Martoma: What Makes An MBA Go Wrong?

University of North Carolina’s Kenan-Flagler School of Business

Kenan-Flagler and Haas to Boost Tuition

Think private school tuition is too steep? Just wait until you see the price tag on public schools.

Traditionally, out-of-state students have paid more for tuition and fees than their in-state brethren.  Take Indiana University’s Kelley School of Management, where U.S. News data shows that out-of-state residents pay $44,460 compared to $24,984. That’s nearly a $20,000 difference – and that doesn’t even include fees and living expenses. At the University of Washington’s Foster School of Business, the difference is nearly $13,000. And everything really is bigger in Texas, as out-of-state students pay $15,500 more in tuition at McCombs.

Mind you, these tuitions are still $10,000-$15,000 lower than, say, private programs like Sloan ($61,152) or Booth ($58,760). But should out-of-state residents really have to pay so much more?

At the University of North Carolina’s Kenan-Flagler Business School, the answer is “no.” In a recent piece in Top MBA, Louis Lavelle reports that the MBA program has applied for an 8.8% tuition increase for in-state students and a 3.7% increase for out-of-state residents. In fact, Lavelle notes that the school has “raised in-state tuition fees by 12% and 13% in two of the past three years.”

Alas, there is still a big tuition gap between in-state and out-of-state MBAs at Kenan-Flager, which will stand at $57,575 vs. $40,328. Despite absorbing a lower percentage increase, out-of-state students will actually pay more in real dollars ($3,262 vs. $2,054). Talk about one step forward and two steps back!

However, Kenan-Flagler administration is serious about closing the overall gap, citing public programs like Darden and Ross, where in-state students pay 95% and 92% of the tuition charged to their out-of-state peers. “We would probably never get to the private school model where there is no difference between the two,” writes Dave Stevens, Kenan-Flagler’s chief financial officer, in an email to Top MBA. “But we do plan to continue more aggressive resident tuition increases over the next few years.”

The tuition increase will be voted by the state’s Board of Governors in early 2015.

Kenan-Flagler won’t be alone in jacking up business school tuitions. Lavelle also reports that several California MBA programs could also increase tuition by 5% in each of the next five years. According to the Los Angeles Times, this increase will be used to “help cover rising costs of retirement benefits, fund recent pay increases in employee contract settlements, hire more faculty, and raise the number of California undergraduates by 5,000.”

And it could have a profound impact on tuition costs at the state’s crown jewel: The University of California-Berkeley’s School of Business. In crunching the numbers, Top MBA estimates that in-state tuition will rise from $54,673 to $69,779 by 2020. Similarly, out-of-state students will experience a nearly $16,000 increase over five years, going from $57,220 to $73,020.

And Haas is just the start. Top 100 MBA programs at Irvine, Davis, and San Diego will also face 5% annual increases. Talk about a boon for UCLA and USC!

The University of California Regents will vote to approve the increase at their November 19-20 meeting.

Sources: Top MBA, Top MBA

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