Nearly seven of every ten MBAs this year expect to graduate with at least some student debt, according to a new study by the Graduate Management Admission Council. The median financial burden for all graduate business students is $45,000.
The study, based on a survey of graduating students conducted between Feb. 15 and March 18th, included part-time and one-year MBA students, which would tend to decrease overall debt levels. Most business schools that report the average debt of their full-time, two-year MBA graduates show significantly higher numbers, ranging from an estimated $114,339 at Wharton last year to $60,473 for the University of Minnesota’s Carlson School (see “Graduating with an MBA and Lots of Debt.”)
The study found, for example, that 67% of full-time, two-year MBA grads went into hock to get their degrees, compared with 52% of those who went back to school part-time or 47% who were graduating from Executive MBA programs. Men were more likely to borrow money to finance their business education than women. Some 61% of men expected to graduate with debt this year, compared to 54% of women, GMAC said (see table on left).
GMAC, however, tended to play down the concern over rising MBA debt. “Prospective students’ economic reservations about attending business school have lessened over the past three years, and they expect loans to comprise less than a quarter of their total financial package,” GMAC said. “In spite of the costs of graduate business education, more than nine out of ten respondents reported their education had good to outstanding value.”
For the first time in its survey of recent or soon-to-be graduates of business schools, GMAC asked students graduating in 2012 about the level of debt they incurred while in business school. The council found significant variations in the expected debt reported both by program type and school location.
While GMAC said the median level of debt for graduating students this year was $45,000, business grads in the 75th percentile reported the median to be sharply higher at $80,000. On the other hand, those in the 25th percentile told GMAC researchers that they borrowed a median of only $21,000.
Which students tend to borrow the most to finance their educations? About 65% of graduates who go into consulting reported student debt, compared to just 50% of the graduates who went into information technology. The most likely students to go into hock for their degrees were those from Central Asia, said GMAC. Some 73% of the students from Central Asia borrowed money for their degrees, compared to 61% in the U.S. and only 34% of the students from the Middle East and Africa.
GMAC said the annual surveys it conducts “among thousands of prospective business school students reveal that loans typically comprise part of the expected financial mix of personal savings, grants, parental and employer support, and other sources that students rely on to pay for their education.”