More kids—and better qualified ones—are studying business in college. And they're nailing fatter salaries when they get out. Meanwhile, academic programs are getting more specialized
There is at least one place in the business world where most of the news is good: undergraduate business education. The number of high school seniors who say they intend to earn a business degree is increasing. Those who entered a business program in 2007 boasted higher standardized test scores than last year's freshmen. And graduates are leaving with bigger salaries. The big-name schools are competing more fiercely for these qualified students, with everything from new buildings to more tailored study-abroad programs. Others are trying to build national reputations with niche programs that take advantage of their location to prepare students for jobs in a particular industry.
The competition is evident right at the very top of our third annual ranking of undergraduate B-schools. The University of Pennsylvania's Wharton School once again was deemed the best program. But it has an increasingly strong rival in the University of Virginia. In several of the measures we use to determine our ranking, the two schools were virtually the same. And we have a new No. 3 this year: the University of Notre Dame, which displaced the University of California at Berkeley (it slipped down to No. 11).
To rank these programs, BusinessWeek uses nine distinct measures, including surveys of some 80,000 business majors and more than 600 corporate recruiters, the median starting salaries for graduates, and the number of graduates each program sends on to the preeminent MBA programs (we rank those, too, in November every other year). We also calculate an academic quality score for the undergraduate schools by combining SAT scores, faculty-student ratios, class size, the percentage of students with internships, and the number of hours students spend on class work each week.
So here's what went down in the Wharton-Virginia contest. Student and recruiter satisfaction with Wharton ebbed somewhat, while Virginia received the highest ratings from its students of any of the 96 schools we ranked. The fact that graduates' average starting salary increased by $5,500—or more than 10%—to $58,000, had a good deal to do with that.
There's no discounting the importance of the dollar sign. Notre Dame's academic quality improved somewhat this year; the main reason it moved up four spots on our list is because of its students' success in the job market. Salaries increased nearly 10% there. When we looked at graduates of our top 25 schools, we found they are making an average of $54,445, which is $3,000 more than last year. As a percentage (5.8% to be exact), that increase is a full two points higher than the national average. At many schools, including Babson College and Washington University in St. Louis, the rise in graduates' salaries was even bigger. That's because more of their students took positions in that most lucrative (in 2007, anyway) of industries: investment banking. At 19th-ranked Georgetown University, 94 seniors, or 29% of the graduating class, accepted i-banking jobs, compared with 63 the year before. That pushed the median starting salary up $5,000, to $60,000—on par with Wharton, Michigan (No. 6), and Massachusetts Institute of Technology (No. 9).
The relationship between Wall Street and our top-tier schools can't be matched by others. But it can be replicated with other industries. Consider these four programs that have distinguished themselves by going local: The University of Houston, in the heart of the nation's oil capital, is training the next generation of energy executives, while Florida State University offers a professional golf management program. The University of Louisville specializes in equine management. Belmont University is using its Nashville locale to help students break into the music business. For these schools, it's all about finding their competitive advantage.
Houston is home to oil giants BP (BP), ConocoPhillips (COP), and Royal Dutch Shell (RDS), along with hundreds of other smaller energy companies. But until 2001, when the University of Houston's Bauer College of Business (No. 82) launched the Global Energy Management Institute, there were no business school programs nearby that focused on the industry. It has been a gusher ever since: Most of last year's 21 students graduated with high-paying jobs. Now, to keep up with changes in the business, the institute is developing new electives focused on alternative energy. The first course, Carbon Trading, will be taught next spring.
There are no fewer than 20 universities offering a professional golf management degree. But Florida State (No. 69) is the only one with a curriculum that includes all the core courses in the business school and the hospitality program. Students, 40% of them from out of state, learn about course and tournament operations, turf management, and club design—as well as catering and restaurant management. Oh, and they need a 12 handicap to get in and must shoot 78s over two consecutive rounds in order to graduate. Everyone who has graduated so far has ended up with a job in the business.
The prospects for graduates of Louisville's equine management program (the B-school is No. 92) and Belmont's music business program (No. 89) are a little more cheery than you might expect. Thanks to Seabiscuit and Barbaro, horse racing is big again. Churchill Downs, where the Kentucky Derby has been held since 1875, is hiring. At Belmont, whose graduates include country music stars Trisha Yearwood and Brad Paisley, courses in copyright law and electronic media help prepare students for a digital world. But the real draw is the internships—and the chance to make connections, which is how most people get their start in the business.