The Most Affordable MBAs? Yes But…

MBAs graduate from the Lehigh University College of Business and Economics in Pennsylvania with no debt, according to Student Loan Hero, a counseling service that compiled a ranking of affordable MBA programs

An MBA from an elite business school can cost six figures, easy. Get accepted to one of the very best schools — one of the M7 or a school consistently ranked in the top 10 — and the price tag may very well exceed $200,000. For some prospective students, that’s a deal-breaker, even before calculating ROI.

In their case, it may be time to look around. A student loan counseling service, Student Loan Hero, has created a new ranking of MBA programs by affordability, taking into account tuition costs, debt burden, and average starting salaries. The top school according to those metrics: Lehigh University’s College of Business and Economics, where MBAs emerge with an astonishing zero debt — something no other school on Student Loan Hero’s list of 50 can boast.

The average debt for MBAs from Student Loan’s Hero’s list is $53,000. So how did Lehigh manage to graduate its 17 MBAs with no debt? At Lehigh, students in the one-year MBA program pay $64,750 in tuition and another $1,970 for health insurance, but they are eligible for multiple scholarships including Dean’s Scholarships (full tuition), Director’ Scholarships (partial tuition), the Asa Packer Social Entrepreneurship Award (full tuition, $18,000 stipend), Lehigh Alumni Scholarships ($10,000), and a pair of military scholarships. The school also offers a Flex MBA and a pair of joint MBA programs: MBA/Engineering and MBA/Educational Leadership, all of which have their own set of aid possibilities.


Lehigh is unranked by both U.S. News & World Report and Poets&Quants (its part-time MBA is ranked 20th by U.S. News, and its undergraduate school was ranked 24th in the inaugural P&Q undergrad B-school ranking last year). It’s a basic fact of life that lower-ranked schools draw less top student and faculty talent, which in turn keeps their ranking low — a vicious, unvirtuous cycle of sorts. Offering substantially more aid in the form of scholarships and fellowships is one way smaller schools can draw student talent away from the elites, and perhaps creep up the reputable rankings, reversing their fortunes. According to a recent survey, more than 50% of B-school applicants say they would attend a “less desirable” program if awarded a scholarship.

Reputation and rank may be the most important factors in choosing a business school, but the bigger schools recognize that dollars can chip away at resolve — and they have upped their scholarship game accordingly. Chicago Booth, Duke Fuqua, Dartmouth Tuck, and Northwestern’s Kellogg School of Management have been the most active schools in offering scholarships based on merit; Harvard and Stanford, which both devote substantial funds to scholarships, tend to dole out their discounts on need rather than merit. HBS has been particularly active lately in offering support for low-income and first-generation MBA students.

And let’s not forget ROI. At Stanford and Harvard, first-year total compensation is around $160,000 — nearly twice the $86,667 Lehigh boasts. If you can go to one of these schools for free or a heavily reduced cost, why not pick the cream of the crop? Truth is, the big brands do deliver lifetime earnings that are far above second- and third-tier schools. The 20-year median compensation for all MBAs is roughly $1.8 million. But for MBAs from any of the Top Ten schools is about $1 million more (see The Most Lucrative Seven-Figure MBA Degrees).  That cash helps to pay down some pretty big loans.


Andrew Josuweit, Student Loan Hero founder and CEO

Even with more available aid and the incalculable benefit of an elite pedigree, Student Loan Hero urges caution in making that B-school choice. “Before choosing a business school, an MBA candidate should be thinking through the impact this will have on their finances,” says Elyssa Kirkham, lead researcher on the Student Loan Hero study. “They need to consider what it’s actually going to be like to pay for their school, and to figure out how much they will have to rely on student loans. Then project even further, past graduation, when they have to start repaying this major debt. What are the monthly payments like? What kind of income can they expect to earn? Is it going to be a stretch to keep up?”

Caution is baked into Student Loan Hero’s mission. Its CEO and founder, Andrew Josuweit, related in a story for CNBC last year how his “journey into debt was far easier than my journey out would be.” He attended an unnamed private school and accrued $74,000 in loan debt — which ballooned to more than $100,000 within a few years because of interest.

Josuweit fought back. He took active measures to reduce his payments, beginning with paying extra monthly. Then he moved out of New York to Austin, Texas, and began biking everywhere instead of driving. Finally, and most importantly, in 2012 he launched Student Loan Hero, “a business aimed at helping other people recover from their student loan debt woes.” In September 2016 he made his final loan payment after seven years. 

“Building Student Loan Hero from scratch helped me check off several important boxes in my personal journey with debt,” Josuweit wrote. “First, starting a student loan-themed business allowed me to help people who struggled in the same way I did. And second, starting a business helped me grow my income and throw even more money towards my loans.”


For its rankings, Student Loan Hero surveyed 116 MBA programs and ranked them by factors indicating students’ likelihood to avoid debt. These include the ratio of the average MBA debt balance to the average starting compensation, average indebtedness figures sourced from U.S. News, compensation calculated as average starting salary (plus average signing bonus when listed), and annual 2017-18 in-state tuition and fees, sourced from each college’s site, extrapolated to assume two terms per year of attendance and 12 credit hours per term.

“With our rankings, we wanted to help MBA candidates have a better comparison tool for the financial side of the decision,” Kirkham says. “Yes, reputation and program curricula are important when choosing an MBA program. However, those considerations shouldn’t overshadow the questions of costs and student debt. In our study, we looked at MBA programs to find those where graduates leave with less debt, face lower costs, and earn higher starting salaries. This is key information that can point an MBA applicant to programs that will give their career a boost without burdening them with major student debt.

“Earning an MBA is a smart investment, and many graduates earn well over six figures. But there are no guarantees … MBA applicants need to do their own analysis of business school costs and returns to make a fiscally sound choice.”


See Student Loan Hero’s ranking of the 50 most affordable MBA programs on the next page.

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