Applicants weigh the cost of MBA fees
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Sharleen Kikunze’s first thought when considering an MBA three years ago was to study in the US. She was working in her home city of Nairobi for Endeavor, a New York-based organisation supporting high-impact entrepreneurship, which had close partnerships with the business schools of Harvard and Stanford universities.
Kikunze (pictured above) compiled a shortlist of target institutions: Stanford in California, Columbia Business School in New York and the University of Chicago Booth School of Business. But when she came to apply in 2020, she realised the US was not for her, for one reason: the prohibitively expensive tuition fees.
Instead she is applying to the University of Oxford’s Saïd Business School and Warwick Business School in the UK, where the courses take one year to complete instead of two in the US, and the respective fees of £63,000 ($84,000) and £43,935 ($58,500) for their 2021 intakes mean the UK courses are less than half the cost of her original US targets.
“The number one factor for me was cost,” she says. “People said to me that the US school networks would be better, but the price is just too high.”
Kikunze is not alone in questioning high MBA tuition fees — and schools are reacting. The coronavirus pandemic has brought cost to the fore in many students’ minds. Campus closures, cancellation of study trips and the transfer of much of the teaching to online video platforms triggered a wave of petitions for fee refunds, including demands by students at Wharton in Pennsylvania, New York University’s Stern School of Business and Stanford.
While schools have resisted calls to return fee money — arguing that the investment in technology to make teaching possible in the pandemic means courses have cost just as much to run — several others have joined highly regarded MBA providers that have frozen fees in recent years.
In 2019, both Chicago Booth and Harvard Business School announced that MBA tuition fees would be the same for the next academic year, at $72,000 and $73,440 respectively. In 2020, the University of Michigan’s Ross School of Business followed suit, fixing fees at $71,000 for non-Michigan residents. At Wharton, fees for the autumn 2020 semester were rolled back by 3.9 per cent, freezing the rate at $81,582 for first-year students.
“We will see increases again, but not this coming year or next, and in slower increments until the economic fallout from Covid has passed,” says Tim Mescon, executive vice-president and chief officer for Europe, the Middle East and Africa at accreditation body the Association to Advance Collegiate Schools of Business. “Tuition fees are too easy a target and public universities in particular will be under enormous public-sector scrutiny. The pushback on significant increases now would be substantial, as would the media response.”
Some schools continue to push up their prices, encouraged last year by a rebound in MBA applications. However, admissions consultants talk of a marked change in applicant attitudes to cost, making price the top concern for many.
Most candidates now focus on scholarships as much as their school application, according to Sam Weeks, an MBA admissions consultant based in Amsterdam. “Cost seems to have reached a point where applicants have had enough [in the US] and I think the European schools are benefiting,” he says. “The focus on scholarships from my clients has picked up recently. Many say, ‘I am targeting X school, but I can only afford it with a scholarship’, so we spend a disproportionate amount of time on their scholarship essay and emphasising their humble origins in their stories.”
Predictions of a levelling-off in fee increases across the board may be premature because schools must still cover the considerable costs of running MBA programmes, such as overseas study strips and teaching staff. Fees have also remained high because the income has become vital for leading providers and their parent universities
“Business schools are there to earn money for their universities, so they are unlikely to discount fees unless they are going to suffer reputational damage,” says Martin Parker, a management professor at the University of Bristol in the UK and author of Shut Down the Business School. “The fees are high because they can charge those prices for a product that is marketed as premium, whatever the actual costs. They continue to be cash cows, and don’t want to give the milk back.”
In France, HEC Paris resisted calls to cut its tuition fees. Instead it offered free access to executive education programmes, for example, as well as more flexible fee schedules for some students, giving more time to pay.
“Most importantly, we made absolutely no concessions regarding the academic quality and rigour of the programme,” says Andrea Masini, HEC’s associate dean of MBA programmes. “This was the best guarantee for our graduates that the value of their diploma would remain unchanged in spite of the crisis.”
MBA tuition fees are a way of offsetting the deficits created by other degree programmes, particularly PhDs, and research. “It’s simply a question of survival,” says Eric Cornuel, president of the European Foundation for Management Development, the accreditation body. “Business schools have always had in mind their financial sustainability and not race to make profits, so I believe they will be very reasonable.”
Cornuel adds that MBA providers are unfairly singled out for their tuition costs when compared with privately provided primary and secondary education. “Looking at many international higher-education institutions, you realise their tuition fees are high, or sometimes very high, from €30,000 up to a staggering €100,000 at some of the elite places. I’m therefore quite astonished why business school fees often fall victim to complaints,” he says.
“The vast majority of business schools deliver an outstanding education that almost guarantees a fulfilling and rewarding job after graduation. There are not many academic institutions that can claim the same career outcomes.”