AVERAGE BUSINESS SCHOOL COSTS APPROACH $200K
You pretend that you understand…but you really don’t. As the banker walks you through the forms, you nod and smile. Someday, you’ll wish you’d listened more closely. For now, you just sign next to every X. Like every MBA taking out a loan, you’re having second thoughts. But you’ve come too far to turn back now. “It’ll pay for itself someday,” you tell yourself. “This is just something I have to do.”
Right now, many accepted candidates are putting on their bravest faces. Getting an MBA is a big step. And it’s not cheap. In fact, it is only getting more expensive as time goes by. That was the finding from new research from Bloomberg Businessweek. According to their findings, it will cost up to $99,000 a year to attend a top-ranked business school.
Let that sink in for a moment. That’s $200,000, which includes annual tuition ($66,000 a year on the high end) along with fees, textbooks, and cost of living (rent, groceries, etc.). And that doesn’t even include those weekend ski trips or winter break global networking junkets.
Compared to law schools, where some are freezing tuition, softening admissions standards, and jacking up scholarship aid, MBA programs aren’t facing dwindling enrollments and stopped up revenue streams. And their students aren’t graduating into flooded markets and stagnant wages. No, MBA degrees are assets, not commodities. And tuitions reflect that.
In fact, based on the tuition numbers it culled in 2015, Bloomberg Businessweek projects tuitions to rise from two to ten percent. At the high end, the University of Maryland’s Smith School of Business’ tuition has skyrocketed by 9.9% to $52,380 for out-of-state residents. Despite that, the MIT Sloan School of Management remains the priciest program at $65,750 (up 3.1%) followed by the Cornell’s Johnson Graduate School of Management at $59,500 (up 2.2%).
Bloomberg Businessweek adds that tuition generally rises three to five percent annually. At a three percent growth rate, you can expect MIT Sloan’s annual tuition to run $76,222 within five years. If you take on another $35,000 a year in incidentals and living costs, an MIT Sloan could cost nearly $225,000 by 2021.
And there is little incentive for business schools to change. In the GMAC’s 2014 Application Trend Survey, 61% of full-time MBA programs had more applicants than the year before (with only 35% reporting a decline). That’s supply-and-demand at work. After weathering some pay dips during the great recession, MBA salaries are roaring back. Since the great recession ended in 2010, 16 MBA programs have seen average starting pay rise 20% or more (topped by the University of Washington at 36.9%). And the top schools are reaping the benefits, with graduates from Harvard ($144,750), MIT Sloan ($142,936), Stanford ($142,834), Wharton ($142,574), Dartmouth Tuck ($142,489), and Berkeley Haas ($140,935) landing gross starting salaries that more than offset two years of tuition.
In short, don’t expect tuition hikes to abate any time soon. With rising salaries and steady placement rates, you can chalk these increases up to the proverbial ‘cost of doing business.’ In this model, business schools get their cut just a year or two earlier.