Because of the economic crisis, the increase in b-school tuition, and the decrease of starting salaries post-MBA, business school grads are taking up to one year longer to see a return on their MBA investments than it took their peers from just a few years ago.

A BusinessWeek article, For MBAs, Breaking Even is a More Distant Dream, calculates the length of time it should take the MBA class of 2010 to recoup their MBA investment (6.5 years) and compares it to the average 5.6 years of an MBA class of 2008 graduate. (The article explains in detail how the ROI figure was calculated.)

European business schools rank highest when it comes to calculating the fastest MBA ROIs, which should come as no surprise due to the cheaper tuitions and the fact that many European programs run for one year instead of two (meaning lower costs and less time away from the workforce).

The top four MBA programs for ROI according to the BW article are:

  1. SDA Bocconi - Milan
  2. HEC-Paris
  3. Manchester Business School
  4. Cranfield School of Management

A few of the top U.S. MBA programs that offer the fastest return are:

  1. Texas A&M - Mays Business School
  2. Michigan State - Broad College of Business
  3. College of Business at the University of Illinois

According to the BW article, programs that are generally ranked as the top U.S. programs actually fare the worst in ROI rankings, many of their grads needing about 10.5 years to achieve a return on their investments. High tuition costs and students with high pre-MBA salaries account for the lengthy ROIs, especially at Chicago Booth and Harvard Business School.

John Byrne, in his recent article, Is An Elite MBA Degree Worth The Cost?, explains: The biggest surprise of the study was not that payback  periods grew longer, given the impact of the recent economic meltdown and rising tuition. The most shocking and implausible result is schools outside most Top 25 lists give students faster returns on investment than the acknowledged leaders in graduate business education.

Byrne continues to explain some of the flaws in BusinessWeek's ROI analysis. For example, he points out that the analysis fails to account for starting bonuses, year-end bonuses, relocation allowances, tuition reimbursement plans, performance bonuses, and the value of other pay increases. He then elaborates on how these figures can dramatically affect a program's ROI.

Byrne's critique is somewhat scathing, but solid. It's worth a moment of your time to check out his article (complete with his own rankings) to get a better understanding of the value (or lack thereof, as he'll point out) of the BW ROI analysis. It is equally valuable to read Louis Lavelle's response. Lavelle is the Associate Editor of Bloomberg and in charge of BW's business school section.

If anything the exchange shines a bright spotlight on the limitations of studies of this kind and of course the rankings. While I don't advocate chucking the whole exercise, Mark Twain's words keeping running through my mind: Lies, damned lies, and statistics. Use with caution.