Over the past decade, the MBA has become the essential accessory for anyone with an eye on a seat in the boardroom or around the partnership table. But the business school experience is not for the faint-hearted. It involves a huge level of commitment and hard work. It can also be quite dauntingly expensive. And the bad news is that it's not likely to get cheaper any time soon.
As an example, one of the world's top schools, the Wharton School at the University of Pennsylvania in the United States, is currently telling potential students that just the first year on campus will set them back $54,000 (U.S.), or as much as $84,000 if you factor in accommodation, books and other materials. In Europe, the picture is not much different. Leading schools INSEAD and HEC Paris in France charge tuition fees of €56,000 and €45,000 respectively, while the program at London Business School in Britain calls for a wallet sturdy enough to handle fees of nearly £54,000.
Until fairly recently, staying at home to pursue an MBA has presented most Canadians with plenty of choice in terms of school and a comparatively light tuition bill. But now the cost of business education is rapidly catching up with the U.S. and the more expensive programs of the European countries.
The Sauder School of Business at the University of British Columbia, for example, now charges domestic students $41,352 for the full-time MBA program, and tuition at the Richard Ivey School of Business at the University of Western Ontario in London is $68,500. The University of Toronto's Rotman School of Management, meanwhile, charges a dizzying $80,000 for their two-year MBA program. And in recent months, the Desautels Faculty of Management at Montreal's McGill University announced that domestic tuition fees for the full-time MBA program would rise from $4,675 to $29,500 per year.
And finding ways to finance these costs is also becoming more of a challenge than it was before the world fell off the economic cliff in late 2008.
The CitiAssist funding program that helped so many Canadian students to hold down places at top U.S. business schools is now just a fond memory and the MBA Loan program run by NatWest bank, which financed students at many schools accredited by the Association of MBAs, has just been withdrawn. Schools have consequently had to take individual and, in some cases, highly imaginative action to plug the funding gap. Duke University's Fuqua School of Business in Durham, N.C., for example, has underwritten all its overseas students, guaranteeing loan providers that it will pay any defaults out of its own funds. In Europe, INSEAD, Vlerick Leuven Gent Management School in Belgium and Skolkovo Moscow School of Management in Russia have partnered with the specialist finance house Prodigy to create support programs based on graduates' future earnings rather than current credit status.
While these financial realities are a tough pill for Canadian students to swallow, the increased costs of getting an MBA, even at home, reflect increased global competitiveness, according to those in the field.
According to Dr. Karl Moore of Desautels, the major reason for the rising cost of business education in Canada is not a drive for profit but the reality of competing in what is becoming an increasingly global market place.
Using his school as an example, he says, "Because of tuition regulation in Quebec in the past, we've been subsidizing each of our MBA students by approximately $10,000 a year and we simply can't go on doing that if we're to invest in sustaining a world-class program."
He adds. "We're ploughing a very significant amount of our fee income into redesigning the program, hiring leading professors, improving career development support and creating new learning facilities. And we're also going to offer ten times the current level of scholarships to ensure the very best students are able to join the program, regardless of their ability to pay. These are the sort of things you simply have to do if you want to compete on a world rather than just a local stage."
The commitment to scholarships at McGill-Desautels is accompanied by other financing options, including an exclusive partnership with financial co-operative group Desjardins, to help students cover the full cost of the program at a preferential lending rate. Other leading MBA programs also offer an array of scholarships, government loans and interest-subsidized loans from banks, including the Royal Bank of Canada and Bank of Montreal.
The investment that Canadian schools (and their students) are making in the bid to become a world power in business education does seem to be paying off. The Financial Times, which publishes a well-respected annual international ranking of MBA programs, now lists five Canadian schools in its top 100, making Canada the third highest rated player in the market after the U.S. and Britain. Although Canadians considering the prospect of an MBA may be less than enthusiastic about the escalating costs involved, they can increasingly be assured that the investment brings them an internationally recognized qualification.
Sources of MBA financing for Canadians
When it comes to paying for your MBA at a Canadian business school, there are a variety of government student loans, preferential bank lending schemes and scholarships that can go a long way to easing the immediate financial burden of returning to full-time study
Anita Labudzki, a recent graduate from the Schulich School of Business at York University, was the recipient of the John Hunkin Financial Services Award of $5,000, one of more than 100 awards, scholarships and bursaries funded by the school's alumni. For Ms. Labudzki, the award enabled her to reap the full benefits of her studies. "It alleviated the financial costs associated with my education. As a result, I was able to lead a balanced lifestyle of academics and networking, which ultimately led to my successful job placement upon graduation."
It is a similar story at the Rotman School of Management at the University of Toronto, which grants about $1-million in entrance scholarships, fellowships and awards to about 15 per cent of its students. As at other schools, offers are on the basis of exceptional merit, including academic excellence, with certain scholarships also taking into account leadership potential or proven communication skills.
The Sauder School of Business at the University of British Columbia also has an extensive list of scholarships available to their MBA students, from full tuition for the Dean's MBA Entrance Scholarships, which is granted to students displaying exceptional academic excellence, to $10,000 for the Minerva Foundation Bob & Judy Hager Family Fund, which is provided to a female student in each cohort who demonstrates financial need and academic proficiency.
Much like its counterparts, Sauder has negotiated preferential loan package programs with various banks, including HSBC Canada, with financial packages covering tuition and living expenses. Some of the banks working with the Richard Ivey School of Business at the University of Western Ontario offer competitive interest-only payments for the 12 months following graduation.
In terms of government student loans, each provincial government in Canada administers and maintains a student financial aid program in co-operation with the federal government's Canada Student Loan (CSL) program. When students apply to their provincial government for assistance, they are also automatically considered for a loan through the CSL.
Finally, domestic students can use the Lifelong Learning Program offered by the government of Canada, which enables them to use a Registered Retirement Savings Plan (RRSP) for their business education. The LLP allows you to withdraw up to $10,000 a year from your RRSP to finance training or education for you or your partner. You do not have to include the withdrawn amounts in your income, and the RRSP issuer will not withhold tax on these amounts.
Special to The Globe and Mail