The cost of an MBA is one of the most important factors to consider when you are deciding to pursue a business school. Knowing what costs you will be paying before, during, and after you step into school will help you know where to invest your money in. In this guide, you will find the total cost of the world’s top MBA programs broken down by specific categories and how you may cover your B-school costs.
1. MBA Program Cost: A Breakdown
The total cost of an MBA program is influenced by many factors. On average, you are expected to pay a sum in the range of $70,000 to over $200,000 over two or more years of studies. Where your actual cost falls into depends on which program you are taking. Will you be attending a school in state, out of state, or online? Is the institution public or private? Are you taking the program full-time or part-time? Which fees are required? Which fees are optional?
While each MBA program has a different cost structure, these programs often contain the same required fees. You may also anticipate other variable costs that are born in the process of starting your application and throughout your studies. In this section, we will find out which kind of cost you have to consider in the course of pursuing an MBA program.
Pre-MBA Costs
Preparing an application for an MBA Program is the starting point of your MBA journey. To gain admission from a top b-school, you may have to invest a fair amount of money and time. Below are some costs you can incur in this process:
- GMAT – The cost of taking a GMAT is around $250, higher or lower depending on your location. If you are in the US, the fee will amount to $275. In addition, other fees like preparation materials, rescheduling, retaking, and additional score reports may drive up the price you have to pay. In minimum, you may expect to pay up to $800 for GMAT.
- TOEFL/IELTS – If you’re an international student that uses English as a second language, you will have to take either the TOEFL or IELTS. TOEFL and IELTS are tests that measure your abilities in speaking and understanding English in an academic context. For these tests, you may add up to $250.
- Application Fees: Application fees vary based on which schools you’re applying to. Smeal College of Business at Pennsylvania State University charges you an application fee of $65 for its MBA Program, while this price is $275 for Stanford Graduate School of Business. It’s possible that you may pull out of your pocket more than $1000, depending which program and how many schools you’re targeting.
You may, however, be eligible for certain discounts or waivers. Check your eligibility to see if you may earn a cut. For example, Duke’s Fuqua School of Business waive its MBA application fee for members of the military, participants for volunteer programs like Peace Corps, attendees of Open House and Campus Visit programs, etc.
- Admission consulting fees – To maximize your chance of getting into an MBA Program, a helping hand from MBA admission consultants can definitely strengthen your application. However, admission coaching comes with a price tag. Usually, there are two major pricing structures: hourly and comprehensive packages.
Hourly fees usually fall in the range of $300 per hour, while comprehensive package fee, on average, is $6,500 for 3 schools. This price falls down to $1,000 or lower per school the more schools you add to your list.
Tuition & Fees
Most costs associated with an MBA program come from tuition and fees that the business school charges on a yearly basis. These costs are notoriously high even for public institutions. In addition to that, you may have to fork out another hefty sum to cover for its associated fees.
- Tuition – The bulk of the MBA cost is attributed to the tuition of the program. Again, depending on which program you are applying, the tuition may vary significantly. On average, the annual tuition fee for a standard MBA program is around $60,000. If you’re aiming for the top business schools, prepare to contribute at least $100,000 annually.
Schools list their tuition and fees as a total sum for one-year programs, or annual cost, for two-year programs. If you are pursuing a two-year program, you will need to multiply the tuition and fees by TWO to get the total cost.
- Course Books and Materials – B-schools often charge their students the fees of course books and materials. These materials are essential components in an MBA education. Typically, these supplies range from $1,000 to $4,000
- Student activity fee – Another fee associated with MBA is the student activity fee. This fee is charged to fund major campus events, student organizations, community service, and other programs to the benefit of the students. This cost can get up to $1400.
Living Costs
Living costs are unavoidable costs you will bear during pursuing your MBA degree. While some costs are direct payments to the school you’re learning, other costs may incur externally while you progress through your studies.
- Room & Board: This is the fee you will pay if you opt to live on campus in dorms or apartments through your school’s housing services. It includes the rent and the meal plan. Depending on the place you wish to live, you can find the suitable option for you. However, most top schools are located in metropolitan cities with very high living costs. You may expect to pay $20,000 to live in one of these cities.
California, where dozens of top business schools are located, boasts an exorbitant amount of living cost for its residents. Major California cities like San Francisco and Los Angeles, home to Haas and Anderson School of Business, have an average living cost and rent of $4,665 and $3,246 per month.
- Travel Costs: Traveling during MBA can take many shapes and forms. Usually, travel costs can be categorized into two types: transportation costs and traveling out of state/country. Therefore, these costs often include fuels, maintenance fees, public transit and taxi fares, airplane tickets, etc. These costs usually amount to $20,000 in two years of MBA.
The most popular times for MBAs to travel in groups happen before the program starts, winter breaks, spring breaks, the summer between the first and second year, and immediately after graduation. The most popular destinations for MBA are Japan, Columbia, and Israel.
- Health Insurance & Fees: A mandatory fee for all MBA students, health insurance allows for cost reduction when you suffer from medical problems. Business schools often offer their students an option of university group insurance plan, but you may opt for private insurance options. In any way, during the course of your studies, certain conditions may force you to pay for your hospital bills. Your medical conditions dictate how much you have to pay. On average, though, a healthy person will fork out $6,000 for health insurance and medical expenses per year.
Living costs can also be influenced by your relationship status. If you are married or have kids, the living cost may be adjusted to north of $15,000 for your spouse and $7,000 for each kid you have.
Other Costs
Apart from those major costs we have discussed above, you may encounter other various costs that entail during your MBA journey. These costs are mostly based on your preferences or needs and cannot be easily quantified. It is up to you to decide which items you want to add in your cart. In most cases, you should always have at least $5,000 at your disposal, in case of emergency.
It is reasonable to assume that you will pay for entertainment fees during your MBA journey, whether it is catching a movie or buying leisure books. In addition to that, you may invest in a new computer and sufficient gears like microphone or headset. Choosing your internet provider is also crucial, depending on your online needs.
Below is the compiled list of 2020 total cost of an MBA program in top business schools in the US.
|
Business School |
Tuition |
Fees |
Living |
Healthcare |
Materials |
Total Cost ($) |
|
MIT: Sloan |
154,336 |
5,080 |
59,220 |
13,900 |
5,100 |
237,636 |
|
Stanford |
149,412 |
1,800 |
69,486 |
13,248 |
3,342 |
237,288 |
|
Wharton |
158,756 |
4,000 |
45,340 |
18,708 |
2,988 |
229,792 |
|
Harvard |
146,880 |
59,900 |
10,324 |
5,100 |
222,204 |
|
|
NYU Stern |
148,368 |
6,933 |
55,780 |
7,036 |
3,960 |
222,077 |
|
Dartmouth College: Tuck |
155,040 |
7,138 |
50,150 |
6,496 |
3,000 |
221,824 |
|
Columbia |
154,752 |
7,694 |
42,750 |
9,202 |
1,908 |
216,306 |
|
Yale SOM |
149,400 |
4,560 |
48,152 |
5,208 |
2,000 |
209,320 |
|
Chicago: Booth |
144,000 |
5,171 |
48,258 |
9,200 |
1,368 |
207,997 |
|
Virginia: Darden |
145,600 |
8,092 |
44,352 |
5,628 |
4,000 |
207,672 |
|
UCLA: Anderson |
130,228 |
64,090 |
9,798 |
1,672 |
205,788 |
|
|
Northwestern: Kellogg |
146,808 |
5,460 |
36,858 |
8,100 |
3,294 |
200,520 |
|
UC Berkeley: Haas |
129,304 |
56,688 |
10,480 |
1,240 |
197,712 |
|
|
Duke University: Fuqua |
140,000 |
37,404 |
14,964 |
1,332 |
193,700 |
|
|
Cornell University: Johnson |
143,880 |
3,000 |
33,600 |
7,300 |
2,200 |
189,980 |
3. Return on Investment of an MBA
The purpose of getting an MBA is to help you advance your career and earn higher salaries. With that in mind, you have to consider whether investing in an MBA degree is a sound option or not. How long can you expect to recoup your costs and pay off your student debts? One of the ways to look at it is to decide the Return on Investment (ROI) of the MBA program.
ROI of an MBA is the metric that tries to capture the amount of return you will receive after investing your money into an MBA program. ROI provides a handy statistic for your judgement of whether the MBA pays off or not and how long.
Calculating the ROI of your MBA
ROI of an MBA can be calculated using different methods, mostly focusing how much money you’ll gain after finishing your MBA. However, salary should not be the only component in your ROI calculation. Adapted from UC Berkeley’s Haas School of Business, this ROI calculation takes into every factor that you may receive from your investment.
- A. Expected salary with MBA
- B. Expected debt after MBA program
- C. Expected salary-to-debt ratio (divide A/B)
- D. Expected salary with signing bonus
- E. Expected salary-plus-bonus-to-debt ratio – divide D/B
- F. Current salary without MBA
- G. Projected 10-year salary without MBA – Add in expected raises and adjustments
- H. Projected 10-year salary with MBA – Don’t forget the signing bonus from D
- I. 10-year Direct ROI – (H-G)/B
- J. Compare MBA ROIs to other proposed degrees Consider additional debt, additional time to earn increased salary, etc. – Complete the calculations above for your other degree options
- K. Consider the value the MBA education can bring to yourself, your business, or your future employer for the duration of your career
- L. Consider the value of the soft skills you will acquire
- M. If you plan on starting your own business, how much is the freedom of entrepreneurship worth to you?
- N. What is the value of job mobility to you?
- O. What is the value of the MBA alumni network to you?
- P. What is the value of the MBA professors network to you?
- Q. What is the value of the MBA career management portal to you?
- R. If you plan to pursue a specialized MBA, how much value can that add to your earning potential?
- S. Consider the benefits of a broadened world view on your life and career. How much is that worth?
- T. How much would increased confidence and self-worth be valued at?
- U. Considering all of the above – both financial gains and intangible benefits that we assigned a value to, how much is an MBA worth to you?
Top 5 MBA Programs with Highest 10-Year ROI
|
Business School |
Average Salary of Graduate |
10-Year ROI |
|
Wharton |
$125,000 |
297% |
|
Haas |
$120,000 |
300% |
|
Marriott |
$97,000 |
320% |
|
Harvard |
$125,000 |
320% |
|
Stanford |
$125,000 |
325% |
To find out what’ll do with an MBA degree post-graduation, visit this link to know the type of jobs MBA grads do and their salaries.
4. How to Cover your MBA costs
There is no doubt that the price tag of an MBA program is very high. Fortunately, there are many options you can take to reduce your expenses. Here are 5 cost-cutting ways you can explore.
Scholarship & Grants
Scholarships and Grants are gifted aid to students that don’t require them to pay back.
MBA scholarships usually come in two ‘flavors;’ internal scholarships, which are offered by business schools themselves, as well as external scholarships, which are offered by other organizations, such as the Fulbright Program or the Chevening awards. MBA Scholarships are usually given on a merit criteria.
MBA Grants are offered by the federal government, state government, schools or private organizations. These grants are given on a financial need basis, as opposed to merit. They are available to undergraduate students with significant financial need.
College Savings Plans
A number of tax-advantaged college savings plans exist to help you save for college costs including 529 Savings Plans and Coverdell Education Savings Accounts. Most states offer a version of a 529 plan. These plans allow your contributions to grow tax-free as long as the savings are used for college costs.
Crowdfunding
Crowdfunding is an innovative way to cover your MBA cost. The process behind crowdfunding is asking for donations from people from the Internet to fund your MBA program. There are various crowdfunding platforms right now such as GoFundMe, Indiegogo, and Kickstarter that allows you to craft your own story and show it to the world.
However, crowdfunding relies on how much publicity you receive and how lucky you are. Competing with many other crowdfunding campaigns, you have to make your story convincing enough and gain attraction to expect donations from strangers.
One Year/Online MBA Program
One year and online MBA programs are excellent choices if you want to reduce cost while still retaining the value that an MBA offers to your career growth.
One year MBA programs are suited for professionals wanting to fast-track their learning journey and accelerate their career progression. By taking a one year MBA program, you not only reduce the tuition, but also don’t have to pay for extra living costs.
With the rise of online learning, online MBA programs are gaining traction among professionals who desire affordability, comfortability, and quality. Many top business schools now offer their MBA programs online through hosting websites like Coursera or EdX or directly through their proprietary portal. These programs are known for being cost-effective and offer a great deal of flexibility in learning and practicing.
Employer Subsidy
Employers often subsidize the MBA degrees of top-performing employees. Some employers provide partial funding and others foot the entire bill with the expectation that sponsorship recipients will continue working for the company after receiving their degree.