The 2018 Data Is In & The M7 Schools Remain Magnificent - Poets&Quants

Three years ago, only two of the seven schools in the M7 had 40% or greater female enrollment. Now all seven do

Way back in the misty recesses of business school history, deans from seven of the most elite business schools in the United States met and agreed on an informal arrangement. They would meet twice a year and share information, and not only among the deans — everyone else, too, from vice deans down through admission directors, career management directors, and even marketing staff. According to legend, the schools would form a self-anointed echelon from which no school would be dropped, and none added. Thus was born the Magnificent — or Magic, depending on whom you asked — 7.

New year, old truth: The M7 schools continue to have an aura of exceptionalism that most other schools envy. Harvard Business School, Stanford Graduate School of Business, the Wharton School at the University of Pennsylvania, the University of Chicago’s Booth School of Business, Columbia Business School, MIT’s Sloan School of Management, and Northwestern University’s Kellogg School of Management may trade places in the full-time MBA program rankings, moving up or down a few places year to year, but they continue to be regarded as, generally, the best programs in the world.

Which is not to say that a select few other schools don’t have a legitimate claim to belonging among this elite of the elite — or that it shouldn’t be expanded to a Terrific 10, or even 12. Shining particularly brightly, lately, have been Dartmouth College’s Tuck School of Business (ranked No. 7 in the latest Poets&Quants ranking), UC-Berkeley’s Haas School of Business (No. 9), and Yale School of Management (No. 10). And that’s just in the U.S. — European schools like London Business School, INSEAD, and HEC Paris belong among the world’s best, too. But sorry folks — like it or not, the M7 doors were designed to stay closed, and closed they remain.

THE NUMBERS DON’T LIE: THE M7 IS CONSTANTLY IMPROVING

As good or as much-improved as other schools may be, there is no laurel-resting at the M7 schools. In metric after metric, year-over-year improvement is a constant. According to the latest profiles for the Classes of 2019, average GMAT scores and GPAs are up, acceptance rates are down, graduates’ compensation continues to rise, and the rankings are holding steady.

Three years ago, Wharton’s incoming class’s average score on the GMAT outdid Harvard’s class for the first time ever. A year later, Wharton repeated the feat, outdueling HBS 730-729. But Stanford — which is also the most exclusive of the seven schools, with a ridiculously low acceptance rate that actually went down from last year’s 6.0 to a miserly 5.1 for the Class of 2019 — bested them both with an average score of 737. Stanford’s 3.73 average GPA was best among the M7, too. For the Class of 2019, the numbers have held for both Stanford and Wharton, while Harvard inches upward in both measures (729 to 730 GMAT, 3.67 to 3.71 GPA).

The M7 has seen major progress in another arena, too: gender parity. Three years ago, only two of the seven schools had 40% or greater female enrollment. Now all seven do, led, for the second straight year, by Wharton’s 44%. In diversity, too, most of the M7 are seeing improvement, led by Columbia’s 34% under-represented minority population, and with only Booth and Kellogg backsliding (27% and 25%, respectively).

A LOT OF MONEY OUT, BUT EVEN MORE MONEY BACK IN

But as much as the M7 have improved in the quality of their admits, they don’t make it easy for anyone to attend their hallowed halls. Three years ago, only one school — Stanford — had an estimated total cost north of $200,000. Now all seven do, led by Stanford’s $225,594 (not counting scholarships or fellowships). The least costly is Kellogg, at a measly $200,434.

That’s a lot of money. And those projections are conservative when it comes to living expenses. Most importantly, they are projections for single students with no children; the total cost for someone who is married with two kids is always much higher. A student seeking an MBA at Harvard, for example, will pay about $213,000 if he or she is single; but if they have a spouse and two children, they will pay $296,000, according to the latest estimates.

But don’t lose sight of the salient fact: When it comes to the top seven MBA programs in the world, you’re looking at big-time compensation once you have your degree in hand. No school has less than $125,000 as the median salary for grads, with Stanford pacing the pack again at $140,000, and every school’s median bonus is north of $20,000 as well. Stanford, incredibly, adds a median “other compensation” of $50,000 to the mix. Three months after graduation, no school has fewer than 92% of grads employed or holding job offers.

How does this compare to other schools? According to 2017 Graduate Management Admission Council data, the median total compensation package for graduate business school alumni starts at $75,513. And according to data from a joint 2017 survey by the Association to Advance Collegiate Schools of Business and the MBA-CSEA, the average salary for grads from six of the M7 schools (Wharton failed to report enough data to be included) is $129,769, compared to an average of $112,246 for a set of 129 reporting schools (which included the other six M7 schools). GMAC also compiled a chart in 2016 showing that a graduate business degree pays out a median of $2.5 million over 20 years (see below); according to data from Payscale from the same year, M7 20-year projections were considerably higher, with Harvard ($3.23 million), Stanford ($3.01 million), and Wharton ($2.98 million) leading the way. See all the 20-year projections on page 4.

(See the next pages for much more data on the M7 schools.)

Harvard remains the gold standard for business schools in many ways, not least of which is the huge number of living alumni, more than 84,000, and alumni clubs around the globe: 106 and counting

How The M7 Rank Against Each Other

One fact of business school life can be counted on year to year: The M7 schools will be at or near the top in every ranking. Here at Poets&Quants, all seven schools are in the top eight in our 2017 ranking, with Wharton nabbing the top spot; it’s a similar case for the most recent rankings by U.S. News, Forbes, and Bloomberg Businessweek, in which none of the seven schools drops below ninth place. That’s not the case for the Financial Times, which does a global ranking that includes schools outside the U.S., nor the Economist, which has a puzzling and questionable methodology. In the newest FT ranking, Kellogg is 12th and MIT is 13th, the same spots they occupied last year; but in the latest Economist ranking, Kellogg is No. 1 (!) and MIT dropped from 12th last year to 19th.

Below, to provide a better picture of a school’s strengths and weaknesses, we’ve compiled the U.S. News ranking of programs by discipline. These numbers are nearly a year old and will be refreshed in March when U.S. News releases its 2018 ranking. The final table on this page parses some more data from the different rankings, from Forbes‘ highly conservative estimate of the payback period for the degree (it fails to conclude scholarship grants) and U.S. News‘ surveys of corporate recruiters and academics to The Financial Times‘ alumni recommendation and academic research rankings.

Stanford Graduate School of Business leads the M7 pack in a number of areas: lowest acceptance rate (5.1), highest average GMAT scores (737) and GPAs (3.73), and highest median base salary for grads: $140,000

What You Can Expect To Pay At An M7 School

An MBA degree from an M7 school is pretty much a sure thing. No one is going to question your decision to go to any of these schools, and very few of the graduates from these institutions regret their choice to attend. But none of this comes cheap.

The highest estimated cost of the MBA degree among these elite schools is at Stanford, where the price tag, including living expenses, is now $225,594. Of course, that’s the price before any scholarship grants — and it turns out that even though all of the M7 schools now cost more than $200,000 to attend, all offer financial help at fairly high levels, with both Harvard and Stanford MBA students receiving an average of more than $35,000 annually (according to the most recent data available), and Wharton and Booth students close behind at $32,000 and $30,000, respectively.

That’s an important part of the financial puzzle to keep in mind when you apply to these schools. Don’t let the sky-high tuition scare you off. In effect, every school has a two-tier pricing structure for the MBA: the full sticker price and the discounted price. Stanford and Harvard claim to only give out money based on need, but all the other schools are using the cash to lure the best qualified applicants to their programs.

Wharton has the second-highest acceptance rate among the M7 (after Booth), at 19.2%, and it’s one of the costliest (estimated total cost: $218,900). But it’s also No. 1 in the 2017 Poets&Quants ranking

Pay, Placement, & Industry Choices Of M7 Grads

Here’s the best part. The payoff of an M7 education is indisputable. There are few educational degrees that pay off as quickly as an MBA from one of these top schools and, more importantly, builds on its value over the course of a career. The first-year compensation package for M7 grads tends to be well above $150,000, once you include a sign-on bonus, other year-end compensation, and possible stock options and perks that schools don’t even bother to tally.

DON’T MISS M7, ELITE OF THE ELITE, BY THE NUMBERS and B-SCHOOL DEANS SHARE 2018 RESOLUTIONS

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