This is the topic which is probably the most discussed one on any MBA forum you visit!! Not only is this the decision maker for any wannbe MBA but also the most important parameter that is used by prospective applicants to sort out their b-school list. I thought i'll put in my 2 cents towards this discussion here only blog!!
So whats the most important parameter Cost of an MBA or its return on investment? Is it wise to take a loan of a hundred grand with the hopes that the school's ROI is 2.5years or is it wise to go to a less expensive school atleast not worrying about the mammoth educational loan? Well the answer is not simple atleast to me.. But this is one of the factors that i took into consideration while sorting out my list of B-schools. Atleast in the current financial times, when getting a job in itself is a huge task which is not ease by the MBA tag behind you name, debt is a huge concern.
This led me to come up with this thought process. The market is going to regain its strength sooner or later. As history shows, Crisis and depression are temporary and hopefully in a couple of years this weak economy would be a thing of past like the great depression of the 70s. But an MBA is permanent. It is a once in a life time opportunity to advance once's career or to change it.. So if i have an opportunity to do an MBA from a school like INSEAD which costs around 80 to 90 grand would i take it.. Sure why not!! Ofcourse its a huge debt, but even if the current economical state prolongs the ROI, the value of the MBA always remains with me and I would be able to reap its benefits atleat in the long term.
On the contrary, if i do an MBA from a 3rd tier school which costs me half of Insead's cost but I'd have to compromise on its reputation and the program experience and if the school projects a placement record of 50% - how much of a value addition am i gaining? Probably not much!! Well what good is a inexpensive MBA program if it does not get me a good job?? People might argue that getting a job is ones own hands, and effort will definitely pay off. To these people here is my question - Do you really believe that? I dont. A wharton grad would have a better chance getting a his or her dream job than a Florida State grad!! Thats the painful truth - Reputation does matter and reputation has a price!!
So I'd take my chance with the future ROI rather than loosing my sleep over some inexpensive which does not take me to where i want to go!! Now there is another part to this discussion. From where and how do i come up with the money. Most of the top schools have their own financial aid office which assists students in getting a loan. Schools like IESE (which btw is extremely expensive) provides guaranteed loans to international students. Here again the reputation of the school plays a major role. The more reputed the school is the more likely are banks to sanction a loan. Most students don't even consider applying for scholarships in the belief that it might be a difficult task. In fact there are several external scholarships that one can apply for but of course this needs extra effort. One simple Google search would bring up many results of these external scholarships. And btw there are people still studying in Wharton, Columbia, NYU, INSEAD, LBS and IESE paying over a hundred grand for their MBA. They would be the best source of information on financing the MBA. So i believe proper research and some added effort would lead to a favorable outcome.
Anyways i guess i was able to put across my point. I'm not an expert in this matter, not even close to one. So kindly consider the above as my personal opinion.
Here are a few links that'll give you some expert opinion.
Business week ranks schools based on their ROI
Forbes Magazine ranks b-schools annually based on their ROI
A podcast from "MBA Podcaster" on how to calculate ROI.
On a personal note, I guess I'm make some progress with my essays, working on my third draft which i hope to complete by 10th of this month!!
My apologies for making this a long post.
Nothing more for now...