“How am I supposed to pay for this?”
Now, I am no advisor to aspiring MBAs or other graduate management degree contenders, but I have a sneaking suspicion that the above might be one of, if not the, most common question admissions advisors get thrown at them. Business school is anything but cheap and the proposition of quitting a paying job to go spend hundreds of thousands of dollars during a two-year term of unemployment sounds like the mad ravings of a lunatic.
But, alas, it is not. The decision to go to business school is made by rational people interested in the long-game of life betterment. Still, the financial proposition is daunting for the vast majority of intended master’s students. So, the question remains: how do people pay for business school?
In a recent Bloomberg list called The Most Affordable Top B-Schools, readers can get a quick breakdown of the costs and average aid that mitigates those costs at ten of our nation’s top schools. It is interesting to scroll through, but bear in mind that the rankings and profiles do not provide a complete answer to the posed question. Rather, Bloomberg crunches some numbers to show how the average person pays for some of it.
In short, readers get a general picture of the estimated cost of a year at some top business schools around the country. The costs include tuition, fees, and living expenses and the data is provided by the schools themselves. Then, readers will get an average aid package number, what percent of the annual budget that covers, and then a final price tag that individuals will have to figure out how to cover using any means other than US government provided financial aid (e.g., savings, private creditors, family, jobs, etc.).
We do not get a breakdown of the annual budget provided by the schools other than the three aforementioned line items. As to how the schools derive “living expenses” is anyone’s guess, but one must wonder if the provided budget includes existing debt payments or other similar individual expenses that can shift a person’s annual expenses around quite drastically, or what type of “living” this average individual is actually engaging in during the year.
Despite the vagaries, the overall picture is that a graduate management student can expect to have 70-75% of their costs covered by public aid leaving them on the hook for approximately $20-35K of uncovered cost per year in business school; at least, these business schools. Staggering, really.
Just by considering how expensive a master’s in business is to obtain, one cannot help but have at least somewhat more of an understanding of why Rohit Chopra, the ombudsman at the Consumer Finance Protection Bureau (CFPB), proclaimed that the student loan market is now officially “too big to fail” in February of this year. [For more on this story, click the previous link as well as this one.]
In the end, all applicants must have a very clear understanding of the costs involved and the means to cover them respective to their individual situations. How do you help your advisees get to that point? Have you noticed any trends relevant to paying for b-school you’d like to share? What does your school do to help students get funding and help them understand what that funding means in the long run?
