Introduction: Understanding the Cost of an MBA
An MBA is a graduate degree in business management and administration. Candidates complete a rigorous curriculum that prepares them for leadership positions. The courses cover management, accounting, finance, marketing, and business law, among others.
Candidates develop management competencies for all types of organizations. These include strategic planning, organizational leadership, and international business. Government agencies, corporations, and nonprofit organizations are top employers.
But it’s the increased earning potential that’s the oft-cited reason for earning an MBA degree. The pre-MBA and post-MBA salary difference is $85,000 (i.e., median gain in salary; Class 2022). Of course, the actual gain in salary will depend on individual circumstances.
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Note that earning an MBA degree can be expensive. You must know the average cost of an MBA program to make decisions about:
- Pursuing an MBA degree in the first place
- Deciding the best MBA degree program based on their financial resources
- Selecting the MBA degree program that offers excellent financial aid options
- Choosing the best career path based on its earning potential
Keep in mind that the average cost of an MBA is just that – an average number. The actual tuition and fees among MBA programs vary depending on several factors. These include program reputation, mode of delivery, program length, and type of enrollment.
Prospective candidates must then understand the latest tuition and fees of MBA programs. Again, it’s crucial in informed decision-making.
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What Is the Average Cost of an MBA?
MBA candidates pay $56,850 on average to earn their degrees today. This is slightly above the average cost for the 1999-2022 period at $52,763 for a two-year program.
But, the actual costs between MBA programs vary widely. Harvard University’s MBA program charges $84,854 per year in tuition and fees. Binghamton University’s MBA program has more affordable tuition and fees at $17,470 per year.
The average costs differ between public and private universities, too. In-state and out-of-state tuition rates are different among public universities. Private universities usually have the same tuition and fees for in-state and out-of-state students.
Online programs may or may not have the same tuition and fees as on-campus programs. If there’s a difference, it’s usually the technology fee for the digital infrastructure.
The latest published annual MBA tuition fees for the best programs offered by private universities are:
- Northwestern University: $90,970
- Columbia University: $90,129
- University of Pennsylvania: $89,500
- University of Chicago: $88,728
- Massachusetts Institute of Technology: $86,550
- New York University: $86,092
- Dartmouth College: $85,408
- Yale University: $85,400
- Harvard University: $84,854
- Stanford University: $82,455
The high cost of MBA programs among private universities can be attributed to their prestige. Many of these are Ivy League universities with names that ring a bell anywhere.
If you’re looking for more affordable MBA options without compromising quality, consider these public universities.
- University of Georgia: $15,334 (in-state); $35,652 (out-of-state)
- University of Florida: $26,473 (in-state); $61,260 (out-of-state)
- Indiana University: $31,978 (in-state); $58,500 (out-of-state)
- University of Washington: $40,008 (in-state); $57,846 (out-of-state)
- University of Texas at Austin: $53,818 (in-state); $59,684 (out-of-state)
- University of North Carolina at Chapel Hill: $55,046 (in-state); $73,226 (out-of-state)
- University of Michigan: $70,392 (in-state); $75,392 (out-of-state)
- University of California Berkeley: $73,160 (in-state); $85,406 (out-of-state)
- University of Virginia: $79,800 (in-state); $81,700 (out-of-state)
- University of California Los Angeles: $85,756 (in-state)
A few of these MBA programs offered by public universities have comparable costs to private universities. This only shows that, indeed, MBA costs don’t fit a one-size-fits-all mold. Note, too, that many of these public universities are known as Public Ivies.
As for online MBA programs, their costs also vary widely. Examples include:
- University of Georgia’s online MBA program has the same tuition and fees – $55,043 – for its entirety. The amount applies to all students regardless of residency status.
- UNC-Chapel Hill’s online MBA program costs $125,589.06 in total tuition. The on-campus program has different tuition and fees, as mentioned above.
- Indiana University’s online MBA program charges $96,944.42 in total tuition and fees (up to 2024 only). There’s no distinction between in-state and out-of-state students.
Keep in mind that these are only actual costs and only for tuition and fees. Be sure to consider the following costs, too, when planning for MBA studies:
- Textbooks and supplies
- Equipment, such as laptop and smartphone
- Software and apps
- Internet connection (for online classes, learning materials, and research)
You must also consider the opportunity costs of earning an MBA degree. There may come a time when you can only maintain part-time employment to meet academic demands. The lost income is an opportunity cost.
Factors That Affect MBA Costs
Many factors influence the actual costs of earning an MBA degree. These factors don’t work in a bubble either, meaning social and economic factors affect them. Factors in the larger environment, such as inflation and employment trends, must be considered, too.
Public or private status
Public universities usually charge more affordable tuition and fees, thanks to government subsidies. But this isn’t true for all public universities. UCLA, for example, charges MBA tuition and fees comparable to private universities.
Private universities have higher tuition and fees. But many also offer more generous financial aid, such as business school scholarships.
Program prestige
The best MBA programs usually have higher tuition and fees because of their prestigious reputation. But we must also say that their prestige has its rewards. Earning an MBA degree from Harvard, for example, opens excellent career opportunities than, say, one from a small college in the backwoods.
Location of the university
Universities with urban campuses usually charge higher tuition and fees that match the cost of living in their areas. In contrast, universities in rural areas have more affordable tuition and fees.
This also applies to the cost of living in specific states. Earning an MBA degree from a California-based university can be more expensive than in an Oklahoma-based university.
Residency status
In-state students, or resident students, enjoy more affordable tuition and fees. State subsidies reduce the cost of education for residents and, thus, boost the local economy.
Program type and length
If per-credit costs are used as a basis, both full-time and part-time MBA programs have similar costs. However, part-time programs can cost more because of the extended spending period. Then again, full-time MBA programs can be more expensive, too, because of the opportunity cost.
Executive MBA programs are usually more expensive than the traditional two-year programs.
Mode of delivery
The business industry accepts both online and on-campus MBA degrees awarded by accredited universities. Online programs, however, can be more affordable because of their flat tuition and less need for relocation, transportation, and on-campus expenses.
Availability of financial aid
Scholarships and grants reduce the total cost of attendance in MBA programs. Be sure to look into financial aid options when choosing an MBA program for this reason.
Tips for Paying MBA Tuition
MBA program expenses don’t have to be a significant burden. Here are effective ways of paying for MBA tuition and fees. Keep in mind that it takes careful planning to get the most out of these ways.
Savings and investments
If you have savings and earnings from your investments, use them first. There’s little to no sense in taking out student loans with interest that adds to your cost of education.
Installment payment plans
Ask about the installment payment plans that allow smaller payments over a specific period. Harvard, Stanford, and the University of Chicago are examples.
Employer sponsorship and corporate tuition reimbursement programs
Microsoft, Google, and Deloitte are among the corporations with employer sponsorship and corporate tuition reimbursement programs. Check with your manager – or, in the case of large corporations, your human resource department – about these programs in your company. Be sure to understand the terms and conditions, especially about post-graduation service commitments.
Scholarships and grants, including fellowships
Look for business-specific scholarships and grants offered by schools, organizations and professional associations. Examples include:
- Reaching Out MBA (ROMBA) Fellowship
- Bain & Company MBA Fellowship
- Stanford Graduate School of Business Fellowships
- Forte MBALaunch Program Scholarships
- Sloan MBA Program Fellowships
These are competitive programs with merit-based criteria.
Part-time work
Consider taking on part-time work if you’re not employed already. The income earned can be used for direct and indirect costs.
Tax benefits
Tap into the tax benefits that graduate students can use for education expenses. Examples suitable for MBA students include:
- American Opportunity Tax Credit
- Lifetime Learning Credit
- Education Savings Account (ESA)
But don’t assume anything without consulting a tax advisor first.
Student loans
Go with federal loans first since these have lower interest rates, flexible repayment options, and even loan forgiveness programs. Private loans should be a last resort.
Crowdfunding
Use crowdfunding platforms to raise money for your MBA education. Plus, it’s a great way to develop your persuasive skills. GoFundMe, Indiegogo, and Patreon are popular crowdfunding platforms.
An ISA is a contract where you don’t have to pay your tuition and fees upfront. Instead, you will pay a specific percentage of your future income for a fixed period until your MBA costs have been fully paid.
By combining these tuition payment tips for MBA students, you’re more likely to graduate with less student loan debt.
How to Reduce the Cost of an MBA
These tips for reducing MBA costs should be combined with the above tuition payment tips.
- Always perform an MBA cost comparison before choosing your preferred program.
- Go for the more affordable MBA program, if possible.
- Apply to MBA programs in your state to enjoy in-state tuition.
- Consider an accelerated MBA program.
- Apply for as many scholarships, grants, or fellowships as possible. Be mindful of their terms and conditions.
- Check out online and hybrid MBA programs for their affordability and flexibility.
- Evaluate an MBA degree’s return on investment. If its rewards justify its costs, then it can be the right MBA program for you.
Conclusion: Is an MBA Worth the Cost?
There are many reasons why an MBA is considered the most popular graduate degree in the US. When leveraged to its maximum potential, an MBA degree provides the following benefits:
- Gain leadership, problem-solving, and decision-making skills for leadership positions (i.e., career advancement)
- Develop hard business knowledge and skills with a wide range of applications
- Improve your odds in entrepreneurship and innovation
- Boost your earning potential (i.e., high returns on investment by as much as 325% in 10 years)
- Expand your connections.
So, yes, an MBA degree is worth its cost.
But an MBA isn’t a golden ticket either. You must determine if it’s aligned with your career goals and personal aspirations. Earning an MBA, after all, demands time, effort, and money. You want to ensure that, indeed, it’s a useful credential in your case.