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."
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