Rochester Slashes MBA Tuition By 13.6%

Simon Business School at the University of Rochester

Simon Business School at the University of Rochester

In an unprecedented move for a highly ranked business school, Simon Business School at the University of Rochester today (Sept. 2) announced that it is cutting the total tuition of its full-time, two-year MBA program by 13.6% to $92,000. The lower rate, falling from the $106,440 it is charging for students coming into the 2015-2016 academic year, will be effective for MBA candidates entering in the fall of 2016.

The school said it is making the move partly to provide greater transparency of the costs of the MBA to prospective applicants. In recent years, an increasing number of business schools have effectively adopted a two-tier pricing model with a “sticker price” and a hidden “discounted price” based on substantial scholarship awards to the best candidates in their applicant pools. Most schools are providing between 20% and 40% overall discounts on tuition via scholarships to students in their MBA programs, though a substantial number of MBAs still pay full freight.

Dean Andrew Ainslie also said he believes that Simon’s tuition costs were higher than the costs for the MBA programs at several peer schools and needed adjustment. “We have all gotten into this habit of upping our prices 3% to 5% a year and then separately being worried about attracting the best students,” he told Poets&Quants. “So everybody has been simultaneously raising their scholarship support.”

HARVARD BUSINESS SCHOOL GAVE OUT $31.5 MILLION IN MBA SCHOLARSHIP AID LAST YEAR

University of Rochestor Simon Business School Dean Andrew Ainslie

University of Rochestor Simon Business School Dean Andrew Ainslie

Simon doles out nearly $5 million annually in scholarship awards to just over 200 full-time MBA students, putting the school toward the upper end of the range, says Ainsle. Last year, Harvard Business School spent $31.5 million on MBA scholarships, representing 28.6% of its gross tuition receipts. Stanford University’s Graduate School of Business, meantime, handed out $15.7 million, accounting for 31.0% of its gross tuition. At Harvard, half the MBA students get discounts, while 52% of the students at Stanford are getting rate cuts (see Top Ten Business Schools In MBA Scholarship Money).

“The real problem is transparency,” believes Ainslie. “All candidates know is the sticker price and we seem to be out of whack with the five schools above us and the five schools below us.” The result, he believes, is that some applicants who might have applied to Simon passed on the school. “Students do this sort of thing,” explains Ainslie. “They go to U.S. News and run their eye down the column and what they are looking for is a combination of three things: where a school is ranked, how much it costs, and what the required GMAT is to apply. We were a little out of whack on on the pricing side.”

The actual cut in tuition at Simon is even larger, on the order of 16.5%, if you take into account the typical 3.5% rise in tuition that would have occurred next year. Such an increase would have brought the cost of an MBA at Simon, currently ranked 33rd best in the U.S. by Poets&Quants, to $110,165. “We will be a little less generous on scholarships but still will be at the upper level of our peer schools in financial aid,” says Ainslie.

  • Jack

    First of all, if you read the Dean’s recent comments regarding his ideal composition of the upcoming MBA cohorts you will see that he is cutting back on internationals. Second of all there are plenty of subsidies available for internationals. Lastly, even if there were not, the marginal inelasticity that this would cause is not enough to make an argument that their demand is “highly inelastic”. A $20,000 decrease in tuition and the prospects of high percentages of academic scholarship are way more significant than getting a 10% or 4% rate.

  • pricing-manager

    if you look carefully at the salary of most management related graduate degrees you will notice that they almost give same ROI. However, there is a significant difference in cost between MBAs and other masters. Other masters are significantly cheaper. This explains why top MBAs are overpriced. fair price for top tier two year MBA shouldn’t exceed 70k total.

  • Monty Best

    And despite the hype, one cannot be certain of ROI!

  • Esuric

    Seems like this is an attempt to draw higher quality internationals. The demand for MBAs in the U.S. is highly inelastic due to the availability of government subsidized loans. Americans go to the best school that accepted them – internationals, on the other hand, tend to think about costs (unless they’re mega rich – then they go to Columbia).

  • pricing-manager

    to be frank, a cost of a top tier mba above 70k is unrealistic.