Business School: What does it really cost? 

Our “What does it really cost” series sheds light on how much different people across the country spend on the big life events: having a baby, taking a sabbatical year, moving, getting a master’s degree, buying a house, etc.  This week’s feature is highlighting the true costs for earning an MBA from a top ranked school (University of Michigan Ross School of Business), including the costs incurred before applying.

Location: Seattle, WA

Age: 38

What was your total cost for business school?

To earn an MBA from a top ranked school, I incurred costs (1) before gaining acceptance into a school and (2) during my tenure in school. Before gaining acceptance to Michigan Ross in 2010, I spent $3K over two years to join a program to prepare for the application process, purchase books and other resources to prepare for the GMAT, pay for application and testing fees, visit top schools to network and determine my best fit school.

I saved money by crashing with friends for visits in key cities. I also allowed friends to crash at my apartment in Atlanta when visiting Emory. The time spent researching, preparing and studying while working full-time was a more significant cost than the $3K. I had very little free time, and it took me two years to gain admission into a top ranked school. I was waitlisted by NYU, UCLA and Michigan Ross in 2009, accepted to Michigan Ross and Emory in 2010.

During my tenure in school, I no longer received a salary from my full-time job since I entered the full-time program and forwent $70K/year, which was my prior compensation, for two years. Also, I secured a room & board loan for $20.5K/year for two years. However, I was able to earn a full tuition scholarship worth $50.2K/year due to my work to put together a great application and improve my GMAT score. My early investment immediately paid off!

During the Summer, I earned ~$15K in ~8 weeks of a summer internship and upon graduation, I accepted a new role earning $140K in total compensation. This role was in a new industry and a new functional area. It would have been difficult for me to make this transition without an MBA from a top ranked school that provided development and networking opportunities.

Based on my calculations, I broke even four years after graduating. I earned $500K more in compensation ten years after graduating. I am also projected to earn $1M more in compensation 14 years after graduating with an MBA.

Cost Break Down:

Admissions Support / GMAT / Application fees: $3K

Room & Board: $41K (financed with loans)

Tuition: $0, full-ride scholarship for $100.4K over two years

Lost Income: $140K ($70K / year based on pre-MBA salary)

*Does not include $15K in summer internship income OR $140K / year salary post-MBA.

Final Costs:  $44K out of pocket and $140K in lost income during school.

Was this more or less than you were expecting?

The “time spent” costs were more than I expected. You have very little free time when applying to school and while in school. The financial costs were in line with my estimates.

Were there other options that you considered? What are the pros and cons of this compared to other options?

I considered (1) part-time MBA, (2) going to a lower ranked school and (3) getting a new job in a new industry and function on my own.

(1) The part-time MBA had less scholarship opportunities, and I didn’t know how I would balance working and going to school at the same time.

(2) I received less scholarship money from a lower ranked school and questioned if they would help me get a better role in the future.

(3) Lastly, I applied to new jobs in a new industry and function pre-MBA and did not gain any job offers.

What do you wish you would have known?

I wish I had placed more importance on traveling with classmates. I did not spend a lot of money on trips while in school and wish I would’ve done that. The international trips were expensive ($1K+) but the experience would’ve lasted me a lifetime.

In conclusion, this man’s total cost for business school was $44K with an additional $140K in lost income.  This was with a full-ride for tuition.

We hope this gives you insights into how someone else navigated the costs of grad school and the different options he considered. Do these costs surprise you?

This post was created as part of the “What does it really cost series?”  Her Personal Finance’s mission is to help high-earning women take charge of their finances.  As an MBA, our founder has a particular passion for supporting this community.  Here is a link to a Q&A with Harvard Business School students about finances in school.  You can also learn more about our founder and our classes on our website.

Did you enjoy this post and want to contribute your own story?  Send us an email to eryn@herpersonalfinance.com.