The Cost of an MBA Program
In the last few years, the economy has been seen as uncertain at best. From an unusually low inflation rate to a relatively bleak jobs picture, it’s no surprise that you’re looking for ways to improve your career. However, there is one important question: is it actually worth pursuing an MBA, and if so, what will it actually cost you? Let’s take a look.
As reported by the U.S. News, the basic cost of an MBA program in US can vary widely, going from around $65,000 at Purdue University’s Krannert School of Management to over $231,672 at a program like the Stanford Graduate School of Business. The average 2-year total tuition of the most recent U.S News Top 50 MBA programs, is $157,692 not counting any waivers, financial aid, or other grants, etc.
Housing: If you’re an out-of-state student, as many MBA seekers are, you can realistically expect to pay $15,000 or more in living expenses over two years. This cost increases near top-tier universities, and decreases in more affordable areas of the country. If you’re studying online from a home you’ve already paid off, then you can subtract almost all of this from the actual cost of your MBA.
Miscellaneous Expenses: Books, food, transportation, and other activities all need to be figured into the real cost of an MBA program. Normal students are likely to spend $10,000 or more over two years for these. This figure does not include any costs you may have for getting into the school (which could realistically double this figure).
Opportunity Costs: This is usually the single biggest cost of studying for an MBA as a full-time student. On the bright side, the median starting salary for business school graduates in the U.S. hit $110,000 in 2018.
Is the cost worth it?
Many MBA graduates feel that their degree is, in fact, worth the price they paid to get it. At top 12 highest-ranked programs in the 2020 U.S. News Best Business Schools rankings, the average salary and bonus was a whopping $166,999.
Some people choose to pursue an MBA degree while continuing to work, usually by attending online classes on a schedule that works for them. This is difficult, but allows for a major reduction in opportunity costs. Students can also get financial aid or support from their workplace as they pursue their degree, all of which can reduce the time it takes for an MBA to start being a net gain.
However, it’s important to realize that the cost of acquiring an MBA has been going up faster than starting salaries and signing bonuses, and there’s no sign of this trend reversing anytime soon. The longer you wait to acquire your degree, the higher the ratio of expense-to-income becomes, and waiting too long to apply may price you out of the school(s) you want to attend.
If the price for a school seems like too much for you, research some alternative schools and see how their graduates usually fare after graduation. You don’t necessarily have to attend a top school in order to get a great job at a good company. What matters is finding the best return for your investment, and given how expensive an MBA is, there’s nothing wrong with considering a few more options.
For more information about MBAs, including costs, how to get in, and how to prepare, visit our blog.