After you factor in living costs, extra-curricular activities, healthcare, and the opportunity cost of taking time out of the workforce for a full-time MBA, the overall cost of an MBA is even steeper.
So why does the MBA cost so much and what can you do to make your MBA experience more affordable?
Download the free BusinessBecause Cost of MBA Report 2023
Why are top MBAs so expensive?
With the variety of experiences on offer and teaching from world-class professors, running full-time MBA programs is a significant expense for business schools.
Here are a few factors that play into the high cost of an MBA degree:
Expertise
Business schools invest in expert faculty. Top MBA professors often have extensive industry experience as well as strong academic credentials, and this knowledge comes at a cost.
Learning from these experts is one of the main benefits of an MBA, and since professors have a significant impact on your business school experience, it makes sense for schools to invest here.
School resources
Along with expert faculty, many top MBA programs provide on-campus resources such as Bloomberg trading terminals and innovation labs—not to mention all the technology needed to enable blended learning. Business schools are increasingly using cutting-edge edtech and digital learning models like the metaverse to deliver programs online, which of course come with increased costs.
Providing space for lecturers, tutorials, and study can also be pricey—especially since top schools tend to be located in business hubs where real estate is at a premium.
Trips and visits
Beyond everyday teaching, providing additional experiences can also drive up the cost of an MBA.
Many programs incorporate the costs of study abroad trips, real-world consulting projects, and other experiences into their fees. Equally, organizing career fairs, workshops, and coaching makes providing an MBA an expensive endeavor for schools.
ROI
Despite the large initial cost, studying for an MBA typically comes with a significant return on investment.
According to the Graduate Management Admission Council (GMAC) Corporate Recruiters Survey 2023, the average MBA starting salary in the US is $125k.
At Stanford, the business school with the highest-earning MBA graduates according to data from the Financial Times MBA Ranking 2023, students can expect to receive an average salary of around $249k three years after graduating, increasing their earnings by 131% post-MBA.
And the ROI isn't purely financial. Studying for an MBA gives you access to a diverse and far-reaching alumni network, personalized career advice, and the opportunity for lasting personal growth.
The high MBA fees you'll pay are proportional to this lifelong return.
Variations in the cost of MBAs
According to our BusinessBecause Cost of MBA Report 2023, the most expensive MBA in the world is offered by Columbia in the US, which will set you back almost $169k in tuition fees alone or an estimated $247k in terms of total outlay. Other leading US business schools such as NYU Stern cost an estimated total of $246k for two years.
But some highly ranked programs cost significantly less. An MBA at IESE Business School is ranked third in the world, according to the Financial Times, and works out at around $158k in total for tuition and all aspects of living costs, while INSEAD in France ranked second and costs approximately $138k in total.
Pursuing a one-year MBA program rather than a two-year MBA can also help you keep costs down and means less time spent out of the workforce. The most expensive one-year MBA, at IESE, still costs significantly less than the most expensive two-year MBA at Columbia, according to our Cost of MBA Report 2023.
How can you make your MBA more affordable?
Whatever MBA program you choose, there are steps you can take to make your MBA cost less.
You should firstly thoroughly research the MBA scholarships available to you. Most MBA programs have several scholarship opportunities, which may cover part or all of your tuition fees.
Many scholarships are aimed specifically at women, ethnic minorities, or international students, while others recognize top academic talent, leadership potential, and GMAT scores.
Chris Abkarians, co-founder of the MBA loan negotiator Juno, says most students won’t pay the full MBA program cost as advertised on a school’s website.
“Many US schools have large aid budgets, both merit and need-based, that bring the price down,” he says.
If you’re initial offer for financial aid isn’t as much as you had hoped, there’s still room to negotiate your scholarship offer.
“Your financial aid award letter is a first draft, not a final product,” Chris says. “If you got into other programs that offered you financial aid, tell your top choice that you would love to attend if it made more financial sense.
“Don’t feel bad about asking—admissions offices have wiggle room set aside for this,” he adds.
You could also finance part or all your MBA by taking out student loans.
Although an MBA is expensive, the career progression, global network, personal development, and high salaries enjoyed by MBA grads means you can expect a strong return on your investment.
Although an MBA is expensive, the career progression, global network, personal development, and high salaries enjoyed by MBA grads means you can expect a strong return on your investment.
Download our free BusinessBecause Cost of MBA Report 2023 to discover everything you need to know about MBA costs at the world’s top business schools, with tips on MBA scholarships and increasing your MBA ROI.
This article was written in July 2022 and updated in August 2023.
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