What It Now Costs To Get A Top MBA Degree
Maria |
December 7, 2021

It’s no secret that getting an MBA is expensive, but how much money do you actually need for an MBA degree?

 In this episode of Business Casual, Maria, John, and Caroline will not only give you an estimate of how much money you’ll need to have a degree, but they’ll also explain why an MBA is a good investment for your career in the long run.

Episode Transcript

[00:00:07.210] – John

Hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co host, Maria Wich Vila and Caroline Diarte Edwards. Caroline, of course, is I cofounder of Fortuna Admissions, the MBA admissions consulting firm and a former director of admissions chief of admissions at INSEAD. And Maria, of course, is the founder of Applicant Lab, which is sort of a do it yourself tool software program to help applicants guide them through the process of applying to a top school. We are going to talk today about something that we do every year at Points and Watch, which is to assess the cost of a top MBA program. Every year we look at the top 25 and see what it costs to attend, not only in tuition, but the estimates that schools provide on room and board and the additional fees that they tack on to tuition. You’ll be not surprised to learn that obviously an MBA for a top 25 school is a major investment. I’ve always said that once you toss in the opportunity costs of forgoing your earnings, you’re looking at larger than any other purchase in your life outside of a home.

 

[00:01:28.370] – John

And this year I would say the top school is in New York City. It’s actually NYU Stern. The two year cost in tuition, room and boarding fees is $243,000. Stanford is next because we know how expensive it is to live in California. The total cost there is about $240,000. Dartmouth Tuck, 238,000. Same at Columbia, MIT 236. Interestingly enough, there are nine schools where the costs are higher than Harvard Business School. Harvard right now is priced at $223,000. I always think that one of the interesting things about these numbers is that when you look at the estimated room and board and fee costs in addition to the tuition, you can make the argument that, well, look, for two years, you’re going to have to pay room and board somewhere anyway. So what doesn’t matter. But most of these estimates that are provided by the school are for let me call it a conservative lifestyle. At many of these elite schools, MBAs live a very rich life going out for drinks and expensive restaurant meals. And maybe many people don’t want to live in a graduate dormitory. They would prefer to share an apartment or have their own apartment, which really significantly increases all of these price Tags on a degree.

 

[00:02:59.450] – John

So let’s start with Maria. How do you make sense of this? I want to kind of put these numbers into some sort of context. If I’m looking at $243,000 to get an MBA from NYU Stern, and I’m not even thinking about the loss of my earnings for two years, how do I get my head around that and say, yeah, this is worth it?

 

[00:03:24.740] – Maria

I think you look at it the same way you would look at any long term investment where there’s an enormous capital outlay up front and the expectation or hope is that you will recoup that in the decades that follow. So I think most people who get MBAs ultimately do acknowledge, even if they didn’t love the experience as much as they were hoping, even the most sort of disgruntled and grumpy graduates will acknowledge that their earnings potential has been pretty significantly increased as a result of doing the program. So my quick answer is look at it as you would you compared it to a house, right. If you buy a house and you live in it for 30 years. Yeah. It’s going to cost a lot upfront. But think about how long you will be benefiting from that purchase.

 

[00:04:12.410] – John

Yeah, that’s really true. And you think about the appreciation that you’re going to get from it. And in this sense, the appreciation is not merely the bump you get when you graduate, but really the bump you get throughout your career because every percentage increase on a bigger basis is very significant. The other big thing is there are opportunities that you will have with the MBA that are otherwise not available to you. A good example, frankly, would be firms that really rely on business schools for their talent pool. So McKinsey Bain, BCG, right off the start, where the starting salary is $165,000 with a $35,000 sign on bonus. If you’re an engineer or you’re into marketing or you’re into any field and you want to get into consulting, you don’t have a choice. You have to go to a top MBA program really to get those jobs. So that justify the expense because those jobs are incredibly lucrative. And while you have to work really hard at them, there is an immediate bump that is sustained over the period that you’re working at A, McKinsey, Bay and BCG or Deloitte or any other major consulting firms, for one thing.

 

[00:05:37.840] – John

Caroline, how do you make sense of this?

 

[00:05:40.790] – Caroline

I think, as you said, you have to take a long term perspective on this. And it’s interesting to look at some of the data on return on investment. And the Forbes ranking is based on purely financial data. Right. Return on investment, payback time and so on. And it’s very impressive, right. The payback time on these top MBAs is just a few years. We’re not even talking decades. Right. We’re talking single finger years. And so when you think about the return on investment that you will actually generate over an entire career, it’s very impressive. So despite the huge ticket price and that entry to a whole new world looks very intimidating, and it looks like you’re taking a big risk. And I often talk to candidates who are thinking about applying, not even sure about applying because they’re so concerned about taking on that financial risk that is unsecured. Right. And if you buy a house, you can sell the house and you’ve got an asset, but you’re investing in yourself. And so it’s much more intangible and can feel much more risky. But as Maria said, it’s very rare that anyone regrets going to business school.

 

[00:06:59.070] – Caroline

And if they do have some regrets, it’s often about the choice of community or the place that they were and not about the whole idea of doing an MBA and whether that had a payback for them in their career. So I do think it’s still important to find the right fit for you and to get into the best school that you can, where you feel you will be able to achieve your goals. And sometimes I speak with people who get into multiple programs, and then they’re lured to a program that was not their top choice because of scholarship offers. And it can be very difficult to turn down a generous scholarship and to then take on the financial risk yourself of going to the program that was the one that you actually had your heart set on. But I always advise candidates to take, if possible, to take some of those financial elements out of the decision and think about really which school is the best fit for you, where you feel most comfortable, where you think which environment is best suited to enabling you to achieve your goals, because at the end of the day, you will pay those loans back, you’ll get the return on investment, and that’s something that will stay with you about that experience and the alumni network and so on will stay with you for the rest of your life.

 

[00:08:21.880] – Caroline

And so I think sometimes candidates are too focused on the short term of the calculations and how much it’s going to cost them, the size of the loan they have to take out and scholarship offers and so on. And I wish often that they were less influenced by those. And I know how difficult it is when it’s such a huge amount of money. But I always encourage them to take a long term perspective, and it’s possible not give too much weight to the financial considerations.

 

[00:08:49.850] – John

Yes. And as you mentioned, the other aspect of putting this into context is scholarship or fellowship aid. The schools are in literally an arms race to offer discounts on these numbers. So you can consider these numbers sticker prices. And if you look at what kind of fellowship or scholarship is available to people at most schools, it’s considerable. And there are MBA programs, to be totally honest about this, where almost every person gets a scholarship and many people get a free ride, and those tend to be not the best program. Sure. Those tend to be smaller programs where schools want to maintain a certain leadership position on a ranking, and they’re literally paying for their students better students to come than they would otherwise get. But you can get a really good deal at some of these schools. And then even at the best schools, they’re quite generous. So let’s look at Stanford. The average fellowship at Stanford is $42,000, a year or $84,000 in total rewards over a two year period. At Harvard, the average fellowship is just under 40 grand a year, or roughly $80,000 total, and half the class gets it. So that’s an extraordinarily large amount of discounting that’s going on at Stanford and Harvard.

 

[00:10:19.910] – John

And yes, these schools have large endowments, and yes, these schools tend to be among the most generous. But a lot of the other schools then have to basically anti up to be in the competition for the best applicants. And there are a lot of schools that have hundreds of scholarships, grants, fellowships, and awards. Ucla is one. Berkeley annually spends millions around it’s relatively small MBA cohort. And when you look at this many times, you can apply for aid, and it doesn’t take a lot of extra effort either. So it’s not like this is something that should be all that time consuming. I think what Caroline mentioned about people taking offers that they might not otherwise accept because of the scholarship award that’s dangled in front of them so that they don’t have to borrow as much money. Ultimately, you’re right, Caroline. You’ve got to know you want that degree from that school, and you’ve got to be pretty darn certain about it to pass up a Wharton or a Columbia or Harvard or Stanford and go somewhere else because you don’t want to get heavily into debt. Don’t be accepting an offer. No matter how generous it is, it’s going to turn you away from the dream school, the best possible education outcome that you could get from it.

 

[00:11:54.570] – John

What’s another way to actually weigh these offers? Because I bet both of you in counseling applicants to top schools get involved not only in the upfront process of here’s how you apply, here’s how you increase your odds of getting in, but just as importantly, on the choice issue, because if you have multiple offers and you’re thinking about this and cost is an issue for you, how do you think about it? Is there a framework for this? Maria, what do you advise people?

 

[00:12:24.870] – Maria

There’s a framework, but I would say it’s more of an art than a science. I think that there are so many qualitative elements that should go into your decision. So on the quantitative side, yes, I think you should look at the career outcomes for your desired career from the career placement reports, how many people go into your desired career, talk to the students. How easy is it to get that job that you’re dreaming of? But I also think that there’s a cultural component to each one of these top schools has a slightly different cultural vibe. And I think there’s something to be said for being near your tribe, so to speak, finding people that are more aligned with you. And so I think there’s the quantitative aspect or the quantifiable aspect, like the more hard, tangible aspect of do they offer the classes I want? Do they have the career outcomes I want. But then I think there are also the other things, like the culture, even the location. For example, if you really want to live on the West Coast, it won’t hurt to go to a school on the West Coast because people tend to stay.

 

[00:13:25.650] – Maria

Even if a large percentage of a class does disperse geographically, there is usually also a pretty big chunk that stays in the area. So if you want to live in the Midwest, maybe you do value an offer from a booth or a Northwestern a little bit more than you might an offer from an East Coast school, for example, right?

 

[00:13:46.720] – John

Yeah, totally. And often geography is destiny. There tends to be more of an alumni network around the schools, whether East, West, Midwest, and that helps. It also tends to be certain different sets of companies that may be recruiting at these different schools. So geography is also a real key component of where you decide to go. Are you surprised that the most expensive school just in terms of tuition? Forget room and board, forget the additional fees that schools tack on and expense their students. But the most expensive MBA program in the world today is MIT Sloan $79,000 a year in tuition. Are either of you surprised that MIT would be that high and be number one over Harvard, Stanford, Wharton, Kellogg, Chicago?

 

[00:14:46.850] – Caroline

There’s not a huge amount to choose between them, is it? I don’t know exactly how the schools calculate this, but it also depends what it is included. Sometimes there are different things that are included in the tuition, different additional cost. So I don’t think those small differences are going to make a big difference at the end of the day to the total cost of the overall experience. And I think that location plays in more to the calculation of cost because there can be a big difference in paying rent in Palo Alto versus some other Metropolitan areas.

 

[00:15:26.130] – John

Right.

 

[00:15:28.290] – Caroline

There’s a cluster of tuition fees, and they’re all fairly close together.

 

[00:15:33.450] – John

Yeah. And the exception would be among the top 25 schools. It’s probably not a surprise. The least expensive opportunities are all at public universities, right. So if you look at Indiana, Kelly, it’s 52,000, University of Washington, the Foster School, 54,000 a year. Ut Austin, MCCOM is $58,000 a year compared with at the top, MIT at 79, NYU at 79, Dartmouth at $78,000, Columbia at $77,000. So you’re looking in that case at a $20,000 a year difference or $40,000 over the two year period. But obviously it’s a reputational, image or prestige game. The brands like MIT, Stern, Dartmouth, Columbia, Kellogg, Wharton, Chicago, Stanford, Yale obviously have more pricing power than Indiana, Washington, UT, Georgetown, or Rice, all of whom have among the top 25 MBA programs. The more affordable price Tags. Is the premium worth it? Do you remember how much you paid for your MBA, Maria?

 

[00:17:00.270] – Maria

I don’t. I think I blanked it out of my head. But to Caroline’s earlier point, even I who went into the startup world right after business school. And so my monetary compensation was not as high as it was for some of my classmates. Even I was able to pay off my debt fully, I think, within ten years. And so you really are able to pay it off. It’s not as daunting once you actually graduate. I think the premium is worth it. A difference between, say, in Indiana versus a Sloan. I would pay that difference.

 

[00:17:37.530] – John

Yeah. Now, I do know that you remember how much your room and board was at Harvard Business School.

 

[00:17:43.330] – Maria

Yes, that’s the room because I was in a dorm, a teeny dorm room that was only slightly wider than the twin bed that was in it cost, I think it was $700 a month, but that did not include food. So there was a cafeteria on campus where I ate most of my meals. And so obviously that would just add up depending on what I chose to eat in a given day.

 

[00:18:10.350] – Caroline

But yeah, I do believe that Maria was on bread and water.

 

[00:18:16.230] – Maria

It was more like Mountain Dew and coffee.

 

[00:18:21.080] – John

This is before the Raymond noodle, phenomena, right?

 

[00:18:24.930] – Caroline

Energy bars.

 

[00:18:26.020] – John

Ramen.

 

[00:18:26.690] – Maria

Exactly. Oh, man, I could have really used some energy bars back then. Would have been pretty transformative.

 

[00:18:33.190] – John

As a point of contrast, the rooming board at Harvard Business School is $30,270 a year and the highest rumor board is at Stanford, where it’s $34,806 a year. Now, the argument on this, like I mentioned earlier, is that, look, you’re going to have to pay room aboard somewhere. So that’s an expense that you’re already incurring to incur at a business school. The only difference is that you’re not having income to help pay for it, but you obviously have to have that expense no matter what you do. Caroline, you’re going to make a point.

 

[00:19:10.550] – Caroline

Yeah. So I wanted to put in a plug, if I may rather shamelessly for the one year program. Absolutely.

 

[00:19:19.930] – John

I was going to ask you, Caroline, how much you paid for your one year MBA at INSEAD.

 

[00:19:26.430] – Caroline

God, I mean, like Maria, I can barely remember. I think it was something in the โ‚ฌ40,000 and now it’s about โ‚ฌ90,000. So it has gone up considerably. So that’s about $100,000. But the payback is fantastic at this one year program. So we mentioned the Forbes ranking, which is based on financial data, and Stanford and Chicago at the top there with a four year payback and IMD, which are at the top of IMD and Insured at the top of the Forbes ranking. It’s about two and a half years to pay back. So it’s difficult to argue with a financial proposition of these top one year programs because it does make a tremendous difference if you are incurring living costs and paying tuition and foregoing your salary for one year rather than two. It’s very powerful formula and I know that a lot of people apply to these programs with the intention of being able to leverage that more efficient format and therefore benefit from those cost savings. And that’s a huge part of the value proposition of these programs. And it’s great for attracting candidates from around the world because a lot of the students of these programs have not been earning US style salaries before they go off to business school.

 

[00:20:59.310] – Caroline

And so you’re working in India or you’re working in some other parts of the world emerging economies where salaries are much lower, regardless of how prestigious your job is, you just don’t have the same savings.

 

[00:21:16.430]

Right.

 

[00:21:16.830] – Caroline

So it makes a tremendous difference for those candidates to be able to get the full MBA experience and achieve their career goals in one year rather than two. It’s a very powerful value proposition.

 

[00:21:30.690] – John

Yeah, that’s really true. And as you pointed out, the ROI on those degrees, based on the calculations, reports does is exceptional. So you were saying the latest data shows it takes four years to get the payback on a Harvard or Stanford degree, how long you get on INSEAD.

 

[00:21:52.630] – Caroline

So it’s 2.7 years for IMD, and it’s 2.6 years for 2.4 years for Cambridge Judge. So, I mean, that’s very fast.

 

[00:22:02.120] – John

Exactly. That’s really a good point. The other thing you should know, though, is that generally one year programs in terms of scholarship aid tend not to be as generous as some two year programs because they don’t need to be because they’re more affordable to begin with. So that’s also a thing. I think it’s so hard for someone to make decisions on the basis of cost because the sticker prices are not the real prices. And it’s not about your negotiating power, really, because there’s a bit of a black box when it comes to how much aid you can get from a school. So you apply and you kind of don’t know what it’s really going to cost you until you get that offer back. And while some people have some negotiating power, it’s pretty limited, really, because the schools don’t want to get into a fight for you with another school bidding against each other. That is rare when that happens, if it happens at all at some schools, because most schools refuse to do it at all. But it is hard to make this decision totally unclosted. You just don’t know what the final price is going to be.

 

[00:23:16.980] – John

The other thing is with the two year program, you’re going to have that summer internship, so you’re going to be earning some cash. And those numbers are on our side as well. What insurance are paid at different firms in different industries, and that takes down some of the sting of the price tag as well. I think all three of us come down on one point here. We totally agree that it is worth it. The numbers are shocking. Yes, the costs are significant, but all three of us believe this is a top school, a no brainer investment. Still. And if you look at the outgoing data right now, today the Wall Street Journal finally caught up with stories that we’ve been running for three months, that salaries for MBAs are record levels, jobs are plentiful, sign on. Bonuses are pretty nice. So it’s clear the rewards are there once you get the degree, go out and apply. All right. Maria and Caroline, thank you so much for this discussion and for all of you out there. Yeah, the price is high, but it’s worth it. All three of us agree that the top MBA from a great school is a no brainer investment.

 

[00:24:41.630] – John

Sure. When you go and you look on the websites and you look at this article that we’ve just published on the cost of an MBA, you might be shocked, but that is the price tag cost. You can probably get a discount through fellowships and scholarships. You’re going to have an internship and a two year program. The payback is going to be four years or even two and a half in a one year program. So we think it’s worth it. We hope you’ll you think it is too. Maria and Caroline, thanks for the discussion. This is John Byrne with Poets and Quants. Thanks for listening to Business Casual our weekly podcast.

 

What It Now Costs To Get A Top MBA Degree
Maria |
December 7, 2021

[00:00:00] John Byrne: Well hello everyone, this is John Byrne with Poets and Quants, welcome to Business Casual, our weekly podcast with my co-hosts Maria Wich-Vila and Caroline Diarte Edwards. Today we have a special guest, Heidi Hillis from Fortuna Admissions. She is based in Australia, is a senior expert coach for Fortuna, and has three degrees, all from Stanford, a BA in English literature, that’s my degree, an MA in Russian studies, and an MBA from the Graduate School of Business. And we have Heidi here to discuss some really fascinating research. Here’s what Fortuna did. They dug into the last Two class profiles of the Stanford Graduate School of Business.

That’s the class of โ€˜23 and the class of โ€˜24. They looked up all these folks on LinkedIn to identify a little bit more about their backgrounds, including their former employers and their places of undergraduate education to come up with an incredible analysis. Heidi, welcome.

[00:00:46] Heidi Hillis: Thank you. I’m glad to be here.

[00:00:48] John Byrne: Heidi, what is, what are the big takeaways from your deep dive discovery?

[00:00:54] Heidi Hillis: It’s hard to know even where to start. I think there’s a quite a few interesting kind of trends that we’ve seen that have taken place over the years. We were mentioning before the call that traditionally there hadn’t been, 10 years ago, if you’d looked, you wouldn’t have seen so many tech companies represented, but now there’s a big presence of tech companies who are feeding a lot of these MBA programs in Stanford in particular.

I think that the thing that was really interesting was, looking, not just at where the companies that were feeding the students, the applicants to Stanford. When they were working there, when they were applying, but actually the paths that they took prior to their current job.

So how many people were working, if you look at McKinsey, for example, or Bain and BCG, those are obviously companies that feed a lot of applicants to the program, but we found 20%, which seemed to be normal of, the class came from consulting, but if you actually look into the numbers in their background, You would see that actually 37 percent of these two classes had worked at McKinsey sometime prior, or actually in consulting, so it was, it’s The kind of the patterns that are behind, what you would normally see in terms of what Stanford tells us.

So you get a sense of the paths that people have taken. And so that’s something that was really interesting to see.

[00:02:16] John Byrne: Absolutely. And of course, this is this analysis goes so far beyond what any applicant would learn by simply looking at the class profile that the school up because, this level of detail is never available to people.

[00:02:33] Heidi Hillis: No, and yeah, for example, you could see that, Stanford will say that they have around, each year around 50 percent of applicants are international, which is a great statistic and gives you lots of hope if you are an international student. But when you dig into the numbers, you actually understand that.

75 percent of the people who get into Stanford actually went to a U. S. University. So even if you’re international, it does have does seem to have kind of an advantage of having been educated in the U. S. That seems to be something that they look for. However, I think. The concentration of universities in the U.

S. that are feeding to Stanford is something also that, if you’re looking at it, you might find a little bit dis, disconcerting. There’s a few programs that are really, obviously the top. Programs as you would expect places like Harvard, Stanford, Yale, the Ivies but if you look at the international universities very diverse from all over the world, really lots of people from different places, which is also really interesting.

[00:03:38] John Byrne: Yeah I tell you, one of the things that struck me in the data is how consistent it is. 10 years ago, we did the same exercise at Stanford and a bunch of other. Schools from Harvard and Dartmouth and Columbia and talk and a few others and back 10 years ago, we found that 25. 2 percent of the class of 2013 were from Ivy League colleges.

And the Ivy League 8 schools, not including Stanford. And if you included Stanford, it would have been 32. 6%. So now, let’s move forward to your data. And in 23, 30. 7 percent went to Ivy League schools, even above the 25. 2. And in 24, 27. 9 percent went to Ivy League schools. So it looks like Stanford has gotten even a little bit more elitist than it was.

Yeah,

[00:04:41] Heidi Hillis: It’s, it is it’s what the data says, right? Obviously, this is a sample. We have 80 percent of the two classes. So we don’t know where those other people went. And that might skew the data a little bit in another direction. But it is, if you look at there’s 15 schools, that include the Ivy’s and then you have UC Berkeley and obviously Stanford that really are contributing, 49 percent of the class of 23, 47. 3 percent of the class of 24. So that is a pretty heavy concentration and But, if you actually look into the data, you see a lot of people also, each of these is actually an individual story.

You see a lot of people who come from other schools as well. So it’s not like you have to give up hope if you come from a different school. I see a lot of individual stories that, from the whole range of U. S. schools that really are feeding into Stanford. So I think what the data doesn’t also tell you, unfortunately, is how many of these Of people from these backgrounds are actually applying.

So

[00:05:39] John Byrne: good point.

[00:05:40] Heidi Hillis: It’s it’s hard to know. And sometimes I think people this is. A path that a lot of people who go to these schools plan to take from the very beginning. So I would see, it would be interesting to know that I don’t know that we will ever find that out. But, um, that’s something to keep in mind as well.

[00:05:56] John Byrne: Yeah. And that’s a fair point. Because how reflective are these results of the applicant pool reflective of an elitist attitude probably a combination of if I had to guess, but, it is what it is, and these institutions obviously are great filters, so you come from McKinsey, Bain, BCG, and you go to Harvard or Stanford or Penn, and you pass through a fine filter, and it makes you less of a admissions risk than if you went to, frankly, the University of Kentucky and worked for a company that no one knows of.

That’s just the reality of elite MBA admissions, right?

[00:06:40] Heidi Hillis: Yeah. And so you will see that the people who are not going, you’ll see a lot of the people who you would, the profiles that you would expect, the Harvard undergrad that then goes to Goldman that then was working at a PE firm.

That’s a really typical profile that you’ll see. But you’ll also see some really, unique and interesting ones, which I think, Okay. Helps you understand that if you don’t have that path, you also have a real chance at these schools, and maybe even more of a chance, again, not knowing, how many of those Goldman P.

E. Harvard grads are applying. So I’m thinking of the guy that I saw who he went to UPenn undergrad, studied engineering, started out a kind of pretty typical path working in private equity, but then made a big pivot to work for go to Poland where he was working in a real estate investment firm and the head coach of the Polish lacrosse team.

So you have really interesting profiles like that, that you can see that. aren’t necessarily taking that typical path. And sometimes that really does help you stand out.

[00:07:42] John Byrne: True. Maria, what surprised you most about the data?

[00:07:48] Maria Wich-Vila: Wow. I think we already covered, the, one of the biggest ones was the number, the percentage of people who would had some sort of either their undergraduate or graduate education within the United States.

Intuitively, I had felt that was true. And sometimes when I try to, give some honest, tough love to applicants from certain countries, and they’ll say, oh, but Maria, I think you’re being a little too pessimistic. After all, X percent of the applicants at these schools are international, and Y percent are from a certain geography internationally.

I’ll say yes, but that doesn’t mean that they’re all Solely from that area. A lot of them are, do have significant international educational experiences. I think another, speaking of the international piece the percentage of people who had significant international work experience as well was something else that really jumped out at me.

Because it would signal to me that Stanford really does value this global perspective both within probably its domestic applicants and also its international applicants. So I thought that was also a really interesting piece of data that jumped out at me.

[00:08:52] John Byrne: Now remind me what percentage was that?

[00:08:56] Heidi Hillis: People who are international

[00:08:58] John Byrne: who have had international work experience.

[00:09:01] Heidi Hillis: I think it was 30%.

[00:09:02] Caroline Diarte Edwards: Yeah. Yeah. Yeah, it’s pretty

[00:09:04] John Byrne: impressive.

[00:09:04] Caroline Diarte Edwards: 30%, which I was thrilled to see. As well as coming from in Seattle and Europe. Obviously the international schools put a heavy emphasis on international experience and I hadn’t fully appreciated that. A school like Stanford would also.

really value that to the same extent. And it’s great to see that candidates are making the effort to get outside of the U. S. and get international experience because I think you gain so much from that exposure. And you bring more to the classroom if you’ve got that experience. I know that both Maria and Heidi.

I’ve worked outside of the home countries as well. Pre MBA and I think that you just have so much more to contribute to the whole experience. And it was great to see that 30%.

[00:09:50] John Byrne: What else struck you, Caroline?

[00:09:53] Caroline Diarte Edwards: We talked about the concentration of academic institutions, and I was also surprised about the concentration in employers.

So while there is a very long list of employers where the students have worked pre MBA when you dig into the career paths that they’ve taken there is some interesting concentration. Heidi had noted that the reports that There are 26 companies that account for nearly one third of the class in terms of where they were working right before Stanford.

But when you look at their whole career history, those same 26 companies represent over 60 percent of the class. So that is, yeah, that’s quite extraordinary that so many of the class have experience of working at quite a short list of companies.

[00:10:46] Heidi Hillis: I think that’s reflective of, if you really think about it, you have a lot of these companies.

You’re talking about the Goldmans and the Morgan Stanley and McKinsey that have really large programs that recruit out of undergrad that are really training grounds for. A lot of people that then on to do, work in industry or go on to work for in finance in particular, a lot of people starting out at some of these bulge bracket banks and then going into.

Private equity or smaller firms. So the diversity within finance in terms of where they were working prior to MBA is quite large compared to consulting because there just aren’t as many consulting firms, but a lot of people in financing, a lot of different firms, but they, a lot of them really do start out in these training programs, these analyst programs that are so big and popular.

[00:11:34] John Byrne: Yeah, true. And looking back, I did this exercise as well. The feeder companies to Stanford 10 years ago in the class of 2023, 22. 8 percent from McKinsey, Bain, BCG, and your data, 22. 5 percent work there. Incredible consistency over a 10 year period. When you look at the top six employers 10 years ago, they were McKinsey, BCG, Bain, Goldman, Morgan Stanley, and JP.

Morgan Chase. They accounted alone for 34 percent of all the students in the class of 20, 2013 at Stanford. In your data for 23 and 24 they account for 29. 8%, just a few percentage points less. So remarkable consistency. And I think you’re right, Heidi, this is a function of the fact that these firms bring in a lot of people who are analysts and actually expect them after 3 to 5 years to go to a top MBA school.

So there’s a good number of them in the applicant pool to choose from and let’s face it, they’re terrific candidates.

[00:12:46] Heidi Hillis: Yeah. I think another pool of really terrific candidates that you see, and I don’t know what the 2013 data was saying, but is the US military, which is really, I think, again, something that I felt having worked with lots of military candidates myself, understand that, Yeah, intuitively, I would have expected, but to see it in the data is actually really interesting.

You just see Stanford in particular, I think, is really looking for leadership potential, and it’s so hard to show that as an analyst, as a consultant, but as in the military, these people have such incredible leadership experience that it really helps them to stand out.

[00:13:23] John Byrne: Yeah. And let’s tell people what the data shows.

How many out of us military academies,

[00:13:28] Heidi Hillis: In all in total, we had, 20 over the two years. So that’s in the two classes that we found. So that’s, a pretty large number. And they come from all the different academies, right? So you’ll find them from different, not academies, in the army, navy and the marines.

So you’ll see that. And you also see quite a few, in the data we’ll, we see a lot from the Israeli military as well, but that’s actually a little bit difficult to because every Israeli does go into the military. So it’s they have that in their background. Any Israeli candidate would have Israeli military background as well, but again, that’s.

Place that people can really highlight their leadership. So you had eight people from who had been, who were Israeli and obviously had military experience where they were able to demonstrate significant impact and leadership prior to MBA.

[00:14:18] John Byrne: Yeah. In fact, 10 years ago, roughly 2%. of the class went to either West Point or the U.

S. Naval Academy. Good number of people actually from the military. Maria, any other observations?

[00:14:34] Maria Wich-Vila: Yeah, I was also surprised at the fact that within those top employers And when we look at the tech companies, it was Google and Facebook and Meta with a pretty large showing. Google was actually the fourth largest employer after the MBBs and, but then, I was expecting there to be an equal distribution amongst those famous large cap technology companies.

So I, I would have expected even representation amongst Google, Meta, Microsoft, Apple, Nvidia, Amazon, et cetera. And yet. Apple and Amazon only had one or two people each versus Google at 25. So I thought that was really fascinating and it makes me wonder if perhaps it’s a function of maybe Google and Meta might give their younger talent more opportunities to lead impactful projects, perhaps.

I’m just guessing here, but maybe Apple and Amazon perhaps are more hierarchical. And maybe don’t give their younger talent so many opportunities, but I was really surprised by that. I would have expected a much more even distribution amongst the those famous those famous tech companies.

[00:15:40] John Byrne: Yeah. You’re right. And I crunched the numbers on the percentages and Google took three and a half percent of the two classes and that’s better than Goldman, Morgan Stanley, JP Morgan Chase. Facebook had 2. 7 percent and Microsoft at 1. 5, and I was shocked at Amazon because, Amazon is widely known as the largest single recruiter of MBAs in the past five years.

At one point, they were recruiting a thousand MBAs a year, but in, in one sense, maybe Amazon quite doesn’t really have the prestige. For Stanford MBAs who might rather work elsewhere, I think that might be is, you look at the employment reports at a lot of the other schools and Amazon is number one at a number of schools and very low percentage of people from Amazon going to Stanford.

We don’t know, of course, how many. Leaving Stanford and going back to Amazon, but it can’t be that many.

[00:16:41] Heidi Hillis: I wonder if there’s something about just a proximity effect here. You have the plate, like the meta and Google just being so close to Stanford, maybe it just, attracts more people applying because they.

They’re almost on campus and maybe, just being Amazon all over the world and different places could be not attracting as many. I don’t know.

[00:17:03] John Byrne: Yeah, true. The other thing, the analysis shows, and this is what you also gather from the more public class profile is really the remarkable diversity of talent that a school like Stanford can attract year after year.

It is, it blows you away, really. The quality and the diversity of people despite the concentration of undergraduate degree holders or company employers, it’s it’s really mind boggling, isn’t it?

[00:17:33] Heidi Hillis: Yeah, they come from everywhere and really interesting paths and even the people I think that, have those kind of typical paths, you see a lot of diversity within them as well.

So I think, even if you’re coming from a Goldman or a McKinsey having lived in another country or gone to done a fellowship abroad or running a non profit on the side. These things are actually what helped them to stand out. But you do see some really interesting, I think, profiles, too, of people who’ve just done, you get a sense of what it would be like to be in the Stanford classroom.

People from really unique and different backgrounds. People who come from all different countries and lawyers, doctors people who have run, nonprofits in developing countries people running large programs for places like Heineken or Amazon too. But, it’s a real diversity of backgrounds.

[00:18:27] John Byrne: Now, Heidi, I wonder if one is an applicant. Is this discouraging to read and here’s why if I’m not from Harvard, Stanford, Penn, Columbia, Brown, Cornell, Dartmouth, and if I didn’t work for McKinsey, Bain, BCG, Goldman, Google am I at a disadvantage and should I even try? Some people look at the data and come away with that conclusion.

[00:18:52] Heidi Hillis: I think it’s a reality check for a lot of people. I think it’s just, it’s really, it just helps people understand, what it, the difficulty of this, why it’s so competitive, but I think that there is, again, behind the kind of the percentages, you do look at these individual profiles and I would get, I would actually take a lot of hope from it if I were looking, as an applicant, because especially if you are.

Maybe a little bit more of a big fish or small fish in a bigger pond or big fish in a smaller pond you go to Rice or you go to Purdue or, and you do really well, those are the people who, they’re definitely looking for that diversity of background as well as the international.

I think that’s really neat. think that, instead of looking at the data and saying, why not, why I shouldn’t even apply, it’s why not me look at these other profiles of people who have taken really unique paths that that do get in. So I think it is actually a Kind of a mix of both, it is a reality check for a lot of people, but it’s actually, there is so much diversity in the data as well.

I think also one thing that we haven’t really covered is about is just the prevalence of social impact in, that’s really taken hold of the class. I don’t, again, going back to your 2013 analysis, I’m not sure how easy it was to tell that, but a lot of you can see reflected in the both the types of organizations people are working for, but also their titles and the kinds of work that they’re doing that that there’s a huge 40 percent of the class of the two classes had some kind of social impact in their background.

Whether that’s, running their own nonprofit on the side or volunteering or. Running trans transformational kind of programs within companies that are, either in finance or consulting or in industry. That’s a big trend. I think that people can take heart from as well.

So if you’re working if you feel like you’re in an organization where you’re not getting the leadership that you. can use to highlight your potential for Stanford, that’s definitely a place you can go is working for in volunteer capacity for a non profit or on the board of a of some kind of foundation.

Those are the kinds of places that you can highlight your potential

[00:21:00] John Byrne: true. And I know we have a overrepresented part of every applicant pool at an elite business school are software engineers from India. And I wonder in your analysis, how many of them did you find from like the IITs?

[00:21:18] Heidi Hillis: That’s a good question. The IITs, it was again, it was one of these you have about 50 percent of classes internet, so 25 percent of the class. was educated outside of the US. The IITs are going to be up there. Let’s see from India, 2. 1 percent of the class came from India. So probably, I don’t know offhand exactly how many of those were IITs, but

[00:21:43] John Byrne: I’ve had a lot of them.

[00:21:45] Heidi Hillis: Yeah, probably a lot of them. Although I think, that’s the other thing is that people who come, to work with me from India, they feel like if they haven’t gone to IIT, then that’s going to be a disadvantage. But I think, you’ll find that there are, there’s representation of other universities as well.

Definitely.

[00:22:00] Caroline Diarte Edwards: Yeah, I was just looking at the list of undergrad institutions. And for example, you’ve got Osmania University from Hyderabad. So it is not, it’s not all IIT. Okay.

[00:22:12] John Byrne: Yeah, exactly. And Caroline, 1 of the things about the institutions that are really represented here and that I don’t really see unless I missed it.

I didn’t see a Cambridge or an Oxford. Two of the best five universities in the world. And I wonder if that’s just a function of fewer people in the applicant pool or what? What do you think that could be about?

[00:22:36] Caroline Diarte Edwards: I had a look through the uk Institutions and you have got cambridge in there.

I think I also noticed. Bristol university there are a few different universities. So i’m aston university, which is not it’s not on a par with Oxford or Cambridge. So I think that speaks to the point that Heidi made that you don’t have to have been to an elite school to get into Stanford.

Aston is a good solid university, nothing wrong with Aston, but it’s not it’s not one of the top UK universities. So there’s definitely some interesting variety in the educational backgrounds of the students going to Stanford. And

[00:23:16] John Byrne: then, yeah, it is if you’re a big fish in a small pond, like Afton, you’ll you could still stand out in the pool.

[00:23:26] Heidi Hillis: Absolutely. There’s a lot of really interesting background, you have look hard on blue and you have Miami University and some really smaller universities abroad. I think. Again, it’s really, if you look at that, it does give you hope because it’s really what you do afterwards and if you, obviously, if you come from one of these schools, you probably want to be in the top, 5 percent of the graduating class, you want to show that you have the GPA that can support an academic background that they feel comfortable that you’ll be able to compete academically, but, and maybe that’s what you’re Offset by the, the GMA or the scores, you don’t know, we don’t have those on here.

But, um, the path post university really becomes much more important in those cases. What you’ve done since then where you’ve, how you’ve risen from starting at a entry level position to, running a division or heading a country group or something like that.

[00:24:21] John Byrne: And as far as Cordon Bleu goes, every good business program needs a Cordon Bleu, for God’s sake, right?

You want to eat well at those NBA parties, don’t you?

[00:24:32] Heidi Hillis: Absolutely.

[00:24:35] John Byrne: Maria, I’m sure that was true at Harvard.

[00:24:38] Maria Wich-Vila: I wasn’t the one doing the cooking but I certainly, I was certainly a member of the wine and cuisine society where I happily participated in the eating and consuming a part of that.

But to, to the point that we were just recently talking about. regarding being a big fish in a small pond. Not only have I seen it personally with applicants that I’ve worked with who did not attend these elite universities, but even many years ago, I attended a, an admissions conference where Kirsten Moss, who was the former head of admissions at Stanford, she actually told stories about how they’ve accepted people who even attended community college.

But within the context of that community college, they had really moved mountains. And she said that one of the things that they look for is, Within the context and the opportunities that you’ve been given, how much impact have you had? So maybe you don’t have an opportunity to go to Yale or MIT or IIT for your undergraduate, but whatever opportunity you have been given, have you grabbed that opportunity and really made the most of it and really driven change?

So she specifically called out, I believe, I believe there were two students that year at the GSB who had both started their educations, their higher educations at community college. Anything is possible. It really is about finding the people who, wherever they go, they jump in and make an impact.

[00:25:55] Heidi Hillis: Yeah, I think that to that point, I think it can almost be a more difficult if you’ve gone to Harvard and then worked at one of these, gone on one of these paths because we know that there’s, that’s an overrepresented pool in the applicant pool to stand out among those to have had that, that pedigree sometimes can be a disadvantage, right?

If you haven’t done as much as you should have with that, or if you started at that high level to show that level of progress over the course of your career is actually a little bit more difficult. Okay. And coming from a community college and rising to, a country level manager in some places is actually puts you at a significant advantage, I would say.

[00:26:31] Maria Wich-Vila: Because it’s hard for those people, it’s hard for those people to stand out, but also I think some of them go on autopilot, right? I think some people are on this kind of achievement, elite achievement treadmill, where they’re not even really thinking about what do I want to do with my life?

They’re always reaching for whatever that next, what’s the best college to go to? It’s Harvard Princeton. Yeah. Okay. Now that I’m here, what’s the best employer to work for? It’s McKinsey, Bain, BCG and without actually perhaps stopping to think about what is my passion? What impact do I want to make in the world?

And so I feel sometimes those autopilot candidates, I feel a little bit bad for them because they’re doing everything quote unquote and yet sometimes when you speak with them, that passion just isn’t there. And I do think that may ultimately harm them in the very, very elite business school.

Admissions because business schools want people who are passionate because at the end of the day, in order to do hard things, you’re going to need passion at some point to get you through those low periods. And so I think that’s something business schools look for. And I do think that sometimes these.

These kind of autopilot candidates might sometimes be at a disadvantage.

[00:27:29] Heidi Hillis: Yeah, I think that, to that point look in the data, when you look at it, you see so many people who’ve gone to McKinsey, Bain, Weasley, or Goldman, but then there’s a, you see a lot of success for people who’ve actually pivoted.

So those pivots that are post The second or third job really do show you that, if you’re if you get a candidate who’s coming from, still at McKinsey, okay, that’s fine. They have to be the top 5 percent of McKinsey, like they have to be going to get so many McKinsey applicants that the only the, you can look at the data in a couple ways.

One is, oh, my God, they took 12 people from McKinsey and the others. Oh, my God, they only took 12 people from McKinsey, right? That’s So if you want to be one of those 12, you have to be the top 12 in the world, right? Whereas if you’ve gone to McKinsey and then done an externship at a health care startup and then moved on to be a product manager at for health at Google, that kind of a path is definitely showing a little bit more, maybe risk taking, maybe ability to follow your passions.

So I think that. When I see candidates who come to me, for example, and they’re like, not thinking about applying now, but maybe in a year or two, I say, look for an externship, maybe think about pivoting out of one of these places and looking for some operational experience.

And because you see in the data that works.

[00:28:42] Maria Wich-Vila: And they’re doing themselves a service not only in terms of enhancing their admissions chances, but even just in terms of determining, what do I want to do with my career? If I do eventually want to go into industry, what functional role do I want to have?

What industry do I want to work in? So it’s, it actually benefits them in the long term to do that as well, even if they don’t go to business school. I think those secondments and externships and second job, post consulting jobs are extremely valuable. Totally agree with you.

[00:29:06] Caroline Diarte Edwards: And I’m sure they also bring more to the classroom as well.

I would think that’s also why Stanford is selecting some of those candidates, because not only have they worked at McKinsey, but they’ve also led a non profit in Africa or worked in private equity or whatever it is. So they have much more breadth that they can bring to the classroom. And I think that It’s seen as a very valuable contribution

[00:29:29] John Byrne: in Heidi.

Did you see that? The majority of the candidates to examined actually did work in more than one place, right?

[00:29:37] Heidi Hillis: Yes, most of them did. There were very few that, you see working at one place. And I would say that those are people that would have really risen through the ranks.

Someone who’s worked at Walmart and become, started in, I don’t know, in one state, but then to become a regional manager and things like that really are going to onto a global role. The people who have stayed at one place really have shown significant career progression within that.

And then the other people I think you do see a lot of movement. The big. The most typical would be from investment banking to private equity and then you do find in finance, there’s a little bit less kind of movement into other industries. You see a lot of people staying within finance, but within finance.

Yeah. Yeah. The other industries, especially consulting or other, tech, people are really moving into other places and it’s becoming, it is a little bit difficult. We have these categories that we’ve talked about, for example, healthcare, but it’s hard to categorize some of these companies.

Are they healthcare? Are they tech? There’s a lot of overlap. And so everything’s a little bit of tech in something nowadays. So whether it’s finance and fintech or education and ed tech or health care and health tech, these are all merging and combining. It’s hard to categorize them.

[00:30:53] John Byrne: So looking at the data here I wonder if you’ve seen your old classmates in the sense that these new people are very much like the people you went to school with at Stanford. I

[00:31:05] Heidi Hillis: put this out and it’s really interesting to a lot of my classmates downloaded the report and read it. And a lot of them came back and said, oh, boy, I would never get in now.

It’s these people are super impressive. I think that you see a lot of. It’s just become more and more competitive. And I think that with more information and more people every year applying, it is becoming really difficult. I think that you do see a lot of, I am encouraged by the diversity part of it that you see still Stanford.

I feel like they do take risks on some really interesting profiles and candidates that maybe some other schools are less likely to do. And so that’s what does give me. A lot of hope when I get some kind of really nontraditional candidate who wants to, their dream school is Stanford. I feel like, I say all the time, there’s a 6 percent chance.

You’re going to get in, but there’s 100 percent chance. You won’t get in if you don’t apply. So you’ve got to, you got to give it a go. And that’s, the attitude that we take to it.

[00:32:04] John Byrne: Indeed. So for all of you out there read Heidi’s article on our site, it’s called who gets in and why exclusive research.

Into Stanford GSB and I’ll tell you one conclusion I have about this is that, man, if you really want to get into Stanford, you need a Sherpa, and and Heidi would be a great Sherpa for you because the, just the profiles of these folks, where they’ve been, what they’ve done, what they’ve accomplished in their early lives is so remarkable that To compete against, in this pool for a spot in the class you need every possible advantage you can get.

And and having an expert guide you through this trip probably would be a really big advantage. So Heidi, thank you for sharing your insights with us and the research, the very cool research.

[00:33:01] Heidi Hillis: Thank you

[00:33:03] John Byrne: and for all of you out there. Good luck. And if you want to go to Stanford, you got to check out this report.

Okay. It will inspire you to up your game, even if you are from Harvard, Stanford, Wharton, or wherever McKinsey, Bain, BCG, Goldman, Google, you want to look at this report and you want to really think about. What it will really take to get in. I think it will inspire you, motivate you to really put your best foot forward.

Thanks for listening. This is John Byrne with Poets& Quants.

Maria

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