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Anyone who has shopped around for a college business program has confronted the harsh calculus that rules any financial cost-benefit analysis. Elite private programs cost more, but frequently deliver better career outcomes. State schools cost less, but you may end up getting shortchanged on jobs.
Nowhere is this clearer than in Bloomberg Businessweek's latest analysis of tuition costs and starting salaries for the magazine's 113 ranked undergraduate business programs. Annual costs for state schools on the list average less than a third of those for private schools—$10,495 vs. $35,408. At the same time, the median starting salaries for public and private schools differ by $4,590, or 9 percent—$46,461 for public schools, $51,051 for private schools.
The result: In our analysis of starting salaries earned per annual tuition dollar spent, the state schools fare much better, averaging $4.97 vs. $1.64 for the private schools.
What's more, there are state schools where graduates earn just as much as those at private schools, but pay far less for the privilege. Four schools on the list have median salaries of $60,000. The University of Virginia's McIntire School of Commerce (McIntire Undergraduate Business Profile) and the University of Michigan's Ross School of Business (Ross Undergraduate Business Profile) each charge in-state residents less than $12,000 a year; Georgetown University's McDonough School of Business (McDonough Undergraduate Business Profile) and New York University's Stern School of Business (Stern Undergraduate Business Profile) charge more than triple that amount.
Over the course of a four-year program, private school students will spend about $100,000 more than their public school counterparts, but annual salaries at graduation at best represent a modest improvement. So is private school a rip-off? William Lesser, interim director of the undergraduate business program at Cornell University's Dyson School of Applied Economics and Management (Dyson Undergraduate Business Profile) says it's not.
Elite private institutions like Cornell, a member of the Ivy League, reject far more applicants than they accept, creating a hugely talented class that adds to the educational experience and a network of highly successful alumni, which serves to open doors for graduates throughout their careers. The reputation of private institutions alone more than pays for the extra costs associated with a private school education, he added. "Even if the starting salaries aren't that different, it gives you a greater opportunity," Lesser says. "It's valuable for anybody to apply and pay the differential."
Among the public schools, University of Florida's Warrington College of Business Administration (Warrington Undergraduate Business Profile) unseated Central Florida in the No. 1 spot, while University of North Carolina's Kenan-Flagler Business School (Kenan-Flagler Undergraduate Business Profile), which was No. 5 last year, broke into the top three. In all, there were four new schools in the top 10: University of Kansas, Colorado State, West Virginia University, and James Madison University. Central Florida, Florida International, and Florida State—none of which were ranked in 2011—and North Carolina State all fell out of the top 10.
The top three schools on the private school list—Brigham Young University's Marriott School of Management (Marriott Undergraduate Business Profile), Cornell, and DePaul University's College of Commerce (DePaul Undergraduate Business Profile)—were unchanged from last year, with BYU taking the top spot thanks to extraordinarily low costs charged to members of the Mormon Church. Joining the top 10 this year: Loyola Chicago, Wharton, and Duquesne, with Carnegie Mellon, Elon, and Tulsa tied at No. 10. Hofstra, which was not ranked in 2011, as well as Baylor, Marquette, and Northeastern all dropped off the top 10 list.
While all the schools that fared well in this analysis represent great values, and will no doubt allow graduates to repay their college loans very quickly, it's worth noting that great values and great rankings don't always go hand in hand.
Of the 25 top public schools and 25 top private schools in terms of value, only 13 ranked in the top 25 in Bloomberg Businessweek's Best Undergraduate B-Schools ranking, which is based on nine different measures of student satisfaction, postgraduation outcomes, and academic quality. Of those 13, only six schools ranked in the top 10.
Some, like Cornell, manage this feat by keeping a lid on costs, others by delivering consistently high salaries for graduates, and one way they do that is by sending the bulk of graduates into lucrative finance or consulting jobs. At the MIT Sloan School of Management (Sloan Undergraduate Business Profile), No. 7 on the private school list, three out of four grads end up in those jobs, and median starting salaries are $65,000; at the University Pennsylvania's Wharton School (Wharton Undergraduate Business Profile), No. 5 on the list, 79 percent of grads go into finance or consulting jobs, and median starting salaries are $70,000, the highest of all 113 ranked schools.
By contrast, at Baylor and Marquette, the percentage of graduates entering those lucrative fields was 44 percent and 46 percent, respectively, and median starting salaries were $45,000 and $46,000, respectively.
Keep in mind, too, that many schools appear to be great values, but only if you end up with a job, and many students don't. At the No. 1 public school, the University of Florida's Warrington School, only 47 percent of graduates who reported their job status to the school last year reported having a job offer by graduation. At Louisiana State University's Ourso College of Business (Ourso Undergraduate Business Profile), the numbers were even worse: Only 34 percent had job offers at graduation.