Undergrads in college aren’t the only students who take a spring break fling. MBA students do them as well. Last year, in fact, some 300 MBA students from Harvard Business School got to travel around Colombia in South America, visiting Bogotá, Medellín, and Cartagena for spring break. Led by a few second-year MBAs from Colombia, the week-long trip started in Bogotá where students danced the entire night in a traditional Colombian party at Andres Carne de Res. Another day of activity in Guatapé ended with a party on a boat in the middle of a lake.
Excursions like these are not uncommon during an MBA experience. The year before, groups of Harvard MBAs used their spring break to trek to places as varied as the Vatican, Machu Picchu, Morocco, and Columbia again. Then, there are all the parties and celebratory events during the entire year, from ski trips to Breckenridge to big tuxedo-required gatherings like Holidazzle and the Newport Ball. Just about every business school has its own versions of similar events.
Many students, in fact, will argue that they are a necessity for the bonding and networking opportunities they provide. But they are also among the hidden costs of getting the degree and they add up fast. So when you are plugging into spreadsheet cells the loss of your salary, the cost of tuition and fees, and your estimates for living costs in a new locale, don’t forget to add all those after class drinks, weekend jaunts and parties, and week-long excursions to all parts of the globe.
B-SCHOOL ESTIMATES OF THE COST OF AN MBA ASSUME ‘A MODERATE STUDENT LIFESTYLE’
You certainly won’t get any guidance from schools on what all this networking will cost you. Estimates of the cost of attending an MBA program are always conservative, based on what Harvard Business School calls “a moderate student lifestyle.” That might very well mean staying in your dorm room watching a Netflix movie when you’re not in a class or team meeting.
At least, the school vaguely acknowledges these extra expenses under the term “optional activities.” On the school’s website, HBS notes that “there are countless opportunities to participate in optional activities during your time at HBS. While the MBA Program Cost of Attendance makes allowances for many of the typical expenses, there is no way to anticipate specific costs for each individual student. It is important to understand that students who get financial aid will need to make choices—or plan additional savings to cover the costs of optional activities.”
So how much do these necessary but nonessential activities cost? At some schools, MBA students can spend roughly $18,000 a year on extras. A few years ago, Bloomberg Businessweek asked MBA candidates just how much they dipped into their pockets as part of their annual ranking project. The magazine published the results from surveys to both the Class of 2014 and the Class of 2015. In the first go-round, the MBAs spending the most discretionary cash were at Stanford Graduate School of Business. The annual spend at Stanford came to $18,553 or $37,106. Second to Stanford was Wharton where the average level of spending was $17,717 a year (see chart below).
AVERAGE ANNUAL SPENDING ON EXTRAS BY STANFORD MBAS CAME TO $37,106 OVER TWO YEARS
“Wharton encourages extravagant spending,” one student told Bloomberg Businessweek, calling the spending “toxic.” He added: “The mentality is that we’ll be rich eventually, so why not spend a ton of money now while we’re in debt.”
When Bloomberg Businessweek revisited the topic for the Class of 2015, the magazine found a different winner at the top: Harvard Business School. This time, however, the magazine published median numbers instead of averages. At HBS, the median was $16,290 a year on extras. At Columbia Business School, it was $14,400 annually, (see chart below) while extras cost a median $12,000 per year for the MBAs at Chicago Booth. Not surprisingly, Bloomberg’s surveys showed that the B-schools where students burn though the most discretionary cash are also the ones that graduate students with the highest starting salaries. In other words, they are the highly ranked schools.