What’s the Average Cost of an MBA Program?

What you need to know how much one may cost—and if it’s worth it

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If you’re considering attending graduate school to earn a Master of Business Administration (MBA) degree, you might need to brace yourself for high costs.  

A 2017 study by the lending company Earnest suggests that the average amount of student loan debt held by someone with an MBA is right around $89,900. However, going to a more prestigious school could cost you even more. Bloomberg Businessweek’s study of MBA costs finds that about 40% of students at top business schools in the United States end up with six-figure debt by the time they finish a program.

Here’s what you need to know about the average cost of MBA programs to help you decide if it’s worth it to spend the money.

Where You Go Matters

When comparing the average cost of MBA programs, it’s important to consider where you may be headed. For example, U.S. News & World Report listed the Stanford Graduate School of Business as the best business school in 2021, and reports that the tuition cost there is more than $74,000 per year.

On the other hand, the McCombs School of Business at the University of Texas at Austin costs $52,550 for annual in-state tuition and fees and $58,270 for out-of-state students. This school still ranks in the top 20, according to the U.S. News & World Report rankings, but costs much less.

It’s also possible to save money when getting an MBA by looking into online programs.

For instance, Utah State University offers an online MBA course for which the cost is $1,000 per credit hour. For someone taking 18 credits per year, that amounts to $18,000. While not a top-rated business school, such a program makes it possible to get an MBA from an accredited business school—no matter where you live.

The Cost of Applying for an MBA

In addition to the considerable cost of attending school, you might also have to figure in the cost of applying for MBA programs, and those fees can vary widely. 

At Utah State, applying for the one-year MBA program comes with a non-refundable application fee of $55. Contrast that with the cost of applying to Harvard Business School’s MBA program, which can cost up to $250—although Harvard does waive the application fee for active-duty military and based on need.

Depending on the application fees and how many schools you apply to, it’s possible for it to cost more than $1,000 just to apply for an MBA program.

How Much Can You Earn With an MBA?

Deciding whether it makes sense to pay for an MBA depends on what you can expect to earn over time. The study by Earnest points out that people getting an MBA often carry a low debt burden relative to their income over time.

In fact, MBA graduates carry an average student debt-to-income ratio (DTI) of 0.71, which is the lowest of all the master’s programs included in the Earnest study. The cost of law school, for example, puts the student DTI at 1, and medical professionals can expect to see a student DTI of 1.41, on average.

According to compensation aggregator PayScale, the average salary for someone with an MBA is $87,000. This is close to the average starting salary of $84,580 projected by the National Association of Colleges and Employers (NACE) for the MBA class of 2019.

For many, even that six-figure student debt might be worth it from a prestigious school. According to academic testing prep company Princeton Review, the 10-year return on investment (ROI) for an MBA from Stanford is 320%, while the ROI from Arizona State University, a less expensive program, is almost 250%.

Whether the average cost of an MBA program is worth it depends on your specialty. 

PayScale reports that a marketing manager with an MBA with a concentration in business and marketing might make $78,000 per year. A chief financial officer (CFO) could earn $165,000 with an MBA with a concentration in finance. Your career path after obtaining an MBA can make a difference in your ultimate DTI, as well as your degree ROI over time.

Qualifying for MBA Student Loan Forgiveness

If you’re concerned about paying off student loan debt that comes with getting an MBA, there are different options for help paying off your student loans, including:

Public Service Loan Forgiveness is a federal program that offers forgiveness for your remaining Direct Loan balance after you’ve made 120 qualifying monthly payments while working for eligible employers. Basically, if you work for a government organization, qualified nonprofit, or are in another eligible job, you might be able to have the remainder of your federal student loan balance paid off on your behalf.

Additionally, if you’re working in a low-paying job after getting an MBA, you might qualify for one of the income-driven repayment programs offered by the federal government. These programs limit your payments to a percentage of your income, and after you’ve made payments for 20–25 years (depending on the plan), your remaining balance might be forgiven.

Finally, some business schools like those at Stanfor offer their own programs aimed at providing forgiveness for graduates who pursue jobs with a social mission, in the nonprofit sector, or with a government agency. Check with your school to find out what options are available and how to become eligible for these programs.

Student loan debt forgiven or discharged between 2021 and 2025 is tax-free, due to the American Rescue Plan of 2021.

Student Loan Refinancing

If you don’t qualify for a forgiveness program or income-driven repayment, it might be worth considering refinancing your MBA student loans. Private lenders like SoFi and CommonBond offer student loan refinancing with fairly low variable rates. They are often much lower than the federal rate for graduate student loans and grad PLUS loans.

However, it’s important to note that private lenders have their own credit criteria. Before deciding to refinance, a rate quote can help you compare your actual rate with the advertised rates. For example, Commonbond offers the option of variable rates that could potentially lead to a rate that’s close to, or higher than, the federal loan rate, so it’s vital to get a quote before refinancing.

Those who aren’t worried about getting on income-driven repayment later, or who aren’t interested in or eligible for PSLF, should consider refinancing their federal debt into a private student loan with a lower rate. Doing that might reduce interest and payments, and allow more manageable payoff of student loan debt. However, changing from a federal to a private student loan eliminates some protections and benefits.

Review Your Options

Before deciding what to do, compare the average cost of MBA programs, and figure out how you will pay for one if you’re accepted. A part-time or online program might cost less than a full-time program and allow you to work while getting your degree, reducing the amount you need to borrow for your MBA.

In addition, carefully consider your potential career path and salary to determine if the ROI on an expensive MBA is worth the cost of the debt in the long run. Move forward only if you determine that you’re likely to be able to handle the debt payments that result from pursuing this graduate degree.

Article Sources

  1. Earnest. "Which Graduate Degree Gets You Out of Debt the Fastest?"

  2. Bloomberg Businessweek. "Top U.S. B-School Students Pile on Debt to Earn MBAs."

  3.  McCombs School of Business, The University of Texas at Austin. "Tuition and Financial Aid."

  4. U.S. News & World Report. "Best Business Schools."

  5. Jon M. Huntsman School of Business. "Tuition and Financial Aid."

  6. Jon M. Huntsman School of Business. "Apply for the Online MBA."

  7. Harvard Business School. "Application Process."

  8. The Princeton Review. "What is the ROI of an MBA Degree?"

  9. Payscale. "Master of Business Administration (MBA), Business & Marketing Degree."

  10. Payscale. "Master of Business Administration (MBA), Finance Degree."

  11. Federal Student Aid. "Public Service Loan Forgiveness."

  12. Federal Student Aid. "Income-Driven Plans."

  13. Stanford Graduate School of Business. "Loan Forgiveness Program and Refinancing."

  14. Congress.gov. "H.R. 1319," Pages 182-183.

  15. Commonbond. "Refinance Rates & Terms."