MBA: Expensive or Economical, How to decide?

Cost of MBA

The moment you consider for an MBA program, the black clouds of costs drench you in sweat. Indeed, an MBA can burn a big hole in your pocket but it will repay you back with accelerating career graph, high designated job, attractive pay packets and lucrative perks and avenues. To toss the probability of MBA whether it is expensive or economical we had drafted few parameters to evaluate your MBA degree on the followings.

  1. Fee: The basic point of comparison is the fee structure of the MBA college. For example, you say an MBA program costs approximately INR 25-80 lacs in abroad while in India you can accomplish it by spending INR 7-20 lacs. Let’s say the GMAT fee will cost you approx INR.16000.
  1. Living: The next very mandatory step is to calculate the living expenses. It is an unambiguous statement that pursuing MBA in abroad will cost high living expenses, whereas in domestic colleges it would be economical.

RETURN ON INVESTMENT (ROI) in Terms of Education

It is essential to understand the Return on Investments in terms of education, for pursuing an MBA a student might incur debt to meet the expenses of the two years course. Prior applying to a loan, candidates must calculate the two main things: (i)  when the loan can be paid back? And (ii) how fast the return on investment can be attained?

How to Calculate the ROI?

Let’s assume you have paid 48,000 Euros for the entire MBA degree course and your salary before initiating the course was 50,000 Euros. Again you’re taking a U-turn and commencing your studies will result in a loss of two years’ salary, i.e. 100,000 Euros (this is a reasonable assessment as no adjustment in compensation is considered). This is the opportunity cost. Being as an MBA aspirant you have to bear the indispensable expenses like rent, food, stationery, etc which also have to be calculated in the equation. After completing  2 years of study, you get an offer from a company. You decide to take the job for a salary of 80,000 Euros. How do you estimate the return on your investment in the MBA degree?

Firstly, add the opportunity cost and the course tuition fees: 48,000 + 100,000 = 148,000 Then subtract your previous salary from your post-MBA salary: 80,000 – 50,000 = 30,000 Now divide 148,000 by 30,000: 148,000 ÷ 30,000 = 4.93

So it is clearly stating that it will take 4.93 years to get back what you paid for your degree. The amount you get after this period is the return on investment. But one thing you must notice that the above equation does not contain any course of risk say like salary increment, recession or span of unemployment, etc.

Value your money 

Generally, the B-schools offer grants, fellowships, scholarships, and loans to the students so that they can also join the student clan of the prestigious institutions. Hence, it is advisable to take a serious tour of the institutions’ website and jot down the important info about financial aids. After that explore the bank/financial to avail the loans but don’t forget to do a comprehensive research regarding the rate of interest and the procedure of repayment of the loans.

Share your views how you managed your ROI on MBA course by commenting.

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