Recovering the Cost of Your MBA is Faster Than You Think

 | August 20,2010 01:56 pm IST

The fact is that business school is expensive, particularly for Indian students wishing to study abroad. Having a rough idea of how long it will take to regain the money spent on your programme can be reassuring.

Tools like QS Scorecard can be utilized to provide customized results pertaining to your particular situation.

For example, an Indian MBA hopeful wanting to study in the UK may find Lancaster, Oxford, and Ashridge will likely provide the highest return on investment (ROI); that is, twenty years following business school graduation, the percentage of the amount invested in tuition costs will be highest after attending one of these schools, as opposed to others.


You can get a rough idea of the time it will take to regain your business school expenses by examining the ROI of three different schools offering different programmes: a two-year programme at a top US school, a two-year programme at a less competitive school, and a one-year programme at a business school in the European Union (EU). These programmes are used to represent the normal range of international programmes available throughout the world. Harvard, Rutgers, and INSEAD will be used to demonstrate the above. The following results are based on a female with two years work experience and a pre-MBA salary of US $40,000, employed by a company with fewer than 5,000 employees.


Top US school Harvard will require an investment of approximately US $147,000, yet the graduate can expect about a 47% salary increase (this figure will vary depending on the graduate's post-MBA occupation). Therefore, we can predict an approximate time period of seven years to 'break even'; that is, to regain the cost invested in the MBA programme.


Attending Rutgers will cost the student approximately US $108,000 for the two-year programme. In comparison to Harvard graduates, the MBA graduate from this university can expect about a 69% increase in her salary, resulting in only a five year period to 'break even'.

Graduates of the one-year MBA programme at INSEAD in France can expect approximately a 55% increase in their salary, post-MBA. As the tuition cost is US $90,000, we can conclude that it would take about four years to 'break even'. Cranfield, in the UK, yielded very similar results.


Khrisan Singh, a recent graduate of Ashridge, reports on his experience: "I grew up with the conception that only the top 5 schools are the ones worth attending, and that if I didn't gain acceptance to at least one of them, my dreams of becoming a well-paid, highly educated business professional would be shattered. Once I truly reviewed the facts, keeping in mind that my return on investment is of great importance, I learnt that the best investment doesn't necessarily correlate to the best-known institution, and that the skills I would learn throughout my MBA aren't only accessible at the most advertised schools."


Many factors will impact your ROI - from the economy to your post-MBA occupation to the country in which you wish to work after your studies. Your return on investment may be significantly greater if you take on employment in the US or UK, as opposed to working in India,but the reality is that living costs in India cannot be compared to the somewhat pricey costs of living in one of these two countries. You may find that in the long run, your ROI will actually be greater if you return to India. A US $100,000 salary in the UK appears high, for example, but taking into account that the average price of a home exceeds US $500,000 in London, you may find that your ROI won't multiply the way you had intended it to.


ROI is one very important factor that should be examined before commencing what will probably be the biggest investment of your life, but it obviously should not be the only factor you look at. Programme content, alumni reviews, recruitment statistics, and location in terms of enjoying life outside of the classroom are a few of the many things to consider when choosing a school.