M7 Business Schools: What It Really Costs To Get An Elite MBA

Harvard Business School across the Charles River

Harvard Business School across the Charles River

Dollar SignDon’t faint or break into a cold sweat. But we are about to tell you something that is truly shocking.

The total cost of getting an elite MBA from one of the M7 schools is now between a high of $297,650 at Stanford University’s Graduate School of Business and a low of $270,002 at Northwestern University’s Kellogg School of Management. Those sums include the opportunity costs of lost income from leaving a job to attend school for two years, but not the interest you might have to pay on your student loans. No matter how you cut it, the costs are scary high.

Of course, everyone knows that getting an elite MBA degree is a highly expensive proposition. That’s why there are so many articles on the web about whether it’s worth it. All the analysis should put that question to rest: The MBA degree is definitely worth the price of admission.

Some people, however, believe that you need to get an MBA at a highly selective and highly ranked business school to see the best return on investment. Truth is, many of the business schools at public universities offer significantly better immediate ROIs than many of the most elite business schools. But those numbers fail to account for the long-term differences in career advancement and compensation–which can be considerable.


In any case, the cost of going to one of the super elite M7 business schools has never been higher. The first big surprise is that the MBA students entering Stanford, Harvard or Wharton MBAs are leaving behind average salaries of $80,000 gross a year. So quitting those jobs to attend a two-year MBA program immediately results in an opportunity cost of $160,000. Among the M7 schools, in fact, the smallest opportunity cost is at MIT Sloan whose students walked away from $70,000 a year salaries or $140,000 in all. We subtracted out the taxes on the income for our analysis at a tax rate of 25%, which significantly lowered the opportunity costs.

Still, these numbers don’t include a pay increase that these young professionals would most likely have gotten in between those first and second years of business school. Even a conservative 5% bump, would add another $4,000 in lost wages, or $3,000 after-tax income, for the person who was making $80,000 a year. The same analysis is true of tuition which typically rises about 5% between the first and second year prices–resulting in another $3,000 or more in costs.

Then, there is the two-year cost of tuition which varies from a high of $136,420 at Wharton to a low of $122,450 at Harvard Business School. On top of that are the costs of housing and food–which you would have expended anyway–and fees for everyone from medical insurance to books and supplies and international excursions. The fees and living expenses estimated by the schools come to a high of $75,120 at Stanford to a low of $57,908 at Kellogg. But they obviously include food and housing which you would incur anyway so we then subtracted out of the estimates $20,000 a year or $40,000 total.


In any case, these estimated budgets provided by each school are typically too low by 20% to 30%, according to people in the know. In fairness to the schools that put these estimates together, the budgets are apparently limited by federally mandated guidelines. If you live with roommates, eat only the food put out by corporate recruiters who come to campus, and completely avoid the bar scene, you might get closer to the school’s estimate. But it’s highly unlikely that you’ll want to live a Spartan lifestyle.

Going to an M7 school, moreover, increases the odds that you’ll be taking some international trips with classmates, even over a couple of long weekends. You’ll spend time decompressing in local hangouts and restaurants on a weekly basis. You’ll buy a couple of coffee drinks every day from Starbucks. And you may want to buy a new suit or two for recruiting events and interviews. These are investments in your future as well because they are important to your networking and job opportunities.

And all these costs quickly go up if you’re not single, if you decide to live off-campus, if you have children, if you go on a longer international travel excursion, or if you have a protracted search for a job. Stanford University’s Graduate School of Business, for example, says that the total estimated annual budget for a single student living on campus is $99,435, not including as much as an estimated $4,000 for an international study trip to fulfill the school’s global experience requirement. That’s $103,435 total for the low ball estimate. If you’re married and live off campus, Stanford bumps up this number to $124,534–an additional $21,000.


Good luck finding housing in Silicon Valley that won’t set you back a great deal more. Those estimates for a married couple living off campus include an annual $45,261 in living allowances which includes rent, food, and personal expenses for what the school terms “a moderate lifestyle.” Here’s the clue that you’ll spend a lot more. Stanford essentially estimates the cost of living off campus to less than $4,000. That just isn’t going to cut it in one of the most expensive housing rental markets in the world.

Given the high costs, you may wonder why so many still want to attend business school, especially an M7 school which tends to be among the most highly selective in the world. The reason: It still pays off. Estimates of the payback periods for M7 degrees range from a low of 3.7 years for the MBA from the University of Chicago’s Booth School of Business to a high of 4.1 years for Stanford GSB. Harvard, Wharton and MIT MBAs have payback periods of 4 years. Kellogg is at 3.8, and Columbia is just a tad higher at 3.9.

(See following page for our analysis of all the costs to get an M7 degree)