Why is MBA so expensive (yet worth it at the same time)?
All of us know that MBA is expensive. Though we do have few cheaper versions available, still everyone aspires to get the most expensive one (such as Harvard’s, Wharton’s, Insead’s). We want to be branded for life and are ready to pay big money for that. Isn’t it?
Well, most people justify their decision to do an MBA by arguing that it’s an investment and hope that they will get a fat $100k job offer even before they finish their MBA program. And there are few who desperately want to come out of their existing job and are ready to pay anything to achieve that. According to the latest Economist MBA ranking statistics, average age of a full time MBA candidate at one of the top b-school is 28yrs. Few mba candidates I met said that they left their well paying job to augment and acquire the skills they couldn’t have acquired by continuing working in their current job for next two years. After having worked for few years in the industry, MBA candidates have high expectations. They expect high quality infrastructure and intellectual resources. As the class size is usually small and expenses are fixed, tuition-fees rise. Moreover, in order to retain good professors, they have to be paid salaries comparable to those offered by the private sector (Have you ever thought what a good school pays to its professors?). Factors such as these make an MBA study so expensive.
Now, for a moment, let’s move towards developing world and talk about an Indian B-School. Recently, Indian Institute Of Management-Ahmadabad IIM-A (India’s Premier B-School) hiked its fees by 12 percent with a justification that the size of the salary offered to the students passing out of the IIM-A were getting fatter every year a part of which could be taken as fees. (Forget recession for a moment) Once students graduate, they are usually offered so much that they get back their investment in one or max two years. This makes an expensive MBA worth it. In 2009, 0.3 million students sat for an entrance exam to get into a premier India B-School. Doesn’t that prove the worth of so called expensive MBA?
Irrespective of the location, in today’s competitive market scenario, companies all around the world want people who understand the business and the bigger picture. An MBA provides an opportunity to gain that understanding. Corporate houses are ready to pay anything to a deserving candidate. And this in a way gives competent people confidence to pursue an expensive MBA. Banks also see students as lucrative clients and offer education loans at competitive rate of interest. To me, it seems to be a kind of vicious circle where companies get high quality people, people get high paying jobs, banks get lucrative clients and universities get candidates ready to pay high fees. Though I am not an economist, but to me it seems to be a perfect free market condition where everyone is trying to get the maximum benefit. Being an advocate of a free market, I feel that market should decide the fees of a graduate program such as MBA. What do you think?
Well, most people justify their decision to do an MBA by arguing that it’s an investment and hope that they will get a fat $100k job offer even before they finish their MBA program. And there are few who desperately want to come out of their existing job and are ready to pay anything to achieve that. According to the latest Economist MBA ranking statistics, average age of a full time MBA candidate at one of the top b-school is 28yrs. Few mba candidates I met said that they left their well paying job to augment and acquire the skills they couldn’t have acquired by continuing working in their current job for next two years. After having worked for few years in the industry, MBA candidates have high expectations. They expect high quality infrastructure and intellectual resources. As the class size is usually small and expenses are fixed, tuition-fees rise. Moreover, in order to retain good professors, they have to be paid salaries comparable to those offered by the private sector (Have you ever thought what a good school pays to its professors?). Factors such as these make an MBA study so expensive.
Now, for a moment, let’s move towards developing world and talk about an Indian B-School. Recently, Indian Institute Of Management-Ahmadabad IIM-A (India’s Premier B-School) hiked its fees by 12 percent with a justification that the size of the salary offered to the students passing out of the IIM-A were getting fatter every year a part of which could be taken as fees. (Forget recession for a moment) Once students graduate, they are usually offered so much that they get back their investment in one or max two years. This makes an expensive MBA worth it. In 2009, 0.3 million students sat for an entrance exam to get into a premier India B-School. Doesn’t that prove the worth of so called expensive MBA?
Irrespective of the location, in today’s competitive market scenario, companies all around the world want people who understand the business and the bigger picture. An MBA provides an opportunity to gain that understanding. Corporate houses are ready to pay anything to a deserving candidate. And this in a way gives competent people confidence to pursue an expensive MBA. Banks also see students as lucrative clients and offer education loans at competitive rate of interest. To me, it seems to be a kind of vicious circle where companies get high quality people, people get high paying jobs, banks get lucrative clients and universities get candidates ready to pay high fees. Though I am not an economist, but to me it seems to be a perfect free market condition where everyone is trying to get the maximum benefit. Being an advocate of a free market, I feel that market should decide the fees of a graduate program such as MBA. What do you think?
posted by iamthecoolestguy at
10:56 AM
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