Women are heading to business school in larger numbers than ever before, and at younger ages to boot. But how much are women gaining from the degree?
More women than ever are earning graduate business degrees, and at younger ages than ever before. But it’s unclear whether these women are gaining much from the degree, with persistent wage gaps between men and women who have the same business credentials and work experience.
Last year, almost 106,000 women — the highest number ever — took the GMAT, the standard admissions test for entry to MBA programs and other business graduate programs, according to the latest figures from the Graduate Management Admissions Council (GMAC), which owns the test. And the majority of test-takers between June 2009 and 2010 were 30 years old or younger.
In addition to MBAs, more women are pursuing graduate business degrees in disciplines like finance and accounting, GMAC found in its 2011 report.
Many of the younger female students are pursuing degrees full-time, such as Jessica Dillon, 29, who worked for seven years after college, at Fannie Mae and Capital One Bank COF . She will graduate from Georgetown University’s McDonough School of Business next year.
“You have to think about your return on investment,” she says of her decision to earn an MBA. “Business school is expensive and you want to see that return at an earlier point in your career.
Arielle Deane, who is graduating in June from Northwestern University’s Kellogg School of Management, says opting for an MBA was a way to expand her skills and also to avoid pigeonholing her career. She had worked for more than five years as an analyst at defense industry giant Lockheed Martin, and wanted to explore other career possibilities.
“This is an opportunity to change the trajectory of my career,” says Deane, 30, who is planning to start a job at a marketing and branding consultancy after graduation.
Women have largely flocked to medical and law schools in greater numbers over the past few years, but they are now turning to business school as well in part because business schools are mindful of the shortage of women students and are recruiting them more aggressively than they have before. Women now make up more than one-third of all MBA recipients, according to federal data — up substantially in the past decade.
High costs and less than stellar payoff
Concerns about the steep cost of a degree — which can run $100,000 or more for a top business school — and going into debt have been top factors in women’s reluctance to enroll in an MBA program. In contrast, the main concern for men is the outcome, or job prospects, following a degree, according to GMAC. Other business degrees such as finance or accounting are a more affordable option, and nearly two-thirds of these degrees are awarded to women.
Despite their growing numbers, all is not rosy for female business graduates entering the working world. Last year, women MBA graduates received half the job offers — one versus two, on average — of their male counterparts, despite sending out 20% more applications, according to GMAC.
And the payoff from the degree is not always stellar. While 2010 female MBA graduates told GMAC’s researchers that they earned, on average, 51% more than their pre-degree salary, men experienced a 54% increase. That translates into a median salary for women of $74,000 for their first post-business degree job versus men who earned $77,500, according to the council’s findings.
A report last year by Catalyst, an organization that studies female advancement in business, found that a woman in her first post-MBA job made $4,600 less than a man in the same type of job.
More significantly, Catalyst found that unequal pay starts with the first job, and widens over time, even after accounting for job level, industry, child bearing and career aspirations, according to the results of the study by authors Nancy M. Carter and Christine Silva.
Even among chief executive officers, women make just over 72% of what male counterparts earn in weekly salary, according to data recently released by The Institute for Women’s Policy Research to coincide with Equal Pay Day (April 12). The wage differences exist across 107 of 111 occupations, regardless of education, according to the institute, which based its conclusions on an analysis of median weekly wage data from the Bureau of Labor Statistics.
Different genders, different goals?
Women often seek to acquire different skills than men when they decide to go to grad school for business, says Gregg Schoenfeld, GMAC’s director of management education, who oversaw the council’s survey of 40,000 prospective business school students.
“Gender plays a key role in determining people’s priorities and the sets of skills they want to gain most from their education,” he says.
GMAC’s prospective students report found that men wanted to become more adept at handling technical and operational challenges while women were more likely to say they wanted to develop their management skills.
Deane, for example, says she choose the Kellogg program because it emphasized teamwork, so “there’s a different team for every class and I have to think about how I can collaborate with each group.”
Having the professional credential was critical to 51% of women MBA candidates surveyed by GMAC. But even more women — 58% — said they also were seeking the achievement and personal satisfaction that came from such a degree. And 50% of women listed remaining marketable and competitive as the prime reason for seeking a graduate business degree.
“Confidence was a big piece of it for me,” says Dillon, who set her sights on a graduate business degree during a Capital One earnings call where she did not understand all the financial details. “And I wanted to have those three initials behind my name.”
Attending business school earlier will help women to bolster their place in the workforce, says Catherine Tinsley, a professor at Georgetown’s business school. “It will increase the number of women who stay in the business world because they will be able to take off time for child bearing, and they are more likely to return because work is a stronger part of their identity.”
For women like Jessica Dillon, plans to raise a family played a part in her decision to start working on an MBA when she did.
“I knew I already had a diversity of work experience,” says Dillon, who is engaged to be married this summer. “And I wanted a family one day, and I knew that it isn’t possible forever. I wanted to get my MBA out of the way.”
The graduate business degree, she says, will give her future career some flexibility.
“If I want to step out of the traditional workforce,” she says, “I have an arsenal of experts — my fellow students, professors and alums — that I can call on if I want to, for example, start a new business.”
More from Fortune: