Second Tier B Schools: Worth A Second Look
For former Marine fighter pilot Brent Brewer, earning his MBA stripes seemed to be the logical next step. Brewer, 36, was convinced that the growth of the Internet and E-commerce pointed to opportunities in information technology. But he had little experience in the field. So while still in uniform, he began hunting for a quality B-school program that married info-tech theory with practical, hands-on learning.
Instead of Wharton or Kellogg--among the heavyweights in BUSINESS WEEK's Top 25 B-schools--his research led him to the University of California at Irvine's Graduate School of Management and its curriculum in information-technology management. Brewer got his MBA last year and is now a vice-president at Santa Ana (Calif.)-based StarBase Corp., which helps companies run their computer systems and Web content. He is well pleased with his education. At UC Irvine, he says, "we were learning the foundations of business, but we'd also get to work with state-of-the-art software." Moreover, helped by a fellowship and later by in-state residency, Brewer spent just some $21,000 in total tuition, less than what a student at a top B-school might shell out for one year.
UC Irvine isn't the only program outside the Top 25 using a niche strategy to lure bright students. It's among a legion of second-tier schools that merit a closer look from aspiring MBAs. With innovative curriculums, lower costs, and fewer admissions hurdles, they can be a viable alternative to pricey top-tier schools. Indeed, some programs outpace those at better-known schools--the noted entrepreneurship program at Babson College's F.W. Olin Graduate School of Business, for example, or the E-commerce specialization at Vanderbilt University's Owen B-school.
As part of the recently published BUSINESS WEEK Guide to the Best Business Schools (McGraw-Hill, $16.95), we compiled a list of 25 runners-up to our 1998 Top 25 (BW--Oct. 19). We based our selection, which is not ranked, on survey results from 6,020 of last year's grads at 61 top programs, plus replies from 259 corporate recruiters. You'll find highlights of the survey in the accompanying table and at BUSINESS WEEK Online at www.businessweek.com/bschools/ or America Online, keyword: BW.
One reason to consider the Next 25 is their easier admissions criteria, compared with those of top-tier institutions. With applications to BW's Top 25 soaring to a high of 89,031 in 1998 (they're likely to surpass that in 1999), most top schools have raised requirements for the Graduate Management Admission Test (GMAT) scores, grade point averages, and work experience. Meanwhile, admission rates have fallen: University of California at Los Angeles' John E. Anderson Graduate School of Management, for instance, accepted only 14% of applicants in 1998, vs. 18% two years before. The runners-up are raising their requirements, too, but the bar still isn't as high. The average GMAT score for the Class of 2000 at a Next 25 program was 628, vs. 667 for the Top 25. Meanwhile, the runners-up admitted 38% of 1997-98 applicants, down from 42% two years before, vs. 21% for first-tier schools, down from 22%.
You'll also find lower tuition among the Next 25. Average out-of-state and private-school tuition at the top 25 schools is 32% higher than that at the runners-up--$22,609 annually vs. $17,125. Not surprisingly, that's an angle second-tier schools are exploiting. Michigan State University's Broad Graduate School of Management, for instance, recently slashed out-of-state tuition by $3,000, to $12,182, to lure high-quality applicants.
Many second-tier schools are also more likely to offer scholarships and financial aid to students. (Unlike federal aid, the packages aren't exclusively based on need.) Each year, half of the MBAs at the University of Georgia's Terry College of Business get a combination of merit-based assistantships and scholarships, cutting their annual bill to less than $700 from a "list price" of $11,300, excluding living expenses.
SMALLER DEBT. Texas A&M University's Lowry Mays College & Graduate School of Business offers aid to 75% of its incoming class, regardless of residence, cutting tuition to under $6,000. And Emory University's Goizueta Business School woos hot prospects with $2.1 million in aid each year. The upshot: 1998's Next 25 grads reentered the job market an average $29,616 in the red, compared with the $38,750 debt burden borne by their peers in the top tier.
The lower costs of Next 25 programs means you're likely to earn a quicker return on your investment than you would by graduating from a Top 25 school. Another factor: Applicants to second-tier schools tend to make less money before enrolling, so the income they forego during two years in the classroom is lower. True, that income disparity continues after graduation--the median base salary earned by 1998's Next 25 grads was $62,960, vs. $75,300 for top-tier MBAs. Nonetheless, Next 25 graduates still enjoyed a 92% rise from their pre-enrollment incomes, outpacing the 75% gain by Top 25 grads.
For even better returns on investment, those with undergrad business degrees or several years' work experience could look into accelerated programs. The most popular of these is the 11-month track that is the main offering at the University of Pittsburgh's Joseph M. Katz School of Business. Also available are 12- to 18-month options at the University of Rochester's William E. Simon Graduate School of Business Administration, the University of Notre Dame's College of Business Administration, and Texas A&M. These compress an already demanding workload into a shortened academic cycle. "You sometimes feel as if you're trying to take a sip from a fire hose," says David Duke, a 1998 Katz grad. Students in these programs also miss out on summer internships, an important step in postgraduate job placement.
Other Next 25 institutions are attracting attention from students, recruiters, and B-school administrators for their inventive approach to today's hot fields of electronic commerce, entrepreneurship, and global business. Mostly they're putting students in partnerships with corporations and exposing them to real-world business scenarios.
Take Vanderbilt's Owen School. Long known for its finance expertise, it has gained a reputation for E-commerce knowhow. Just five years old, the Owen E-commerce program, dubbed Project 2000, attracts nearly 50% of the student body and features consulting projects for companies ranging from startups like CDnow to giants like Netscape. "While other MBA programs are just talking about how the Internet is changing business, Owen is actively adapting its curriculum to this new information- technology paradigm," says Robert Pursell, a 1998 grad now with Microsoft's WebTV Networks. "It was not unusual for a course syllabus to change daily as new information became available about the trends in E-commerce."
SEED CAPITAL. If entrepreneurship is your goal, several second-tier schools offer programs that help set up ventures and foster their growth. In fact, students in the 1998 B-school rankings survey rated Babson's Olin School No. 1 in the nation in the field, ahead of such better-known entrepreneurial-minded institutions as UCLA, MIT, Berkeley, and Stanford. At Olin, you'll spend much of your first year applying classroom theory to a team-consulting project for a mentor company. If you've still got the venture bug after graduation, you can tap Olin's new $200,000 seed capital fund and get free office space, complete with computers, fax, and phones, to help launch your startup.
A growing number of Next 25 schools are beefing up international business curriculums as well. The revamped track at Georgetown University's McDonough School of Business includes six "integrative experiences": one-week, team-based projects that help tie all the different coursework together. These experiences often take on an international perspective, with students analyzing a real life problem at a global corporation such as Arlington (Va.)-based power company AES. Students can also take a joint program with the university's Walsh School of Foreign Service, earning an honors certificate in international diplomacy along with an MBA, or spend a semester as an exchange student at one of 11 overseas business schools.
At the University of South Carolina's Darla Moore School of Business, you can earn a master's degree in international business studies (MIBS) after undergoing mandatory intensive language training and a six-month overseas internship. But the granddaddy of global business studies is still the Glendale (Ariz.)-based Thunderbird, the American Graduate School of International Management. A player for over 50 years, it offers 80 courses on the subject. Included in the curriculum is "Winterim," three weeks in January when students either study with visiting experts about such issues as global conflict-resolution techniques, or visit countries like Japan to learn business practices.
What are the drawbacks to attending a Next 25 school? Their less lofty reputations, compared with those of the Top 25, can hinder graduates' placement at well-known corporations. Their smaller alumni networks can limit job leads, and they tend to have smaller endowments. Recent grads say some, such as Texas A&M and University of Tennessee, have outdated facilities. But overall, the Next 25 often provide a fine management education at a far lower cost than better recognized institutions. If you do a little digging, you may find that a Next 25 MBA can be a steal.