Breaking down the costs of an MBA
When we say fund an MBA, we’re talking about a significant investment. Costs include:
- Tariff.
- Accommodation rental.
- Health insurance.
- Administrative fees, such as those of student associations.
- Study materials.
- Furniture for your student home.
- Equipment such as computers.
- Cost of living in general, such as food, mobile phones, internet, and others.
- Among others
Cost of Attendance
Universities generate a metric called ” Cost of Attendance” to estimate how much it will cost you to live and study during the program. For example, at Harvard Business School (HBS), the cost is $115,000+ for a single student and around $139,000 for those married without children.
Cost of Attendance from leading business schools
| SCHOOL | BACHELOR | MARRIED WITHOUT CHILDREN |
|---|---|---|
| HBS | $115,638 | $139,34 |
| Stanford | MX$126,465 | MX$152,157 |
| WITH | $109,180 | |
| Wharton | MX$124,476 | |
| Columbia | $127,058 | |
| Kellogg | $120,432 | |
| Booth | $122,160 | |
| Average | $120,773 |
Source: Websites of each school, for the 2-year MBA program. Retrieved August 2023.
This figure is used for two main purposes:
- Financing: Universities refer this number to lending and scholarship institutions. The goal is to ensure that loans and scholarships, or a combination of both, do not exceed this amount.
- Visas: For international students, this amount is attached to the visa documentation, and you will need to prove that you have sufficient funding.
If you convert these numbers to your local currency, you’ll realize that this is a considerable amount. We’re talking about an average of $240,000 over two years, not counting internship periods.
A one-year cost structure might look like this.
The financial dilemma: deciding whether to invest or not
I remember perfectly the moment when I was faced with these figures. How was I going to finance my education? I attended an MIT Sloan event in Santiago, surrounded by alumni, and wondered how they had funded their MBA. Was this a privilege only for those with high purchasing power? To be honest, there are those who have sufficient funds. But is this MBA only accessible to those who have companies that finance it? I found out that it wasn’t.
Return Time
Affording the cost of an MBA is an investment. It is essential to remember that, according to various estimates, this investment can be recouped over a period of 4 to 6 years if you work in the US and in traditional industries associated with the MBA. In more exclusive industries, it might even be less.
If you decide to return to your Latin American country after completing your studies, keep in mind that salaries in the region are generally lower. The average indicates that professionals go into debt for approximately 10 years to pay for their MBA. However, there is a possibility to accelerate this amortization if you manage to enter renowned companies, especially if you graduated from a prestigious institution. Anyway, you should consider this MBA as a long-term investment, with a return horizon that varies between 5 to 10 years.
Why Is This Investment Worth It?
- Reputation: If you earn an MBA from a reputable university like Yale or Stanford, that reputation will stay with you throughout your career.
- Networking: Not only will you have contact with your classmates, but you will also be part of a wide network of alumni of the university.
- Skills: Many students come to the MBA with varied backgrounds, from lawyers to engineers. The program provides you with essential tools and knowledge to venture into the business world.
Sources of funding
There are several ways to finance an MBA abroad:
- Scholarships: This is money that universities or other institutions give you without needing you to pay it back. Unlike many scholarships in Latin America, for an MBA, the acceptance letter is often required first before you can apply for a scholarship.
- Credits: Some universities have agreements with financial institutions that offer loans to those admitted. You can also consider local banks in your country.
- Sponsorships or Subsequent Discounts: Some companies offer to support their employees in financing an MBA in exchange for a commitment to stay.
- Personal Savings: Make sure you have savings that cover unforeseen expenses or expenses that exceed the cost estimated by the university. Lifestyle, the city you’re in (for example, living in New York is notoriously expensive), and eventualities like family or health emergencies can all affect your expenses. It’s vital that you plan ahead and have a savings cushion for these situations.
Sponsoring companies:
Several companies value an MBA education, especially if it comes from a prestigious institution, and are willing to invest in you. These companies may offer to not only pay for some or all of the cost of the MBA, but in some cases, pay you a salary during that period of study. At the end, it is common for them to offer you rehiring, and in some cases, they even refund part of what you invested in your study.
Some consulting firms, such as McKinsey, offer career plans that include funding to study an MBA abroad, with the expectation that, upon returning, you will occupy a specific position within the company and have a commitment to permanence. Companies such as BCG, Bain and, according to reports, Matrix Consulting (which operates mainly in Latin America) also offer this type of financing.
Note that, sometimes, the financing offered by companies may be incompatible with university scholarships. If a company decides to fund you, some universities might see this as a reason not to give you an additional scholarship.
