One of the recurring, and quite frankly most surprising, themes we've seen in recent posts on MBA discussion boards is the discussion of costs of programs. Many students are setting a budget first and then applying to schools in that budget range. Why is that so surprising? Well first of all, students have typically chosen to attend the best school they get into and then plan on figuring out the budget issues later through a combination of loans, scholarships or their own cold, hard earned cash. From the perspective of someone who has helped dozens of students with the application process over the last few years (and being a budget conscious consumer in their own right), it is actually very encouraging to see this since it will probably help students be much more realistic in their school choice and raise their probability of being accepted to a good, and cost effective program.
Secondly, the ROI of a student' s MBA program investment has a lot of variability based on things like the job market in two or more years, the chosen field the student goes into and also what a student should expect to make ten or more years after graduation.
The downside of a budget first approach is that students could turn down great opportunities at amazing schools because they are looking to save a few thousand dollars on the program cost. This, at the end of the day, will not move the needle on your ROI calculation as significantly as budget conscious students might be hoping for.
Schools that are typically ranked outside of the top ten are trying to take advantage of these budget conscious students by offering more competitive scholarships and in the case of the University of Rochester, actually dropping the cost of tuition. They plan to reduce tuition and fees from about $106,500 to $92,000 for the entire 2-year MBA program.
According to Andrew Ainslie, Dean of the school, there is a correlation between the ranking of a business school and its price. "The higher rank the school, is the higher the price. And the lower ranked the school is, the lower the price." It seems Rochester felt they had to get their costs more in line with their peer schools instead of raising their tuition 3-5 per cent as they have the last few years.
The good news is there is now an industry-wide discussion about the constant increase in pricing of MBA programs and if it will have a significant impact on demand. To see MBA costs significantly outpacing inflation doesn't make a lot of sense. It's certainly refreshing to see a school actually look at the cost of the program and find a way to lower costs than to raise them. Andrew Ainslie added, "Industry really wants us to keep producing M.B.A. students, but we seem to be getting less and less interest from potential students." Perhaps this will help make students more aware of the school and increase applications.