Nohria: HBS Less Costly Than Other Top Schools

Nitin Nohria became the tenth dean of the Harvard Business School on July 1

With tuition and fees now almost $160,000 for a Harvard MBA, Dean Nitin Nohria said today (Jan. 6) that he is trying to keep the costs of the degree “enormously affordable” and that several other top business schools charge more than even Harvard.

“We are at the middle of the pack when it comes to the top ten schools,” he said in a wide-ranging interview with The Financial Times. “What most people don’t know is how much financial aid we now offer. Roughly 50% of our students will get some form of financial aid. We have tried to keep our tuition enormously affordable so we grow tuition at about three to five percent a year.”

Nohria’s comments were made in response to a question from Gillian Tett, U.S. managing editor of The FT on the video program “View From the Top.” In recent years, some observers have questioned the rising cost of the degree as salaries have fallen through a severe recession and large numbers of graduates failed to gain jobs. Donald Jacobs, the former dean of Northwestern University’s Kellogg School, has said that business schools need to lower the actual costs of getting an MBA to continue to attract the best and brightest.


In a segment of the show in which guests are asked if they would go long or short on different issues, Nohria said he would short the U.S. dollar, Facebook, President Obama, and U.S. real estate. He said he would go long on China and India, Wikileaks, green industries, health care, gold, and Chinese business schools.

Nohria’s mild defense of the cost of a Harvard MBA occurred on the same day that a new analysis by Bloomberg Businessweek found that the payback period of the degree from a top school has stretched by nearly a full year to 6.5 years for the Class of 2010. Two years earlier, it would have taken MBAs from top schools an average of 5.6 years to recoup their investment in the degree. BusinessWeek said the difference occurred because post-MBA salaries were lower in 2010 (down 6 percent from the 2008 average) along with the rising cost of tuition and other fees to get the degree. Meantime, pre-MBA salaries were higher so that the pay differential between what a grad made before and after earning the degree was not as large. According to BusinessWeek, the analysis is especially damning of the very elite U.S. schools, such as Harvard, where the payback period is now 10.5 years, partly because HBS students leave jobs that pay them much more than second-tier schools. The magazine’s analysis, however, failed to include signing bonuses, guaranteed year-end bonuses as well as pay and bonus increases once an MBA is in a job–compensation that would dramatically change these payback numbers, particularly for graduates from the very best schools.

Whatever the case, few would consider the cost to get a Harvard MBA “enormously affordable.” Harvard suggests that incoming students budget $79,400 a year for tuition, fees, books, and room and board for a total of $158,800 for the two-year program. Based on that estimate and those of other top schools, Nohria is right: a Harvard MBA is less expensive than an MBA from several other top competitors, including Stanford, Columbia, or Chicago. Columbia now says that the costs of tuition, fees and living expenses are $168,307 for its mainstream two-year program—nearly $10,000 more than HBS. Stanford estimates the cost of its MBA to be $166,812 if a student lives on campus or $177,378 for a single living off campus—almost $20,000 more than HBS. Chicago puts the cost of its two-year MBA at $165,190.

The problem is that Harvard’s estimates are based on setting aside only $10,800 a year for a room, a cost far below what most HBS students end up paying. A four-year-old BusinessWeek survey found that Harvard MBAs estimated their annual living expenses at more than three times that number at $37,000 a year while many reported paying $80,000 annually. None of these estimates, moreover, include the costs of global or domestic study trips, which have become a regular part of almost all MBA programs. A single study tour can cost as much as $4,000. Nor do these estimates include the cost of forgone earnings for a two-year period.

As Nohria noted, some of the tuition and fees are offset by the school. Nearly half the students in every class receive an average of $25,000 per year in “need-based HBS fellowships.” A good chunk of the tuition, fees and living expenses also are financed. Harvard says that the average debt for a member of the Class of 2010 was $73,110.

Nohria, the first Harvard dean to be born outside North America, was asked if his appointment last year was a sign that the school was becoming more serious about international business. “I’m not sure whether my appointment is itself a sign of any kind,” he retorted, but he said Harvard is becoming more global.


“If the 20th Century was an American century in business, the 21st Century is clearly going to be a global century in business,” said Nohria. “The Harvard Business School has been making significant investments in becoming more global. We have research centers in different parts of the world: in Tokyo, Shanghai, Mumbai, Hong Kong, Paris, Buenos Aires, and even on the West Coast in Silicon Valley. These research centers are ways that we can make sure that we can understand business as it evolves all over the world.

“Our belief is that the best way to be global is to not try to have a large physical footprint. I don’t think we could ever know China better than Tsinghua (University in Beijing) or India better than an Indian business school. What we can do is that when we go to India we not only do we know India well but we also know China, we also know Latin America, we also know Europe. Trying to bring the world’s best global thinking both to markets all around the world but also to our campus at Harvard Business School, that is the strategy that we are pursuing.”

Nohria says he expects increasing competition from new business schools outside the U.S. “It’s almost inevitable that there will be great universities that will develop in other emerging markets,” he said. “Just as we are seeing them develop great companies, there is no reason to think they will not develop great universities. That is good for higher education as a whole. The kind of competitive intensity we will learn from Chinese scholars, they will learn from us. We will learn from Indian scholars. They will learn from us. As the ecology becomes more global there are greater opportunities for exchange. Three are greater opportunities for dialogue. So I think the rise of these business schools which will inevitably happen in all parts of the world, will be good for business education as a whole.”

Questions about this article? Email us or leave a comment below.