Students are increasingly flocking to a lower-cost option for pursuing an MBA degree: online programs. In fact, enrollment in online MBA programs in the U.S. totaled 45,038 students during the 2020-2021 academic year, surpassing the 43,740 who enrolled in traditional full-time MBA programs, according to the Association to Advance Collegiate Schools of Business (AACSB).
The costs associated with attending an MBA program can deter some students. The total cost to attend top-ranked full-time programs—such as Harvard University or the University of Chicago—exceeds $200,000, and even online programs, which traditionally cost less, can easily run into the six figures. For example, some top schools on Fortune’s newly published ranking of the best online MBA programs have a total price tag in excess of $100,000—including Carnegie Mellon University, the University of Southern California, and the University of North Carolina-Chapel Hill.
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That said, those high-priced programs are the exception rather than the rule. Many more affordable options exist—and students can complete an MBA for a fraction of the cost. At almost a dozen online programs, including Missouri State University, West Texas A&M University, and the University of Southern Indiana, it costs less than $16,000 to complete an MBA degree. Many state schools may offer an attractive value for in-state residents.
“Our rationale for our price point is that we are the provider that has a high-quality program, but doesn’t add in a lot of extra fees for the kind of premium nature,” says Robert King, an associate dean of graduate business programs and associate professor of marketing at West Texas A&M University.
Regardless of whether your budget is $16,000 or $200,000-plus, it’s important to consider a program’s expense. The cost of an MBA degree will be determined by several factors, such as whether you attend school full-time vs. part-time, the program’s format (online, hybrid, on-campus), and the specific program you choose. Here’s what you need to know about the cost of an MBA degree.
How to reduce the cost of an MBA program
When weighing the costs of pursuing an MBA, you need to understand exactly what you’re getting for your money. Low-cost online options will inherently provide a different experience than the higher-priced traditional programs.
That’s why, when assessing a school’s affordability, you need to consider more than just the normal expenses and instead evaluate what a school can provide, says Esther Magna, the principal MBA admissions consultant at Stacy Blackman Consulting, an organization that helps prospective MBA students get into high-ranking graduate programs. That’s because a school that appears expensive on paper may become affordable to the right candidates.
“The best way we define affordability for MBA programs for a typical applicant would be to build a quality, competitive differentiated application so that the admissions readers on the MBA program side are so moved and clearly see that applicants unique value for the incoming student class such that they decide to give a lot of scholarship money,” Magna says. “That’s the best route towards an affordable business program that has a brand that is sustainable and respectable and credible for a young professional.”
Consider opportunity costs
Besides the obvious tuition expenses, Magna says prospective students should consider the “opportunity cost” of a degree if they plan on leaving a salary behind to continue their education full-time. It’s also important to factor in where the program is based, because rents and other costs can be expensive in large cities like New York or London.
“Opportunity costs are a factor, but also living costs,” Magna says. “So those are things to factor in and certainly they can be offset or even washed away by full-ride tuition offers because then young professionals don’t have to be burdened with those tuition bills.”
Magna recommends applying to an array of “rigorous” and “reputable” schools to maximize financial options.
“If you keep a wider net for programs, then maybe that program will see that you’re really a value add enough to warrant granting a partial or full scholarship,” Magna tells Fortune. “So school flexibility is a way to handle the cost consciousness.”
Other ways to offset the costs of an MBA program
While scholarships and student loans are common ways to offset the cost of pursuing an MBA program, there are other options available to prospective students. First, it’s a good idea to check in with your current employer to see what policies might be in place to potentially offset or even completely cover the financial costs associated with an MBA program. Some companies work directly with specific schools, while others reimburse up to a certain amount, if not the entire cost, of tuition.
Some large corporations like Chipotle, Starbucks and Walmart even offer to pay 100% of employee tuition for in-demand degrees according to People Keep, an organization that helps employers develop employee benefit plans. In 2019, the International Foundation of Employee Benefit Plans found that 92% of organizations surveyed in the U.S. and Canada offered some amount of education assistance, tuition reimbursement, or student loan repayment benefits.
Military employees can count on tuition reimbursement under various government programs or the post-9/11 GI Bill.
Finally, the U.S. tax code caps tuition reimbursement at $5,250 per semester, and depending on the school you attend, that could pay for one or two courses a semester of either graduate or undergraduate work. Any amount above that $5,250 is generally considered taxable income.
How much an MBA will cost you
Even if you review the range of costs of various types of programs—including online, part-time, full-time, advanced, and executive MBAs—so many factors will play into the amount you actually pay, depending on the school you attend. And while cost is a big consideration in the decision process, Magna says it’s important to remember that MBA program selection is a personal choice that’s based on your individual values and criteria.
“So it’s always a framework, and it’s always a hierarchy and there’s always a cost factor, right? If there are those that do have to look at trade-offs of the cost of tuition compared to their mortgage of their house and their expenses for raising their kids, then there is education everywhere which is really cost-effective,” Magna says. “But we prefer applicants to optimize for multiple factors, not just cost.”
Check out all of Fortune’s rankings of degree programs, and learn more about specific career paths.
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