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Examining the True Cost of An MBA Degree

March 20, 2018 · 4 minute read

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Examining the True Cost of An MBA Degree

It goes without saying: Business school doesn’t come cheap. MBAs are some of the most expensive graduate degrees out there, with students graduating with an average of more than $70,000 in debt.

Tuition prices vary but can approach astronomical levels, with top universities like Columbia and University of Penn exceeding $100,000 for some programs—and that doesn’t always include room and board.

Play it right, however, and you can double your salary, not to mention forge professional connections that will last you a lifetime. So which schools are worth the cost, and which ones will have you paying bills for years to come? And how do you pay for your degree at all when you’re looking at such high price tags?

We’ve put together this list so you can begin to figure out the cost, value, and logistics behind funding that MBA. Between scholarships, sponsorships, work opportunities, and private and federal student loans, there are ways of funding even the most expensive education.

Choosing between programs and deciding which loans to take out can be a difficult task, but with a little research, you can get a degree that will open up a world of opportunity. Here’s what you should look at when deciding where to get your MBA and how to pay for it.

Cost-Benefit Analysis of Getting an MBA

There are no cheap business schools—that is a fact. At the lower end tuition costs come in around $40,000 a year; at the higher end, it’s closer to $60,000 a year .Elite schools like Harvard, Stanford, and the University of Chicago leave students $86,000 to $116,000 in debt.

Even considering the increase in salary for those who went to prestigious programs—Stanford graduates make an average of $160,916 a year—those upfront costs of tuition can be intimidating. And let’s not forget, there are still costs that don’t factor into tuition.

Clubs, for instance, might be a necessary networking tool, and they come with a price tag that’s hard to factor in. And how about a trip to study in India? Traveling abroad pushes your costs up even further, but it might be an essential business school experience.

Even if you’re not looking within the Ivy League schools, many expensive MBA programs, such as NYU or Stanford, are non-Ivies. That being said, many MBA programs offer scholarships, based both on merit and need. According to a survey conducted , about 48% of students attending two-year degree programs were on some kind of scholarship.

Keep this in mind when researching schools, since aid varies widely. Stanford, for instance, has one of the highest costs of attendance (around $114,936 a year ) but students can graduate with far less debt than most top tier MBA programs due to their need-based financial aid.

Ways to Pay for Your MBA

Assuming you don’t have $100,000 lying around for a rainy day, you, like most of your fellow graduates, will have to get creative. Sponsorship through a company is possible but relatively rare—around 6% of graduates cash in on this—and it can come with strings attached.

For instance, you may be contractually obligated to stay with the company sponsoring you for a certain number of years, which may prove limiting if you don’t see a future with that company or in that field. Many students choose to work summers, or even during the school year. However, some schools advise students not to take on part-time work due to the workload and the importance of extracurricular activities.

Chances are it’ll be necessary to apply for loans, whether private or federal. There are four types of loans you may apply for: the Federal Perkins loan, the Federal Unsubsidized Stafford loan, the fixed-rate federal PLUS loans, and of course loans from a private company. Federal loans come with certain protections to those who are eligible, including income-based repayment plans, grace periods, deferral, and forbearance.

If you want to compare federal options you can check out the Department of Education’s information . For loans first disbursed on or after 7/1/17 and before 7/1/18 interest rates vary from 4.45% to 7%, depending on loan type, for grad students.

Though government loan options come with a number of attractive protections , refinancing your federal loan with a private lender could be an excellent strategy to lower your debt, especially if you don’t plan to use these benefits.

Private lenders can offer competitive interest rates to refinance student loans, meaning you could save more than you originally thought on repaying student loans. As an MBA student, you could be an ideal candidate for a low-interest rate private loan, partly because of your post-grad earning potential.

Deciding If An MBA Is Worth It

For the top American universities, average post-grad salaries range from $131,443 (University of North Carolina Chapel Hill) to $173,888 (Columbia University) for students three years out of school. On average, graduates from the top 20 MBA programs are making almost one and a half times their amount of incurred debt.

But it pays to look beyond the Ivies. Graduates of Brigham Young University’s MBA program have the top salary-to-debt ratio in the country, with graduates making exactly double their incurred debt each year. In contrast, however, schools like Strayer and Kaplan University, on average, cost more than graduates end up making.

Long story short: Do your research. Make sure your school is one that will get you an Ivy League paying job—not just an Ivy League bill.

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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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