lot of money and apply to business goals often are reliant on scholarship support, or they have to go to a bank and borrow every dollar of the tuition plus money for his spending and living expenses. If you were making a quarter of a million or more, hopefully you banked a lot of it and you probably don’t have to borrow anything, which also changes that part of the equation. Now, Caroline, this is a US-centric model. The data comes from Bloomberg’s MBA ROI calculator, and it’s based on survey data of alums because this data isn’t readily available. Schools do not disclose it. But I’m wondering, do you think like NCI and London Business School in particular are drawing people with six-figure plus salaries? I would imagine so.
[00:10:11.520] – Caroline
Yeah, they certainly have students who are coming in, who are earning in that range. The average is probably a bit lower than the top US schools because of the geographic diversity of the student pool. I think that plays into, for example, the numbers that we see there for Stanford. I think a lot of those students are, well, first of all, they’re working in industries like many of them, private equity, venture capital, and so on, where they’re earning big salaries. And a fair number of them will be in California, in the Bay Area, or in New York. And so they’re coming from geographies where the cost of living is very, very high, where schools like INSEAD and London Business School are drawing people from all over the world, including emerging economies and substantial representation from countries countries where candidates don’t have the same earning power, and the cost of living is much lower, right? So that average would definitely be a bit lower for INSEAD and London Business School. But the school sees a tremendous range, right? They see candidates who are earning far less than this and people who are earning in this $150, $200, $1,000 plus range as well.
[00:11:25.910] – Caroline
So there’s definitely a huge range there.
[00:11:29.090] – John
Okay. I wonder if This is also an interesting data point for admissions and a data point that could be as valuable, if not more valuable, than a GMAT score or an undergraduate GPA. Here’s why. Obviously, if you’re making six figures, you got to be pretty successful. It’s like independent verification that an organization or a company finds you worth that money. Therefore, isn’t it even a better filter than a GMAT score where you can simply hire a tutor, where you can spend months and months studying for the test and get a higher grade, or even an undergraduate score from a university that may have great inflation? Is that actual pre-MBA number very valuable to an admissions officer? Maria?
[00:12:14.400] – Maria
I think it is, although I would hesitate to say that it is a key metric necessarily in determining the admissions decision. I think for me, when I’m looking at people’s applications, I like to see the trajectory upwards, perhaps more than a raw number. If someone’s been at a company, say for several years, some companies might give a promotion every two years like clockwork, some companies might not. But even if the title hasn’t changed, I can see in the compensation levels, if that has changed, Then regardless of whether or not the title has changed, to your point, it’s not the only way that a company can show that they value certain young talent, but it is certainly a very concrete metric. Here’s a company that is literally putting its money where its mouth is. When the recommender says, This young person one of the most talented people at the analyst level that I’ve ever worked with, that’s great. Of course, it’s believable regardless of who’s writing it. But wow, when the numbers back that up, it certainly helps that argument. Now, I do want to caution people that if you are making less than the figures in this average don’t feel like, Oh, there’s no chance for me to get in.
[00:13:19.530] – Maria
First of all, we don’t entirely know how they collected this based on surveys, so there might be some self-reporting bias in there. We don’t really Then second of all, it is an average. If a school’s average is $100,000 a year prior to business school, that could be several people who are making $50, $60, $70,000 a year, and then a few people making $500,000 a year. Those averages, I just don’t want anyone to get necessarily discouraged. But I do think that looking at that number, it certainly makes me feel more comfortable that a company already values you. You might have already saved up enough money. You might have at least started saving money to pay for the degree. I also I also think it’s useful if there’s a company that a lot of people are applying from and they all have very similar titles, it might be a way to say, Okay, well, for whatever reason, maybe this company has a certain rules with who gets what title at what point in their career. But if one person is making significantly more money in the same job, it certainly does. Again, I don’t think it’s like, Boom, slam, dunk, you’re accepted.
[00:14:24.070] – Maria
But I definitely think it’s an interesting data point that is considered.
[00:14:27.920] – John
It should be pointed out that the The average salary in the US for someone who’s between 25 and 34 is $53,000 a year. If you’re making six figures in your mid-20s, you’re doing really well. There’s no doubt about it. Now, there’s some weird things about this data, and I’ll give you one of them. The average at Vanderbilt is higher than the average at Yale by about 1,800 bucks. I wonder why that might be so. Caroline, you have some thoughts about that?
[00:15:07.670] – Caroline
Yeah. Well, I think it’s the composition of the classroom and the diversity of the students. So Yale, SOM, tends to have more students coming from the nonprofit sector, and so they would naturally earn less money. And just to add to what Maria was saying just now, I absolutely agree that schools look at the salary evolution can be a proxy for career evolution, right? And sometimes it’s difficult for schools to understand whether someone has progressed in their career. I certainly remember when I was evaluating applications at INSEAD and you’re looking at people coming from all different career backgrounds from many, many different countries, right? A hundred plus different countries. It could be very difficult to understand whether someone in a particular career, a particular country, has progressed rapidly or not. Sometimes Sometimes that salary data can be very useful as a proxy to understand if they are progressing and they’re progressing rapidly. But as Maria said, it’s just one data point, and candidates who are not earning in that range should not be concerned. Also Because if you did only select for salary, it would be quite a boring classroom, right? You’d have a classroom full of investment bankers, private equity types.
[00:16:28.690] – Caroline
It would be It would be rather dull for everybody concerned. So schools are, of course, looking for a lot of professional diversity in the community that they bring together. And that necessarily also goes along with some diversity in the salaries that people are earning pre-MBA. And I think that’s what you’re seeing in those numbers with with the ALE.
[00:16:52.980] – John
Yeah, very true. So if you want to look at this, it’s called, Quit a 6-Figure Job for an MBA? That’s what students have done at these 10 B-Schools. Check it out on Poets and Quants. Now, the other big news that’s occurred is the Harvard Business School has finally gotten stem designation for its entire MBA program. If you go to Harvard now and you get the MBA, no matter what concentration you focus on in your elective curriculum, even marketing, in other words, a subject that may be less quanti than accounting, finance, or something else, you can still get stem designation from a Harvard business school. It’s taken Harvard a long time to do this. This is six years after the first US school actually got stem designation for its entire MBA program. That was Rochester Simon, which more naturally got it because Rochester Simon has a more quanti curriculum overall, as does Carnegie Mellon and MIT. But it took six years after Rochester did it. Maria, it’s your alma mater. How come they took so long?
[00:18:09.280] – Maria
I don’t know. You know what? If I had to guess, which is I want to Just a caveat, this is 100% a guess. I have absolutely no insight into this process because I have never tried to make a school stem designated before. But if I had to guess, I think it’s that because HBS is focused on a general management curriculum, The case method, it does involve numbers. It’s not like you never see a number during your time at HBS, but it is also not a primarily quantitatively driven program. If I had to guess, I would say that it probably involved having to prove to whomever the authorities on high might be that, yes, we actually are teaching people numbers. There’s a stereotype that you’re not going to see a number if you go to HBS. That’s not true. Maybe they might have had to adapt certain cases or certain assignments to make them a little bit more quantitatively and analytically heavy. If I had to pick, it would be that, as opposed to a school that can point to, Here are our four electives in data science, and here are our three electives in optimizing operations with calculus and all kinds of crazy stuff.
[00:19:17.220] – Maria
HBS doesn’t really offer those sorts of classes, and so I suspect that’s what it was.
[00:19:22.530] – John
True. In fact, I think there are a lot of people who sometimes think, Well, is Harvard the right place for me? Because I might not get the quantitative work that I would get in another program. If you feel that way and you think the case study is not the best way to do that, I would disagree with you. I wonder where you are, Maria, on that. But now you I didn’t even think about that anymore. But Maria, you can still learn numbers and do case study work, right?
[00:19:51.550] – Maria
Of course you can. Of course, there are courses that will naturally lend themselves more to analysis, et cetera. However, I do think that the general management focus at HBS, it’s more things like, instead of, for example, teaching you perhaps the nuts and bolts of super intense data analytics, it’s more along the lines of if you’re ever managing a team and you need to hire a data analyst, here’s what you need to know to work well with that person. For example, I took a class on business law when I was at HBS. I did not feel like doing a full JD MBA, but I did take a class in business law, and the professor was very clear right up front. You’re not going to become a lawyer from this class, but my goal is at some point in your career, you will need to work with legal counsel, and I’m going to teach you enough to know how to manage the lawyers, how to talk to them, what questions to ask, how to say, Wait a minute, are you sure about that? Because isn’t there something in the law about this? It’s the same thing with HBS, where those nuts and bolts of execution, you can definitely learn it, but it is also, this dovetails nicely with the conversation we were just having.
[00:20:57.040] – Maria
If you do look at some of those starting salaries, people coming in You’re not going to Harvard Business School to become a full on quant type of person. You probably might have done that in undergraduate. Maybe you worked at a hedge fund for a couple of years at a lower level quant position. But if you’re going to a place like HBS, it’s because you want to advance to a level of your career where you’re not the person necessarily crunching the numbers, but you will one day write a letter of recommendation for the person on your team who is when they decide to apply to business school later on.
[00:21:26.530] – John
Right, exactly. Now, Caroline, obviously, this means more to an international applicant than it would to a domestic applicant. Let’s explain why.
[00:21:35.560] – Caroline
Yeah, absolutely. So it’s a great opportunity for international students because it means that instead of being able to stay in the US for one year post-MBA, they can stay for three years, right? So that’s a dramatic difference to be able to to continue to land a job and continue for three years. And of course, many of them will then be able to stay longer term having established themselves in a job market in the US. So that’s a big part of the appeal of having this designation is that it’s a huge benefit for international students.
[00:22:13.120] – John
And the latest class profile at Harvard shows that 39 % of their incoming class is international, which seems pretty solid. I mean, a lot of schools are only at a third. And of course, there are many schools that are well above 39. Do you think this means that that is going to increase more naturally, Caroline?
[00:22:34.670] – Caroline
Well, let’s see how things go with the election. And I do wonder if they tried to get this in and done and dusted before the election in November because there’s obviously uncertainty about which way that will play out. And if Trump wins, that’s probably not a positive for immigration and for business schools. So we saw with the previous Trump presidency that the volume of international applications dropped to the top US schools. And so I would imagine that that could repeat itself if Trump were to get in again. So perhaps this would help to compensate for that effect at HBS.
[00:23:12.130] – John
Yeah, that’s a really good point, because when Rochester Simon first did this, I remember having lunch with a rival dean at a major business school who basically openly worried that the Trump administration at the time would clamp down on the whole STEM designation program and would basically eliminate it. That gives you an indication of where the Trump administration could be. I mean, he was saying, Rochester went too far in getting a designation for their entire MBA program, as opposed to, let’s say, if a student did a concentration in financial engineering or quantitative analysis, then that makes sense. But over the full MBA, he was worried, really, that the government would crack down on the Trump. And I think that that’s still a possibility if, in fact, Trump gets elected. So, yes, you’re right. Not having a STEM designation also has put Harvard at somewhat of a disadvantage against all the other business school programs in the US which have stem designation, including peer-level schools with Harvard. So this probably levels the playing field and makes Harvard more attractive to international applicants who are worried about whether or not they can land the job with an H-1B visa because the extra time that you have to get the visa now is three years.
[00:24:44.050] – John
It’s two years plus the one you would ordinarily get. That gives you three shots at an H-1B visa, which really significantly increases the odds that you can get that visa. It’s just a level of comfort that you know that if you’re doing a job that’s somewhat related to STEM, you’ll have that three-year guarantee, at least. Maria, any final words on this? You must be happy that your Amway model has finally gotten into this act.
[00:25:11.810] – Maria
Yes. I think I will admit it is not something that has been keeping me up at night. However, so much the better for all the reasons that were already mentioned. It’s great for international students, and I’m thrilled.
[00:25:25.420] – John
Yeah, I think it’s a really good move. It’s called Harvard Business School’s Full MBA, is now stemmed, designated. Look it up in some quotes it wants. Meantime, if you are deeply into six figures, and you are even an international student, now you have two more reasons to come and get an MBA. Number one, There are plenty of other people like you who are earning more or equal the sum that you’re earning. Now at Harvard, you get three years to work in the US instead of only one with three shots at an H-1B visa. All good news. Hey, thanks for listening. This is John Byrne with Business Casual.
