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Return on Investment - 2016 Alumni Perspectives Survey Report

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Using data collected from nearly 7,000 graduate business school alumni as a part of the 2016 Alumni Perspectives Survey, this SlideShare highlights analyses performed by GMAC researchers related to the return on investment of a graduate management education.

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Return on Investment - 2016 Alumni Perspectives Survey Report

  1. 1. Alumni Perspectives Survey Report2016 Return On Investment
  2. 2. 2016 Alumni Perspectives SurveyResearch Services Making the decision to earn an MBA or other graduate business degree requires weighing the full cost of such an investment. Time Energy Money
  3. 3. 2016 Alumni Perspectives SurveyResearch Services The findings of the 2016 Alumni Perspectives Survey showcase the quantifiable returns alumni have received on their investment.
  4. 4. 2016 Alumni Perspectives SurveyResearch Services Specifically highlighted here are alumni's monetary returns in terms of base salary earned over time.
  5. 5. 2016 Alumni Perspectives SurveyResearch Services Methodology
  6. 6. 2016 Alumni Perspectives SurveyResearch Services Return on investment (ROI) is a simple formula that measures the amount of return on an investment relative to the investment’s cost. ROI = Investment Return – Investment Cost Investment Cost
  7. 7. 2016 Alumni Perspectives SurveyResearch Services In this study’s analysis of the ROI of a graduate management education, investment cost is: Total out-of- pocket program costs Forgone pre-degree salary +
  8. 8. 2016 Alumni Perspectives SurveyResearch Services For investment return, alumni provided salary data for three time periods: Pre- degree base salary Post- degree base salary Current base salary
  9. 9. 2016 Alumni Perspectives SurveyResearch Services To determine ROI at various points in time (3, 5, and 10 years post-graduation), a compound annual growth rate (CAGR) was calculated between post-degree and current base salary. CAGR = Current Salary Post-Degree Salary( ) -1 1 # of years post-degree employment
  10. 10. 2016 Alumni Perspectives SurveyResearch Services Using data collected from nearly 7,000 graduate business school alumni, GMAC researchers were able to calculate: Median Total Investment Cost of a Degree Initial Boost in Base Salary Post- Degree Average Years to Recoup Investment Median ROI at 3, 5, and 10 Years Post- Degree
  11. 11. 2016 Alumni Perspectives SurveyResearch Services ROI for Full-Time 2-Year MBA
  12. 12. 2016 Alumni Perspectives SurveyResearch Services On average, it takes alumni of full-time 2-year MBA programs 3.5 years to recoup their b-school investment. Total Investment* Initial Boost in Base Salary* Years to Recoup Investment $105,000 $30,000 3.5 *Median, US dollars.
  13. 13. 2016 Alumni Perspectives SurveyResearch Services Median Cumulative Post-Degree Base Salary (US$) 3 Years 5 Years 10 Years $348k $590k $999k Median ROI 3 Years 5 Years 10 Years 37% 132% 445% On average, in 10 years following graduation full-time 2-year MBA alumni earn nearly $1 million (USD) in cumulative base salary.
  14. 14. 2016 Alumni Perspectives SurveyResearch Services The ROI of a full-time 2-year MBA fluctuates relative to economic conditions. -20% 0% 20% 40% 60% 80% 100% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ROIatthreeyearsaftergraduation (3-yearrollingmedian) Graduation year 3-year ROI rolling median Linear (3-year ROI rolling median) ROI at 3 years after graduation, by graduation year (3-year rolling median) 3-year ROI declined during the recessionary period of the early 2000s, and was stagnant during the Great Recession.
  15. 15. 2016 Alumni Perspectives SurveyResearch Services $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 USdollars Graduation year FT 2-YR MBA investment costs Post-degree salary Total investment costs of a full-time 2-year MBA are growing at a faster rate than starting salaries. Total investment and post-degree salary, 3-year rolling median adjusted for inflation (2012 dollars) Despite this, adjusted starting salary has increased over the past 20 years, and the value of an MBA remains strong.
  16. 16. 2016 Alumni Perspectives SurveyResearch Services ROI of Other MBA and Business Master’s Degrees
  17. 17. 2016 Alumni Perspectives SurveyResearch Services On average, it takes alumni of professional MBA programs 2.5 years to recoup their b-school investment. Program Type Total Investment* Initial Boost in Base Salary* Years to Recoup Investment PT or Flexible MBA $25,000 $10,000 2.5 Executive MBA $25,000 $10,000 2.5 Online MBA $25,000 $10,000 2.5 *Median, US dollars.
  18. 18. 2016 Alumni Perspectives SurveyResearch Services Alumni of specialized business master’s programs recoup investment costs faster than MBA grads. Program Type Total Investment* Initial Boost in Base Salary* Years to Recoup Investment Master of Accounting $35,000 $45,000 0.8 Master of Finance $35,000 $22,500 1.6 Master in Management $30,000 $30,000 1.0 *Median, US dollars.
  19. 19. 2016 Alumni Perspectives SurveyResearch Services Download the full report at gmac.com/alumniperspectives
  20. 20. 2016 Alumni Perspectives SurveyResearch Services Follow us on Twitter! @GMACResearchers

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