All the costs you should consider before applying to business school

Your education is one of the most expensive investments you’ll ever make, but it’s just that — an investment that will hopefully pay dividends. And that rings particularly true for an MBA or Master of Business Administration degree, which basically pays for itself, according to Jeremy Shinewald, president and founder of mbaMission and author of The Complete Start-to-Finish MBA Admissions Guide. But while the degree can significantly improve your job prospects and boost your earning potential, it can financially set you back as well.

For reference, an MBA at Duke costs $68,000 per year, while an MBA at Columbia costs $74,400 per year. It’s no surprise then that research conducted by Bloomberg Businessweek found the average MBA student accrues $53,000 of debt. However, graduates enjoy an 89 percent chance of job placement three months after graduation in a plethora of fields beyond financial services including technology, health care, manufacturing and more.

Not sure if you can afford an MBA? Here’s where to start.

Consider your financial situation

It’s impossible to determine your ideal financial situation before you make the MBA leap, since “there’s a personal choice associated with it,” said Shinewald.

You have two camps of people, he explained: those already working in private equity making over $300,000 a year and able to pay tuition and associated expenses out of pocket. Then, you have MBA hopefuls, like Shinewald once was, earning a modest salary, and using the MBA degree as a salary boost.

MBA degrees can be accessible to anyone if you’re creative about the financial resources available to you, which include the following:

Scholarship programs

Most B-schools offer scholarship programs. Speak to the financial aid officer for any opportunities based on merit or public service, like participation in the Peace Corps. While not every student is eligible for them, Shinewald said they’re a great way to ease the financial burden.

Student loans

Unlike scholarships, virtually anyone can qualify for a student loan. They don’t come without risks, however. “There are financial consequences of borrowing,” Shinewald said, which include high interest rates (6.6 percent for graduate students getting direct unsubsidized federal loans in 2019).

Employer assistance

Many large firms (Deloitte, in particular, said Shinewald), send dozens of employees back to school per year to earn their MBA, covering tuition and/or living expenses. But there are strings attached. “There’s the expectation that you’ll come back for two or three years. That’s a heavy price to pay. If you want the liberty to switch jobs you have to pay them back because they invested in you,” Shinewald said.

If you’ve already earned an MBA on your own dime, you can ask HR to reimburse you for all or part of your tuition. “The companies [tend to] look favorably upon it. Some firms help create tuition reimbursement programs,” Shinewald said. And keep in mind that you often receive a signing bonus of anywhere between $25,000 to $50,000, he said.

Think beyond tuition

Paying tuition is only half the battle. Between the cost of dorms and off-campus apartments, re-location, textbooks and groceries, expenses can add up. Doing research on the cities of your schools of choice, contacting admissions offices and getting in touch with current and recently graduated students can all help you figure out what those costs might look like.

And that’s not to mention the travel that has become typical of many students’ B-school experience. Shinewald said many MBA students make the mistake of spending their money before they earn it, which jeopardizes their ability to afford life as an MBA student. “On weekends they take trips to Utah or South by Southwest, or wherever people go, and they spend anywhere from $10,000 to $20,000 on travel each year because they expect a bump in pay and want to enjoy the fun part of business school and keep up with the Jones’,” he said.

According to Lindsay Badeaux, senior assistant director of admissions at The University of Chicago Booth School of Business, those additional costs shouldn’t necessarily tether you to a commuter school or deter you from aiming for a prestigious school to cut corners.

“When considering return on investment, it’s important to do your research into the types of positions and salary ranges the alumni of your chosen business schools have secured,” she said. “For any MBA program, commuter or otherwise, it’s a large investment of your time and money, so you want to ensure those sacrifices will pay off in the end and help you achieve your career goals. Higher tier schools have name and brand recognition, which likely contributes to their higher job placement rates, so if you plan to commute, it’s worth perhaps ‘going big or going home’.”