There’s a long standing understanding that graduates with a degree from a private undergraduate business school will earn a larger starting salary than those who hold a degree from a public institution. But how much larger? Is the $35,000+ tuition per year worth it?
A recent BusinessWeek article compares the tuitions and starting salaries of private and public undergraduate business programs, and concludes that you get more bang for your buck with the state schools.
Look at it this way: On average, a state school will run you about $10,495 per year, compared with the private school tuition of $35,408. That’s a difference of more than $20,000 per year. When it comes to comparing starting salaries, however, that gap is much smaller: the Median starting salary for public school graduates is $46,461; for private school grads is $51,051, a difference of only 9%, or $4,590.
For every dollar spent on tuition at a public undergraduate business program, students will make back about $4.97 with the average starting salary. Private school graduates will only make back $1.64 for every dollar spent.
And these numbers don’t even take into account the top business programs at state schools that offer equivalent starting salaries to the top programs at private institutions, like UVA’s McIntire School of Commerce and U. of Michigan’s Ross School of Business. These two schools charge less than $12,000 per year (for in-state residents) and have median salaries of $60,000!
So why do so many people aspire to attend top business programs at hugely expensive private universities? The article continues to explain that there are other benefits to private schools that public schools can’t compete with, including the talent level of the class (due to them being so selective), the committed alumni network, and the reputation of the school. “Even if the starting salaries aren’t that different, it gives you a greater opportunity,” says William Lesser, interim director of the undergraduate business program at Cornell. “It’s valuable for anybody to apply and pay the differential.”
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