P72-73 MBAS8 Financing MBA.qxd 19/2/08 12:39 Page 68
Editorial
MBA
Financing your MBA - FAQs:
What is the current payback period for
MBAs graduating from US and European
business schools?
This article is based on an interview Nunzio Quacquarelli gave to the China Economic Review
ourse fees have risen in recent
C
years, but salaries and bonuses
have also risen and the payback
period has actually reduced
slightly over the last five years.
Salaries for graduating MBAs from top
international programs have increased signifi-
cantly over the last two years. Average salaries for
MBAs graduating from top US schools such as
Tuck, Chicago, Wharton and Stanford averaged
US$110,000 last year. This compares with an
overall average MBA starting salary of US$93,500
in the US and Europe, and an Asian average of
US$71,500. To calculate ‘true earnings’ one
should also take into account the ‘sign-on’
bonus offered by many MBA recruiters, and the
potential to earn a further US$15,000 during a
summer internship. approximately two and a half years. Someone on investment) calculator. This draws on the
To estimate the true cost of completing an returning to an average Asian salary would not nec- latest reported school average salary figures,
MBA, we should take into consideration tuition essarily have a much longer payback period: it the latest course fees and adjusts based on an
fees, living, travel and book costs. We assume would depend on the differential between their applicant’s target industry, geography and
annual living and book costs of US$23,000 per pre- and post-MBA salary. The higher the pre- pre-MBA salary.
year and apply a weighting depending on whether MBA salary the longer the payback period.
the location is rural, suburban or metropolitan. In Personalised payback periods can be What are the typical costs of an MBA?
addition, the opportunity cost of salary foregone calculated on a school-by-school basis on The standard period for a full-time international
must be included in the calculation and a typical
TopMBA.com/Scorecard, using the ROI (return MBA in the USA is still two years and the
annual tuition cost of approximately US$40,000. US$42,000 annual cost of The Wharton School,
Using these assumptions, for someone with
“To estimate the true cost
full-time MBA, is typical. Other blue ribbon
a pre-MBA salary of US$50,000 and joining an
of completing an MBA,
American schools, such as Harvard, Chicago, or
average recruiter in the US or Europe, a two year Stanford, have similar costs.
MBA taken at a top US business school would
we should take into consideration
In Europe, London Business School (LBS) is
have a payback period of approximately three
tuition fees, living, travel
one of the rare institutions to offer a two–year
years. Using the same assumptions, for a one-year program, costing £42,000. In general, European
European MBA the typical payback period is
and book costs.”
MBAs are shorter. The program at IMD in
72 TopMBA CAREER GUIDE
www.topmba.com
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