MBA Tuition Costs & Financing Guide
The purpose of this page is to provide a broad overview of the various MBA program costs that a student faces and the types of funding opportunities available. By reviewing the financial aid processes at a diverse range of leading business schools, we hope to help candidates assess MBA programs in light of both their personal and professional goals as well as financing capabilities. Early in the application process, this guide is best used to gain a broad overview of the financial aid process and resources available at various programs; the school web sites, and conversations with current students can help extend this research.
Later, candidates can use this overview as well as our Financing the MBA Strategy Guide to plan out their application schedule with an eye to financial aid deadlines and, if needed, any additional essays required. This page can then help those at the end of the application process make an informed decision about where to enroll and how to pursue further funding.
MBA Tuition Costs at the top business programs has risen steadily for decades. Indeed, in the past five years alone, the average tuition at the top programs increased by more than 37 percent—double the inflation rate over that same time period. Students can now expect to pay between $50,000 and $75,000 for a single year’s tuition at a top school, with an average total price tag of $140,000 for tuition alone. Public universities, which discount tuition for state residents, can sometimes be more affordable.
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Cost of an MBA
The primary expense of an MBA program is tuition. Having said that, there are a variety of other costs—including living expenses, course materials and additional fees—that can increase the total amount a student pays by a half again. Most business schools provide a breakdown of the expenses, which are posted under the financial aid or admissions section of their websites in order to help prospective students seriously consider the cost of completing a particular MBA program. Schools typically take the total cost of attendance into account when calculating the financial aid package students receive.
Pre-Matriculation Costs
Even applying to MBA programs can be costly. To start with, taking the GMAT even once will cost candidates $250. In addition, each business school typically charges an application processing fee, which range in price yet may total $250. Candidates can also incur hundreds or even thousands of dollars in traveling expenses when visiting schools or going to interviews. Finally, applicants can take on an array of optional costs such as GMAT test preparation, consulting services and supplementary coursework.
Tuition
Tuition at the top business programs has risen steadily for decades. Indeed, in the past five years alone, the average tu inion at the top programs increased by more than 37 percent—double the inflation rate over that same time period. Students can now expect to pay between $50,000 and $75,000 for a single year’s tuition at a top school, with an average total price tag of $140,000 for tuition alone. Public universities, which discount tuition for state residents, can sometimes be more affordable. For instance, in-state residents attending schools such as UC Berkley’s Haas, UT Austin’s McCombs, or UNC’s Kenan-Flagler pay $10,000 to $17,000 less in tuition each year than do out-of-state residents. This wide range of variance can be explained in part by the different levels of subsidies that public universities receive and the economies of the states in which they are located.
Living Costs
The cost of living also forms a substantial part of a student’s expenses while at business school. These costs typically cover housing, food, utilities and other personal expenses, and they can vary widely by geographic region. For example, the Fuqua School of Business, located in the college town of Durham, North Carolina, estimates that students will pay $18,702 for room and board in their first year. Meanwhile, at NYU Stern, located in the center of Manhattan in New York City, the estimated cost for room and board is $26,024.
Living costs are usually based on surveys of the student population or estimates of local rental costs. Students should keep in mind that the figures posted by most schools are for single students with no dependents; those with partners or children should take into account the additional expenses of balancing family life with full-time studies. Harvard Business School, for instance, estimates that students with a spouse or partner should set aside an additional $18,162 in yearly expenses for a spouse or partner, another $15,768 for one child and an additional $10,140 for a second child. Meanwhile, Tuck, with its rural New Hampshire campus, calculates that $7,500 should be set aside for each additional family member. Prospective students with further questions may contact their target programs’ financial aid offices in order to request information about expected family expenses.
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Additional Expenses & Fees
Course materials, healthcare insurance, transportation costs and other mandatory university fees can add several thousand dollars to a student’s expenses each year. Furthermore, extracurricular activities, particularly international trips that are often a highlight of an MBA experience, can substantially increase costs; for example, the Kellogg Worldwide Experience and Service Trips (KWEST) range from $1,900 to just over $3,000 before considering a number of out-of-pocket expenses. To help cover these expenses, some schools allow students to apply for an increase to their cost of attendance and thereby take on more loans.
Loan Interest
Because recent legislature has rendered federally subsidized loans unavailable for U.S. citizens or permanent residents in graduate school, students relying on loans to fund their studies will see their interest accumulate while in business school. For the most part, students do not have to start paying that interest, or the principle, until several months after they graduate. Federal loans and some private loans also include an ordination fee that is tacked on to each loan disbursement.
Financing Options
Students typically rely on a mixture of savings, fellowships and scholarships, employer or outside assistance, and loans to meet MBA programs costs. According to the GMAC 2015 Prospective Student Survey, domestic applicants from ages 24 to 30 broadly estimate that they will rely on personal savings to finance 13% of their education, loans for 30%, and scholarships, grants or fellowships for 16%. Other anticipated sources of aid include parental support, spousal or partner earnings and employee assistance.
Meanwhile, estimates from several top programs suggest that between 30% and 50% of students receive some form of fellowship or scholarship. For instance, the Stanford Graduate School of Business calculates that 50% of its students receive fellowships funds, while New York University’s Stern School of Business states that up to 40% of its full-time MBA students receive merit-based scholarships. Harvard Business School, one of the few schools to solely offer need-based aid, reports that more than 65% of students receive some form of financial assistance. About half of all HBS students receive approximately $32,000 each year through need-based fellowships, the school says.
The best place to find information about a particular program’s financial aid offerings is the business school’s financial aid office, which may be run by the parent university. Along with providing substantial information about school-based fellowships or scholarships, financial aid officers can also help students navigate the loan application process and secure alternative sources of funding. In addition, free online resources such as finaid.org, scholarships.com or Peterson’s Award Database can provide students with further guidance.
School-Based Financial Aid
Schools often offer a variety of options to help students pay for their education. These options can include merit- or need based business school scholarships or fellowships, university wide scholarships, work-based opportunities such as research assistant or teaching assistant positions, and lists of outside resources. To find out more about a particular school’s offerings, students should refer to the financial aid or cost of at tendency section of a school’s website or contact the school’s financial aid office directly.
Merit- and Diversity-Based Fellowships and Scholarships
Most scholarships provided by schools are awarded based on merit, meaning they are offered to students who have demonstrated qualities such as academic excellence, professional aptitude or outstanding leadership. Merit-based scholarships are usually awarded at the admissions committee’s discretion in order to attract the highest caliber students and can cover the full cost of tuition.
To enhance the diversity of a class, private donors, alumni and corporations also can endow a variety of scholarships or fellowships targeted towards applicants with a particular career interest, educational background, nationality, racial or ethnic identity, or gender. In addition, some schools offer financial awards to students who are already enrolled and have demonstrated leadership on campus or exceptional academic ability.
The process of applying for scholarships and fellowships varies by school. In some cases, students are automatically considered for these awards when they submit their applications to an MBA program, with no additional work required. Alternatively, some scholarships and fellowships require an additional essay, submitted either at the time of application to the program or after acceptance. A large majority of merit- and diversity-based awards are time-sensitive or based on a first come, first-served process, so students are encouraged to apply early in the MBA admissions cycle.
Scholarships provided directly by a school are typically offered on a consistent basis year to year. However, endowed fellowships or private scholarships may not always have funds available. Students applying separately to these scholarships and fellowships should check with the head of each program to ensure they are being offered that year.
Need-Based Awards
Though not as widely available, schools may offer financial aid based on students’ demonstrated financial needs. Certain leading schools, such as Harvard and Stanford, are notable exceptions to this trend in that all of the fellowships they offer are based on financial need. Need-based aid may come in the form of a grant, which does not need to be paid back, or a low-interest loan.
When deciding whether to offer a student need-based aid, the financial aid office typically weighs the student’s income from previous years; his or her spouse’s financial situation; any assets such as stocks, trust funds or home equity; and other outside funding such as employer assistance. Schools compile this information by either asking students to fill out school specific forms or, in the case of U.S. citizens and permanent residents, using information found in the Free Application for Federal Student Aid, more commonly known as the FAFSA.
School-Based Work Opportunities
MBA programs typically discourage full-time students from working during their studies. However, some business schools do offer work-based financial assistance, in which students ap ply to work with professors on research projects or help teach classes in exchange for tuition reimbursements. These opportunities may pay up to $20,000 a year and are usually available after a student has been enrolled for at least a semester.
Loan Repayment Assistance Programs
Loan Repayment Assistance Programs (LRAPs) are designed to encourage students to pursue careers in the public and nonprofit sectors, which generally offer lower salaries than those in the private sector, by offering assistance on loan repayments. While the individual requirements of each program vary by school, LRAPs typically require that a graduate work full-time, receive an income below a certain threshold and demonstrate they required financial aid during their MBA studies. Financial support from these programs varies from covering a certain%age of a student’s loan to assuming the full cost of a loan payment.
Loan Options
For U.S. citizens and permanent residents, the most widely used loan programs are those provided through the U.S. government; these specifically include the Direct Loan Program, the Direct PLUS Loan Program and the Federal Perkins Loan Program. Through these programs, students can borrow the cost of attendance, as determined by the school, minus any financial aid packages they receive. In order to remain eligible for government loans, students must ensure that their total debt from subsidized and unsubsidized loans, including federal undergraduate loans, remains under $138,500. The Direct Loan Program offers graduate students unsubsidized loans of up to $20,500 at an interest rate of 5.05 percent. There is an ordination fee of 1 percent of the loan deducted from each loan disbursement, and interest accrues throughout a student’s time in school and during deferment and grace periods. While graduate students were previously able to borrow up to $8,500 with interest delayed until after graduation, the Budget Control Act of 2011 eliminated Graduate Direct Subsidized Loans in July 2012.
Students with good credit histories may also consider applying for a Federal PLUS loan. The interest rate on these loans is fixed at 7.6 percent for the life of the loan. There is also a 4.2 percent ordination fee that is deducted from each loan disbursement.
Students with exceptional financial need, and who are matriculating at participating schools, may also apply through their school’s financial aid office for a Perkins Loan of up to $8,000 per year at a 5 percent interest rate. There are no other fees associated with this loan. Students should keep in mind, however, that their school determines who receives this loan, and participating schools do not necessarily reserve funds for their MBA students. Also, there is a $60,000 cap on how much you can borrow in total as a graduate student, which includes any amounts you may have borrowed as an undergraduate.
Fees & Interest Rates
When deciding whether to take out loans, students should be sure to take the costs of fees and interest rates into account. For example, if a student borrows $100,000 in federal loans her first year, she will owe $12,110 in interest alone, as well as the principle loan, by the time she enters the workplace.
How to Apply for Federal Loans
The Free Application for Federal Student Aid (FAFSA) is an online form that determines the loan eligibility of U.S. citizens and permanent residents. Available on January 1st each year, the FAFSA can be submitted online or mailed in by either downloading the PDF or requesting a paper-based copy. The U.S. Department of Education recommends submitting the form online to prevent any delays in processing the application.
While deadlines for submitting the FAFSA vary, most schools recommend completing the form as soon as possible in order to ensure applicants do not lose out on available funds. The FAFSA does require information about income from that year’s tax return—for example, the 2015 FAFSA asks for information from the 2014 tax return—but applicants can use the previous year’s tax return to approximate their income or use the FAFSA Income Estimator tool. After filing their taxes, applicants can then use the IRS Data Retrieval Tool to update their FAFSA.
Processing takes three to five days for electronically filed FAF SAs. Schools have access to a student’s completed FAFSA one day after it is finished processing.
Private Lenders
To cover the rest of their expenses, students may wish to explore private loan options through a bank or other lender. Schools generally encourage students to exhaust all possible scholarship, fellowships and federal loan options before turning to alternative private loans given the typically higher interest rates these parties offer. However, applicants with excellent credit scores may be able to secure private loans that offer a better interest rate or lower ordination fee than federal loans.
Private loans have much stricter eligibility requirements than federal loans. Lenders can decline to issue a loan, require a co-signer or set higher interest rates for a number of different reasons, including a credit score. This score, which typically ranges from a “poor” 300 to a “strong” 850, is based on factors such as an applicant’s payment history, debt ratio, types of credit and length of credit history. Those with a history of late payments on credit cards or other loans, or who owe a significant amount of money compared to their credit limit, tend to have low credit scores, and these individuals may face higher interest rates on private loans as a result. In addition, applicants with little to no credit history or who are from outside the U.S. may need a co-signer, or someone who agrees to take on full financial responsibility for a loan should a borrower fail to pay it.
While schools generally do not endorse a preferred lender, citing conflict of interest, they do sometimes list reputable lenders their students have used in the past on their financial aid websites. Students can also reach out to their local banks or other lenders, or research national programs such as PNC, Wells Fargo, Sallie Mae, or Discover Card’s MBA loans.
International Students
By law, federal loans can only be distributed to U.S. citizens or permanent residents. This means that international students must put extra work into finding financial aid and loan pro grams to support their education if they choose to pursue a U.S. MBA program.
International students should research their own countries’ options for financing studies abroad, and schools’ financial aid offices are also useful resources in this regard. For instance, Harvard lists 10 scholarship or fellowship opportunities for students of particular nationalities; this list includes financing opportunities for Harvard students alone as well as universal fellowship options. MIT Sloan lists 15 scholarships or fellowships geared towards international students, and Columbia Business School provides an even more in-depth explanation of resources, discussing both scholarship search engines for international students and country-specific opportunities.
Private Lenders for International Students
International students can also consider U.S.-based private loans, but they should recognize that many of these loan programs require a U.S. co-signer. Understanding that this can prove a hardship for those without a U.S. connection, some schools offer internal options for international students.
For instance, Harvard Business School has partnered with the Harvard University Employees Credit Union to offer private educational loans that do not require a U.S. co-signer. NYU Stern also features a list on its website of loan providers that don’t require international students to have a U.S. co-signer. Consulting with your target schools’ financial aid offices is a great way to learn about available loan options.
International students should keep in mind that U.S. lenders are typically not allowed to issue loans to students from countries on the United States Treasury Department’s Office of Foreign Assets Control (OFAC) Sanctions list. The Treasury Department encourages prospective students to check this list with some regularity, as it is frequently updated.
Also addressing the need for non-co-signer loans, companies like Prodigy Finance have entered the market in recent years. Founded by INSEAD alumni who faced funding challenges themselves as international MBA students, Prodigy offers loans using an innovative community-financed model in which alumni, institutional investors and qualified private investors fund the next generation of MBA students.