25 B-Schools That Lead To The Most MBA Debt

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.)

  • Anne,

    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.

  • 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?

  • Great article! Also, please consider a ranking with the 25 schools with the least debt out of the top 100 MBA schools, There may be a couple of hidden gems out there … Thanks!

  • Matt,

    It’s definitely need.

  • Matt

    Wanted some clarity on one thing:

    Are students taking out loans because of “need” or so that they can defer payment with their actual savings?

    I can see the savvy Wharton crowd using private loans so that they can continue to invest their savings over their two years in school vs actually needing to take out loans.

    Thoughts on need vs opportunism?

  • Cliff,

    U.S. News has the data for the other schools, if they provided it. All of this is behind a pay wall, though.

  • Great article John. I always wondered what the average debt rate was for recent graduates from top MBA programs. It does leave something to ponder and whether the question of it being worth it or not is always relative. With a tough economic market and with more people interested in pursuing graduate programs or MBAs, information like this is really important in making that next career move. John, do you know if the list from U.S. News stopped at the 25 schools or were there more? I’m just curious if they listed other schools that are still within the 100 Best MBA programs.

  • Arthur Featherstonehaugh Dullsworthy

    John, LBO deals include debt for the purpose of multiplying equity returns and, to some extent, taking advantage of the “debt tax shield.” That’s it. Student loan debt is incurred either: 1) to stretch personal resources to cover tuition and expenses of education; or 2) to cover the cost of maintaining a level of consumption (dinner, drinking, travel, etc) consistent with an expected higher income after graduation. There’s no possibility, as these things are understood, that Wharton’s students or any other group of MBAs are incurring debt as a form of “personal LBO.” (Interestingly, homeownership is much closer to your notion of a personal LBO.)

    So I would insist that you use the terminology more carefully.

    Although Stanford may be more generous than Wharton, I doubt they’re $38,433 more generous than Wharton. I strongly doubt it. I also doubt that the Stanford crowd are $38,433 richer than Wharton (after adjusting for more generous fellowships). And if Wharton isn’t more forthcoming with information about financial aid, that doesn’t support a birther-style argument that the level of financial aid at Wharton is negligible by comparison with Harvard and Stanford.

    Just sayin’.

  • Arthur,

    Indeed. The raw numbers–on debt loads and fellowship grants–only tell you so much. There are a lot of other things going on here: Level of pre-MBA income, amount of personal savings, willingness to finance your education (who knows, perhaps Wharton’s more financially-inclined students might be doing their own personal leveraged buyouts via student loans). So you can’t just subtract the fellowship grants at Harvard and Stanford and come up with a simple calculation that makes perfect sense. It is safe to assume, however, that HBS and Stanford are more generous with their fellowship money and that helps to explain some of the rather dramatic differences here. But it probably doesn’t fully explain the differences as you point out.

  • Arthur Featherstonehaugh Dullsworthy

    John, something doesn’t make sense here. The difference between average indebtedness of Wharton and Stanford students grads is $109,836-$71,403=$38,433. But you say that Stanford offers $41,300 per student (or is it per financial aid recipient?) in fellowship aid over the course of two years. Do you mean to suggest that Wharton provides only $2,867 in fellowship aid per student? Sorry, these numbers simply don’t make sense — they don’t subtract down. It’s more likely that the average Wharton student is borrowing more for the purpose of, speaking euphemistically, “consumption smoothing.” I propose a different interpretation of this data (though I’m still not sure what we’re comparing here — amounts per student or amounts per financial aid recipient): that Wharton’s students are voting with their pocketbooks (by assuming relatively greater amounts of debt nondischargeable in bankruptcy) to show that they are substantially more optimistic about career outcomes than their peers at Stanford and Harvard. And, though I didn’t go to Wharton, this is how any MBA would do the analysis, through study of market behavior, real transactions, and consumption decisions.

  • Pradeep,

    The percentage of international students at Wharton is 36%, not much different than it is at Harvard where the percentage is 35.2%, and not that far off from Stanford where the percentage of international students is 31.7%. As the article states, Wharton is probably much less generous with fellowship money than Harvard or Stanford.

  • Pradeep

    Did you account for the percentage of International students at each school? Owing to the exchange rate, most International students (esp those from Asia) would take loans for almost the entire cost of attendance. May be the % of Internationals is higher in Wharton and hence the higher average debt?

  • Jane

    That would certainly explain why Columbia would not release it! I can see that.

  • Because Columbia’s MBA program costs the most–$168,307 in total costs not including foregone salary–I would have to think that Columbia is way up there. This is especially true because it’s so much more expensive to live in New York than Philadelphia or certainly Hanover, N.H. My bet is that the number is in six figures.

  • Jane

    I wonder how much Columbia and MIT Students have in debt!

  • Arthur Dullsworthy

    @John, I’d like to see the per student dollars provided for fellowships from all sources, internal and external, before I make this ranking. My suspicion is that some of the excess indebtedness results from overuse of borrowing capacity in the two years of b-school.

  • Cristian Vasquez

    Great article John!

    It would be great to also see the top 50 or top 100 MBAs sorted out by least debt. Thanks!

  • Sage,

    Not yet. But clearly there is a real need for this and we’ll get to it very soon. Thanks for suggesting.

  • Sage

    Have you done a comprehensive article about securing business school loans? I read the “Cocktails and Case Studies” excerpt and that was fairly broad. Is there anything on the site that addresses how best to fill out the FAFSA, where to secure the best private loans (e.g. HELOCs), or anything that takes a more granular look? Thank you!

  • Great article, John. Thank you for putting together these stats. When considering the pros and cons of each school and degree this data is a great way to inform the decisions.

    We recently posted on how to weigh the costs and benefits of each program. http://www.aristotlecircle.com/blog/considering-costs-and-benefits-college

  • Johnnie,

    I think it’s largely due to more fellowship money, based on my reporting. I’ve run the average fellowship grants at Harvard and Stanford by other financial aid directors who think these schools are very generous. But wealth–greater personal savings and higher pre-MBA income–is certainly a factor.

  • Johnnie Welker

    Funny how HBS and Stanford debt are under $80K, is it because they give out a lot of scholarships? Or is it because the student’s attending are just richer?