Tuesday, March 18, 2014 at 12am

Class of 2016 Will See MBA Tuition Fees Rise Again: MBA News

Class of 2016 Will See MBA Tuition Fees Rise Again: MBA News main image

MBA tuition hikes are continuing across many of the top business schools in the US. In the last six years MBA programs have been marked up 37%. The class of 2016 cohort will see an additional average increase of 4% on top of that, according to Bloomberg Businessweek.

With these recent raises, the average yearly cost to study on a full-time two-year program at a top business school in the US now stands at US$60,000. Of Businessweek’s top 10 leading schools, the Fuqua School of Business had the largest MBA tuition increase of 4.9%, while Harvard Business School had the smallest, of 2.7%.

The US$60,000 average doesn’t take into account living and other expenses however, meaning students at the top business schools can expect to rack up US$150,000 in costs by the time of graduation.

Nunzio Quacquarelli, MBA graduate of the Wharton School and the man behind TopMBA.com, states that an annual increase of 3-5% “has become the norm” for the elite MBA programs in the US such as the Fuqua School of Business. This tuition climb however, means that figuring out if an MBA is worth the investment is a little trickier.

Fuqua School of Business boasts the smallest increase in MBA tuition fees amongst the top MBA programs

The good news is that MBA starting salaries have been more or less stable since 2008, at an average of US$93,000 according to the 2013/14 QS Jobs & Salary Trends report, compiled from a survey of 4,300 MBA employers that hire from leading schools. The consistency of the figure, according to Quacquarelli is due to recent pay cuts and the end of big bonuses for those in the finance industry, an industry which helped raise the average of MBA salaries before the financial crisis hit, while improvement of MBA starting salaries in other areas that has ensured the average has not been dragged down by financial industry cuts, according to Quacquarelli. Consequently, the likes of the Fuqua School of Business can justify their MBA tuition increases.

It’s not just the top MBA programs that have been affected by MBA tuition hikes however, as the same is happening across the board. According to data collected from the Association to Advance Collegiate Schools of Business, the average MBA tuition jumped from US$32,473 in 2007 to US$44,476 in 2012, easily beating tuition rises for undergraduate degrees. In the same period, private business schools raised their MBA tuition rates by 27%, up to US$55,451, which was double the increase of undergraduate fees at private, non-profit US universities.

Although Quacquarelli predicts that there needs to be some price stability in the coming years, with increases continuing but at a lower rate, he also asserts that top business schools are able to get away with these rises because prospective MBAs aren’t necessarily “price sensitive”. He tells Businessweek; “They’re not going to bat an eye at US$64,000 versus US$58,000 a year when it comes to the value of their education and potentially benefiting their career. What will turn heads [however] are full and partial scholarships.”

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Hefty MBA course fee is a serious cause of concern for many. But then one can always opt for student loan. Since MBA fetches one a high paying job, one can pay it within a few years of working in the professional space. Careful and effective planning is what is necessary.