Venture capitalists are itching to disrupt business education. From their point of view, the MBA—first created by Harvard Business School in 1908—is outdated. Look no further than Section4, an education platform founded by NYU Stern professor and serial entrepreneur Scott Galloway, which raised $30 million during its Series A round earlier this year. But Section4, whose motto is “Business education for all,” seems to be targeting the masses rather than seriously taking on the heavyweights like Stanford Graduate School of Business or the University of Pennsylvania’s Wharton School.
Despite eager venture capitalists and no shortage of thought pieces claiming the MBA is dead, the upper echelons of B-schools are looking pretty safe. Simply put, companies are still hungry for what top programs are producing. If dollars are any indication, demand for MBA graduates from elite programs is as strong as ever. That’s what Fortune found after collecting data for our first-ever Best MBA Programs list. In 2010, new MBA graduates at Wharton (No. 3 on our list) earned a median $110,000 base salary right out of the gate. Ten years later, that median is up 36% to $150,000. Wharton isn’t unique in that regard: During the same period, median base salaries rose 30% at No. 2 ranked Stanford and 47% at No. 4 ranked University of Chicago’s Booth School of Business to $156,000 and $150,000, respectively.
Even those lofty base numbers undersell the payoff. Fresh out of No. 1 ranked Harvard Business School, the median 2020 graduate accepted a $150,000 base salary. Among those same graduates, 60% received a signing bonus and 72% were eligible for a performance bonus. The median signing bonus was $30,000, while the median performance bonus came in at $35,000. When all compensation is factored in, it is common for MBA graduates of elite programs like HBS to earn over $200,000 in their first year out of school. That’s more than triple the $68,703 U.S. median household income.
Why are recruiters from companies like Amazon, Boston Consulting Group, and McKinsey shelling out so much for these graduates? It boils down to the fact these elite programs are finding some of the brightest students in the world and then equipping them with the potent combination of hard and soft skills that firms desperately need.
“There are these very famous exceptions to the rule that fascinate people. From Steve Jobs to Bill Gates. But generally speaking, corporate America is very much run by individuals who have these really valuable degrees [MBAs] that combine both quantitative skills, [like] the ability to sift through massive amounts of data, and leadership skills,” Ann Harrison, dean of No. 13 ranked UC Berkeley Haas School of Business, tells Fortune. “Learning to be a great leader requires a lot of psychology and other skills that you learn in business school.”
Of course, getting into these schools isn’t easy. All of the top 10 schools on Fortune’s Best MBA Programs list have at least an average GMAT score of 720 or higher for incoming students. Students who apply to Stanford, which has the highest average GMAT score, at 733, have only an 8.9% chance of getting accepted. Among all GMAT test takers, the average score is 568. Only 12% of takers earn above a 700 score, and just 2% crack 750.
Applicants who are lucky enough to get into an elite program don’t feel lucky when the bill comes. The tuition at No. 5 ranked Kellogg School of Management at Northwestern University is $76,368. When you add on other costs, like room and board, it soars to $111,658. Without scholarships, the two-year program costs well over $200,000.
Even with the exorbitant cost, however, the value proposition seems like a steal when compared to some other graduate degrees. Among all 69 schools on Fortune’s Best MBA Programs list, the average starting salary of 2020 graduates is just over $105,000. That’s 35% higher than the typical American with a master’s degree earns, and 9% higher than the typical doctoral degree holder earns. After leaving No. 6 Columbia Business School, the median MBA graduate earns $150,000. Meanwhile, two years after earning a master’s degree in film studies from Columbia University, only half of loan borrowers are earning more than $30,000 a year.
While elite MBA programs are thriving, some lower ranked business schools are hurting. In 2019, the University of Illinois at Urbana-Champaign joined a growing list of schools that have ended their traditional in-person MBA program. These less renowned programs are feeling some pressure from disrupters, in particular, from online MBA programs that boomed during the pandemic. Industry insiders believe online MBA programs will only get bigger. In fact, while the University of Illinois no longer offers a traditional program, it does still have an online MBA program. This boon for online business education is why, in April, Fortune released its first-ever ranking of the nation’s best online MBAs.
To see Fortune’s full Best MBA Programs list, go here.
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