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Stat of the Week: The Cost of Business School Networking

These days, advertisers are touting how they don’t have “hidden fees” or “fine print” in their contracts. When you’re evaluating a business school, you’re probably looking at tuition. No doubt, you’re also budgeting for cost of living too. But there’s also another expense that you should factor into the equation: Networking.

By networking, we mean travel. In sales, you take your clients to ball games or fine dining to bond. In business school, you hit ski slopes or golf resorts with your peers. The difference? You don’t get an expense account in business school (or a CFO who looks the other way on occasion).

Yes, ‘networking’ adds more debt. But it’s something to expect. Your peers will eventually become your advocates, partners, and investors. Someday, they will open doors for you with people in their own network.  If you want to develop real relationships, they’re easier to build in Cabo (and on a plane) than prepping for a case competition.

That’s makes some recent data from Bloomberg Businessweek so fascinating. They found that the cost of networking (i.e. travel) at business school can run upwards of $18,000 per year. That was the high end at the Stanford Graduate School of Business. And the numbers were only slightly lower at Wharton, Harvard, and Columbia.

Source: Bloomberg Businessweek

In fact, as Bloomberg Businessweek notes, “The better the school, apparently, the higher the premium on travel and fun: Students at top-tier business schools spend thousands of dollars each year on discretionary expenses and tend to spend considerably more than their peers at lower-ranked schools.”

Call it the b-school equivalent to keeping up with the Joneses. And it’s something that can separate the MBA haves from the MBA have-less, says Phuong Nguyen, a second-year at HBS. She tells Bloomberg Businessweek that such travel can pay dividends in the long run. “This group of people that I’m in school with right now, in 10 years are going to be the next CEOs. It’s investing in more than just knowing the names, but knowing the story behind them.”

In fact, travel spending, which can cost $3,000 or more (excluding airfare) is becoming the expectation at some schools. “Wharton encourages extravagant spending,” one anonymous respondent wrote in Bloomberg Businessweek’s student survey, “The mentality is that we’ll be rich eventually, so why not spend a ton of money now while we’re in debt.”

Bottom line: Before you take out a student loan, don’t forget that there are plenty of expenses that will cost far more than projected. In business school, relationships – not grades – are the real currency. While professors face a “publish or perish” dictate, many business students must follow a much different expectation: “Spend or be segregated.”

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Source: Bloomberg Businessweek