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run by NatWest bank, which financed students at many schools accredited by the Association of MBAs, has just been withdrawn.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.”
