I’m a big believer that going to business school is an experience that can’t be quantified. It is a life experience that cannot be expressed in monetary terms. The friends you make and the relationships you build last a lifetime, and are invaluable for not just business, but of course, personal reasons. That being said, cost is a real concern for many people considering business school. Having been through business school, I’d love to shed some light on this issue. So how much will an MBA cost?
The below chart shows the MBA cost at each of the top 10 schools. The one conclusion to draw here is that the costs don’t really differ that much across schools. In other words, don’t choose a top program based on how much it will cost you, because at the end of the day, the difference will only be a few thousand dollars between top schools (with the exception of public schools which tend to be about $10K cheaper per year). The other conclusion to draw is that it costs a lot to go to any of these programs. In two years, you will spend, at a very bare minimum, $75,000 * 2 = $150,000.
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MBA Cost Comparison for Top 10 Schools |
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School |
Total |
Tuition & Fees |
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Harvard |
$76,600 |
$46,150 |
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Stanford |
80,677 |
51,321 |
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Wharton |
80,000 |
50,430 |
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Kellogg |
72,539 |
46,791 |
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MIT Sloan |
77,224 |
48,650 |
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Chicago |
81,246 |
49,020 |
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Haas |
67,819 |
43,161 |
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Tuck |
76,700 |
47,835 |
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Columbia |
75,589 |
46,476 |
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Yale |
73,117 |
47,200 |
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Median |
$76,650 |
$47,518 |
What’s also not included in this chart is what I call the “Opportunity of an MBA Cost.” In addition to the dollars you will be shelling out to your school and general living expenses, you are forgoing the money you would’ve made if you stayed at your job. Now, this cost differs for a lot of people. For investment bankers and private equity folks, this amount could range anywhere from $150,000 * 2 years = $300,000 to $500,000 * 2 years = $1,000,000. That’s a lot of money! In addition, you are also forgoing promotion opportunities along the way. The way that folks in financial services justify getting an MBA is the network that they build and the bragging rights of going to an HBS, Wharton or Stanford. And that makes sense to some degree, 1) because people place a lot of value on status, and 2) a good network could make you rich in the future. For example, 10 years down the road, say you make Managing Director at Goldman Sachs. If one of your buddies from business school is the CFO of a potential client that could bring in $4M of fees, right then your business school education gets paid for many times over just from that one relationship. This is just one example of the tremendous long term value your business school experience can bring. It may be difficult to see the value now when you are writing checks of $75,000 or more each year, but it’s very rare to hear people say that they’ve regretted going to business school.
My last point is that these MBA cost figures published by business schools are grossly underestimated. Unless you want to stay in your room all day long and not socialize (therefore defeating the purpose of going to business school), then you can probably stay within that $75,000 budget. However, business school students love to party, love eating out, and love traveling. If your friends go out for nice dinners on a regular basis, are you going to miss out on that experience just because dinner is a bit expensive? Bonding with your classmates happens at bars, night clubs, and on trips. And business school student love living it up, 1) because they know it’s their last time ever to be a student, 2) they’re used to a certain lifestyle already (think McKinsey, Goldman style perks)
So then what does an MBA cost, really. Here’s my more realistic estimate:
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Real MBA Cost |
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What the schools quote you |
$75,000 |
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Extra meal costs (1) |
2,250 |
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Long vacation trips (2) |
10,000 |
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Weekend trips (3) |
3,000 |
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Clubbing/bars (4) |
2,700 |
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Other events (5) |
1,000 |
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$93,950 |
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x 2 years |
$187,900 |
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1) 150 meals @ $15 more than what you would spend eating in |
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2) 2 @ $5,000 each |
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3) 10 @ $300 each |
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4) going out 3 times/week for 30 weeks @ $30 per night |
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5) retreats, school-wide events, other entertainment |
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This calculation will look different for everyone (both over and under-estimated), and I’m sure there are many other things I’ve left out (including salary forgone!). My point, however, is that an MBA costs a lot, and will cost more than what the schools tell you it will cost. As a rough ballpark figure, I’m not shy to say that $200,000 for 2 years is a good benchmark to go by. At least that’s what I spent. For me, of course, it was worth every penny.