One of the most important considerations for any potential student, but especially for an MBA candidate, is the cost of tuition and living expenses. With university costs skyrocketing and the job market remaining uncertain at best, a decision to go to business school has serious implications. The difficulty of this decision can be magnified even further depending on a candidate’s individual situation. For example, an older candidate may already have a family who relies on their income and might prefer to stay in their current geographic location. Alternatively, someone who is earlier in their career might have significantly more flexibility when it comes to leaving their existing career and choosing which school to attend.
The increased availability of accelerated and One Year MBA programs means that candidates have more choices than ever and the ability to find the specific program that represents the right combination of academics, location, cost, and time commitment. Regardless of your current situation, however, it is important to keep in mind that the true cost (value) of an MBA goes well beyond tuition, books, and supplies. Furthermore, the true cost of an accelerated or one year MBA can be drastically different and, often, much less than a traditional MBA. Therefore, when evaluating your options, it is important to consider the following:
1) Direct costs. This includes items such as tuition, room and board (if separate or different than your current living situation), books, supplies, etc. Traditionally, one year MBA programs cost about 20-40% less than a traditional MBA, although this varies significantly by school. With total costs for traditional MBA programs nearing $150,000, in some cases this difference could translate into $50,000 to $60,000. When you also consider the increased interest (compounding!) that you may incur as a result of taking on a larger student loan, the gap is even larger.
2) Foregone wages. This is a critical component in making your decision and should be considered in much the same way as any direct cost. Many candidates often get so caught up in how expensive tuition is, that they forget to consider how much more they are giving up in foregone wages by going back to school. Remember, although you may have grown comfortable making $75,000 a year (with all the benefits), all that goes away when you leave your employer. Because of the accelerated nature of a one year program, however, you could be back in the workforce in as little as 12-15 months (as opposed to 2+ years). Depending on your current salary (especially if you are an investment banker or consultant), this difference could be worth more than the entire cost of your MBA.
3) Career path. Are you eligible for a big promotion next year? Does experience mean more than education in your industry (or the industry you want to join after school)? These are questions (and potential costs) you need to consider when figuring out the true cost (value) of an MBA. If you are on the verge of a management-level position, not only are you giving up your salary while you are in school, but also a potential promotion, raise, and bonus to go with it. This can be another advantage of a one year program, as it keeps you out of the workforce for much less time.
Keep in mind that while we would consider the above items as the most critical items, there are many questions you must ask, given your specific situation. Furthermore, there are many benefits of a traditional MBA program (a topic for another article), like potentially better recruiting opportunities, that we have not discussed here. Ultimately, however, for many candidates, the financial and career path benefits of an accelerated MBA program are too large to ignore. What are your biggest considerations as you go through the research and application process for business school?
