25 B-Schools That Lead To The Most MBA Debt

by John A. Byrne on Print Print

MBA students at the top business schools are borrowing more money than ever to pay for their degrees.

The average debt carried on the back of graduating MBAs at Wharton increased by nearly $5,000 last year to a record $109,836, the highest debt burden reported by any business school. Wharton MBAs now graduate with debt that is more than a third higher than their counterparts at Harvard Business School and Stanford’s Graduate School of Business. The largest year-over-year increase in student debt was at Dartmouth’s Tuck School where the average debt burden of a Class of 2010 MBA rose by more than $10,000 to $96,292, second only to Wharton grads.

Financial aid officers at B-schools attribute the rising debt levels to the recent recession, which led to pay freezes at pre-MBA jobs and caused applicants to tap into personal savings, as well as the increasing costs of tuition. “Two years ago, the class came in with much greater financial aid,” says Diane Bonin, director of financial aid at the Tuck School. “People coming in made a little bit less and had much less in available savings due to the economy.”

After Wharton and Tuck, the highest debt loads were carried by graduates of Duke University’s Fuqua School of Business ($92,827), the University of Michigan’s Ross School of Business ($92,734), and Northwestern University’s Kellogg School of Management ($87,256). These staggering levels of debt are far in excess of averages for undergraduate student loans–$27,803 in 2007-08, the latest reported year–which have fueled widespread concern and worry. (Also see: The MBA Debt Burden.)


Most MBA students at top schools eagerly take out what many would regard as crushing levels of debt because they are confident the degree will payoff in the long-term. “In purely financial terms, the payback period is still short relative to a lot of graduate degrees, despite the large numbers,” says Richard Lyons, dean of the University of California’s Haas School of Business at Berkeley. “And they get a fine graduate education as well.” (Also see: “Why Chris Ryan Borrowed $80,000 To Get an MBA From Duke’s Fuqua School of Business.”)

At the Haas school, average debt for MBAs in the Class of 2010 jumped by 14.6% from a year earlier to $73,186. “Though our tuition remains a bit below our peers, it has risen toward market a lot in the last five years, particularly for California residents,” explains Lyons. “That’s an important contributor, though not enough to explain all of it.” The increase in debt levels, he adds, was despite an increase in fellowship funding to students.

These large numbers, moreover, are averages for graduates who borrow money. At the Tuck School, for example, some 25 percent of the graduating class last year got their MBAs without a loan. Some of those students were sponsored by their pre-MBA employers. Of the majority who had to go into debt, the Tuck grad with the highest debt had racked up loans of $156,820. The lowest? Just $13,000. This year, says Bonin, the Class of 2011 will graduate with average debt of about $98,500, yet another year-over-year increase but modest compared to the rise from 2009 to 2010.


“The numbers scare me,” concedes Bonin. But she says that about 48% of the full cost of attending Tuck is paid out of students’ personal savings, and the default rate on MBA loans has been extremely low. “Historically, our default rate on institutional loans has been between 0.4 percent and 1.7 percent over the last seven years. Our students have been very successful in their careers.”

Perhaps the biggest surprise in these overall debt numbers, reported by the schools to U.S. News & World Report, is the handful of B-schools that bucked the trend of increasing indebtedness. MBAs at Yale’s School of Management, for example. were able to reduce their average debt by more than $12,000 each. Last year, Yalies left New Haven with MBA debt of $86,895, down from $99,418 a year earlier. At Stanford, average debt fell by about $5,000 to $71,403.

“I expect the decline was due to interest rates going up on private loans,” surmises Jack Edwards, financial aid director at Stanford Graduate School of Business. “Prior to the economic crisis, our students were able to secure loans at very low interest rates and borrowed instead of using their own personal financial resources. After Oct. 2008, the interest rates did increase, so the students were more cautious in borrowing and strategically only borrowed what they needed.”

The largest single drop? Graduates of Carnegie Mellon’s Tepper School last year left with average debt of $75,570, less than $12,022 from the 2009 totals. Debt loads also fell at Harvard, UCLA, and Pepperdine. (See next page for list of the top 25 B-schools that lead to the most student debt.)

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  • Anne K

    These averages are meaningless. Most people who attend B schools can figure that if you take 100K (tuition) debt and no debt, your average debt will be $50K. There are graduates who have have landed great jobs and have surpluses and those (in this situation) would still be considered no debt. How fair is that?

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne


    These averages include only those who have gone into debt to get an MBA. Those who incur no debt are not included in the numbers. Generally, about 75% of any given class goes into debt to get the degree.

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