The average MBA cost varies depending on the type of MBA degree, the school, the concentration, the location, and other factors. These include an important element that many might overlook- the forgone salary from spending time out of the workforce instead of earning money at a job. Average MBA costs help contextualize the decision of whether to attend an MBA program.
The Base Cost
In terms of tuition, MBA degrees start at around $40,000 a year, and the traditional MBA is two years long. This cost rises based on the ranking of the school: according to US News and World Report the annual cost can reach $57,000 for top MBA degree programs. However, the tuition is not the only direct cost of earning an MBA. Investopedia reports that costs for books, room and board, and other expenses like computers and trips can total to an additional $20,000 per year, giving a cost for a two-year MBA of around $120,000-$140,000.
Someone considering entering an MBA program generally holds a job before they apply. Then they need to leave that job for two years to pursue the degree. This adds to the effective annual cost of the program, because they give up two years’ worth of salary in addition to paying the costs listed above. The amount of this cost depends on the job the MBA applicant held before entering the program. For example, if they were making $75,000, the total foregone salary from entering a two-year MBA program is $150,000.
In addition to giving up a salary, an MBA entrant also gives up time they could have spent gaining specific on-the-job experience. That experience can be valuable, not only in terms of personal growth, but also because it can lead to promotions or better job offers. Giving up that experience is another cost of attending an MBA program. This is a “soft” cost that is difficult to quantify, but potential applicants should be aware of it.
Combining all of the above information, the total cost for an MBA degree can range between $250,000 to $300,000, with the cost being higher for schools in areas with higher costs of living, schools with higher rankings, and students who have better-paying jobs before they enter the program. Some of this cost can be alleviated with a part-time MBA, but this also extends the length of the program. Companies may offer to pay for part or all of an MBA’s costs for their employees, although this may come with the stipulation that the employee continue to work for that company after graduation from the program.
The final price tag can be high, so it is important to weigh the cost of the MBA carefully and obtain a good estimate of the expected benefit of the degree. Additionally, due to the wide range of cost estimates, average MBA cost numbers do not necessarily predict the exact cost of a specific school. However, they are useful for an initial analysis about whether applying for an MBA is worth further consideration, taking into account MBA cost.