In recent years, the cost of post-graduate education has become eye-wateringly expensive. An MSc in actuarial finance at Imperial College, London costs £18,000 for example, while an MA in fashion, experience and design management at Bocconi University in Milan comes in at €19,500. But a full-time MBA can cost anything from €14,000 to €62,000.
Bocconi charges €32,800 for its MBA, while Imperial charges £25,000.
At Insead in Fontainebleau and Singapore, the 10-month programme costs €45,000, while at Iese Business School in Barcelona the two-year MBA costs €61.900.
From September London Business School will charge participants £43,490 for the 15-21 month programme – and at IMD in Lausanne students can expect to pay SFr55,000 plus a further SFr20,000 for all programme and project-related fees.
These figures are for tuition and some materials. Participants must pay another €10,000 for accommodation and living expenses.
Such large financial overheads are not for the fainthearted and on graduation students can find themselves with crippling debts.
Why is the MBA price tag such a hefty one?
One reason of course is branding. Top-ranked schools, offering a premium product, command top prices.
Janet Shaner, director of MBA marketing at IMD in Lausanne, acknowledges the high price tag but says it is “priced just fine”.
“There is always a place for premium-priced products,” she says. “The size of that market might expand or contract, but there is always a place for a premium product, especially if we can deliver on what we promised and make the return on investment. There is clearly a place for that.” A student who wants a high-profile, high-paying job needs a well-known MBA from a top school and must be prepared to pay for it.
Julia Tyler, associate dean of the MBA programme at London Business School, concurs: “If you are making this kind of investment decision, it is an investment in yourself.”
But, she says, it is a decision with sound foundations.
She says the return on investment at LBS can be achieved in as little as a year if participants take the fast-track MBA route and on graduation receive signing-on fees and bonuses from their new employer. She also points out that LBS students earn money during their internship and are remunerated for their second-year project. Although not all students will receive these payments, nevertheless the numbers show that three years after graduation, they have excellent career progression and higher salaries.
Ms Shaner at IMD says return on investment is approximately three and a half years, “which I think is a very good and fast rate of return, and students can then continue with their career growth and advancement.”
She says it is important that there is a correlation between the student’s and the school’s objectives.
“It is really important that your goals, school choice and investment are aligned,” she adds. A student who wants an international career and global network has different aspirations and career trajectory from someone who wants to study, work and live in their home country.
However, not all business schools charge top-of-the-range prices.
Grenoble School of Management in France charges approximately £13,000 for its MBA. According to Judith Bouvard, dean, alumni say that is good value for money and a sound investment. And, at Audencia Nantes School of Management in France, the 12-month, full-time MBA programme costs €19,000, less than half that of an Insead MBA.
Valérie Claude-Gaudillat, director of MBA programmes, says when the MBA programme was added to the school’s portfolio it was decided fees would be kept low.
“I believe we offer really good value for money,” she says. “I believe we offer everything – we provide very good levels of teaching, we provide individual coaching in terms of professional development.”
She believes that once some European schools attain the same quality as their US cousins, they align their prices alongside those of the US.
But Antonio Fatas, dean of the MBA programme at Insead, is dismissive of such arguments.
“We don’t think about the US as anything special,” he says. “We share the same market as the US market, we use the same faculty, our costs come up the same. We deal with the same applicants, the same recruiters, we are in a similar market with a similar product, so it [the MBA] is a similar price.”
In common with many schools he points out, Insead is a not-for-profit institution and MBA fees cover the costs of technology, faculty, teaching tools and so on.
Like Ms Shaner he believes the MBA “is priced just right”.
And he points out that students are willing to pay the fees – if this were not the case, demand would fall.
Opting to study for an MBA is a lifestyle choice and ranks with buying a home and a car as one of the biggest investments an individual will make. But Ms Tyler says potential students must remember it is a one-off purchase.
For example, she says, LBS offers its alumni a life-long career service, continuing education and an international global network of like-minded individuals. An alumnus who maintains links with the school will find the investment lasts a lifetime – a boast that even the most persuasive car salesman cannot make.