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You are here: Home / Archives for ROI

Dang this sh!t’s expensive!

June 8, 2018 by EssaySnark - Discusses Dartmouth Tuck, UCLA Anderson, Columbia Leave a Comment

The estimated first-year costs for a Columbia MBA have risen by over $40,000 in under ten years.

That’s just for the first year of your MBA, which for this year’s entering class, is expected to set them back a cool $111,000 . JUST FOR THE FIRST YEAR. That’s a 50% increase from 2007, where the first-year fully loaded cost was estimated at $73,464.

That’s absolutely nuts.

A fifty percent increase?!???

We used to scoff at questions from BSers about ROI and the MBA. The MBA has long been an excellent investment, in terms of the increase of earnings you’ll get from it. But seeing this change in the published 2018-2019 estimates really gave us pause.

What business can get away with annual increases like this without customers balking?

Well, apparently businesses which have seemingly limitless demand, like business schools have seen in recent years.

Contrast that to law schools where they’re practically begging for students to attend.

Now, before we get too far into this rant, we do have to mention that it’s in your favor for a school’s cost of attendance estimates to be higher at least from one perspective: These are the figures that are used for all financial aid calculations. If you’ll be applying for a student loan, the lender will use the school’s published estimates in order to determine the highest amount that they might fund you.

If the school underestimates the actual costs you’ll incur, not just for standard school stuff like the books and fees and all that nonsense they’ll be hitting you up for, but for the price of just living in that town, then you’ll be stuck and living a much more frugal life than perhaps you expected to be.

Pro Tip: All of this is why it’s so important to be looking at these numbers NOW and evaluating your finances NOW and understanding what it will feel like to live for nine months at a time with NO INCOME.

You need to be saving today for this expense, and you need to recall what it felt like to be a student.

Double caramel macchiato with an extra shot?

Not every day, you won’t.

But coming back to this issue of inflation:

The U.S. economy has been in a period of incredibly moderate inflation — so much so, that some economists are worried. It’s not a state of the environment that we’ve seen many times before and there are all sorts of theories about what’s happening, how long it may last, and what might happen as we start to move out of it.

Moderate inflation is quite nice as a consumer. Starbucks prices stay consistently the same. You’re not surprised by the increasing bill each time you go grocery shopping.

It’s not nice for the worker, as it also means that wages have been suppressed, which is a main concern of many of those economists.

But in an era of moderate inflation, we still have seen these universities jacking up their prices every year.

Every damn year.

There’s nobody telling them they can’t. So they do.

This holds true at public and private universities alike.

At least for public universities, there’s additional pressures on the school administration in trying to rein in spending.

Here’s a quick comparison of some figures from just two schools, Tuck and Columbia, over the past four years:

Tuition trends at Columbia & Tuck, 2015 to 2018

Whenever we log these values in our own tracking systems, we always capture the actual tuition figure, plus any fees that the school is reporting as mandatory for all, so that’s what those first columns are reporting. Often schools have other fees that end up being mandatory for many students, such as health insurance fees, but we don’t count those since they’re not technically mandatory for each and every person. However, don’t overlook it in your own budgeting: at most schools, if you don’t prove you already have sufficient medical insurance coverage, they force you to buy into their plan.

We don’t have complete records on all schools but just for comparison purposes, UCLA Anderson — a state school — for the Class of 2020 entering this fall has an estimated first-year tuition and loan fees of only $61,302 and a total first-year cost including living expenses of $98,699. Los Angeles is a pricey city so you can expect to pay nearly as much in rent as you might in Manhattan. The difference in full-year cost is from the lower tuition charges from the school. We don’t really advocate using tuition prices as a determining factor in choosing your schools, as we do believe there still is a good ROI on the MBA even from what some would call a “lower ranked” school like UCLA (we don’t see them as “lower ranked” but we know many shrug off our recommendations to try for a place like that as below them). We do recommend looking at these important considerations now, though, and we also really want to call the schools out for this ridiculous racket of forever increasing the charges.

Another problem when you’re digging in try and make sense of these estimates is that these schools aren’t reporting their data on an apples-to-apples basis. You’ll soon notice this when, for example, you see a fairly wide variation in estimates for books at different schools. We’ve seen this range from around $900/year to more like $1,500/year. Wouldn’t you think that books would cost nearly the same at any top-tier school? It’s even worse when you see the variance in actual categories being reported.

Take the details between Tuck and Columbia for the 2018-2019 school year for the Class of 2020.

Tuck

Tuition & Expenses: Tuck Class of 2020

Columbia

Tuition & Expenses: Columbia Class of 2020

Click image to view in full size

We look at those Tuck totals, and from what they’re saying, it’s only going to cost a first-year less than $4,000 more a year to go to school in Manhattan as it will in Hanover.

Say what???

That just doesn’t make any sense.

You look closer and you’re like, “What is a $15k ‘miscellaneous and health’ charge?” Like, you know the U.S. healthcare system is a mess, but it’s not gonna cost you $15k a year!!

It’s confusing. And the way the numbers are broken out is just not standardized.

Either Columbia is unfortunately keeping numbers like room and board artificially low — which is likely — or Tuck is playing sneaky with how they’re allocating things out to those categories.

But the issue is that the way they’re breaking their figures down just doesn’t let us do a natural comparison.

Another thing to keep in mind when you’re looking at these estimates: The figures for living expenses (housing, or room and board; they’re listed in different ways by different schools) are almost always only for the school year. These are not full-year estimates. Most people are off somewhere else during the summer in their internship where they’re actually earning money, so that certainly helps, but you’ll need to pay rent in whatever city you’re interning in, and those costs are not estimated in these charts. When you’re planning out your own budgets, you’ll need to keep these things in mind.

And if you like 99.9%* of other BSers want to intern in Silicon Valley then remember it’s one of the most expensive housing markets in America right now. You’ll likely end up in a roommate situation both for convenience but also because of the price. Be prepared for some sticker shock. Even those coming from Manhattan may be dismayed.

And in the Valley you’ll need a car… or maybe not “need” but it sure is convenient. If you target SF then no.

All these things will need to be considered. And of course you need to look seriously at what your earning potential will be in your planned future profession. For many people it’s still a no-brainer, and the MBA is well worth it (and the EXPERIENCES you’ll gain in bschool cannot be discounted even if you cannot put a price on them) — but we can no longer issue a blanket recommendation that the MBA will pay off financially for everyone.

We’ve got a handful of other posts on the question of ROI for the MBA and an assortment of others generally about MBA tuition including things like scholarships and fellowships.

 
 
 
*OK maybe it’s only 97.3% who want to work in tech.

Filed Under: tuition Tagged With: ROI Bschools: Dartmouth Tuck, UCLA Anderson, Columbia

($) ROI and the MBA

October 23, 2017 by EssaySnark

The MBA is a very expensive degree. Hopefully you’re aware of that already. The schools publish numbers on their sites about tuition and estimated costs, yet many applicants neglect to read those pages until after they’ve been admitted and are faced with the prospect of plunking down a deposit and looking at how they’re going…


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Filed Under: tuition, values Tagged With: alumni network, rankings, ROI

How valuable is that MBA?

March 15, 2017 by EssaySnark Leave a Comment

There are plenty of ways to evaluate ROI on an MBA, the most obvious being to look at your potential post-MBA salary compared to where you’re at now.

There are plenty of intangibles associated with graduate business education too of course. The GMAC researchers put out a survey of bschool alumni every year to try and quantify some of them.

Here’s a graph from their 2017 report:

That’s a pretty convincing argument for the full-time two year MBA — but the EMBA is none too shabby.

It’s hard to say what factors may be contributing to the significantly lower “Outstanding” score for the Master in Management, though it’s a much smaller pool of MiM alumni that the GMAC folks would be polling, and we’d have to assume that it’s a younger cohort, too, only because a) usually people are younger when they go for an MiM compared to the MBA, and b) the MiM has only gained a foothold and become a popular educational track in more recent years. Presumably, people are more likely to see more significant value of their graduate education over time. That’s just a guess.

We’re posting this chart as one (of hopefully many) input to your process of considering options and researching programs.

The other data that jumped out for us was the online MBA numbers compared to the full-time MBA. A 25% “Outstanding” score is still pretty good, but it does pale in comparison to the full-time score of 40%.

What’s more interesting though is that when taken together, “Outstanding” + “Excellent” add up to a very impressive strong top-end performance for the online MBA, one that’s almost equivalent to that gold standard with the full-time MBA. That’s actually a bit of a surprise. The online MBA still gets a bad rap in many quarters, mostly because you by definition are sacrificing a lot of the networking opportunities, and the bonding with fellow classmates, that you naturally benefit from through the in-person on-campus experience.

Apparently it’s common for grads to speak highly of their school and their program. That makes some intuitive sense to us. After all, if you plunk down many many thousands of dollars, and devote many many hours of your life to studying corporate finance and statistics and double-entry accounting when you could be sitting on the couch with a beer, then it’s only natural that you’ll decide that it was a smart thing to do, and that the investment was worthwhile. Things would have to have been really fraught during your MBA studies for you to go completely sour-grapes and talk negatively about the experience. Most of us self-justify our biggest decisions in life to make ourselves come out as smart in our own hero story. If you dump all that time and money into something, then human nature means you’re more than likely going to say that it was worth it.

But that tendency does not explain away the extreme weighting on the positivity scale that we’re seeing here. To have so many alumni say that their graduate experience was excellent — not just good but excellent — is indeed remarkable.

Given how much less expensive, and convenient, and all around more manageable an online MBA can be, it’s a pretty big vote in favor of at least exploring it as an option for some of you. There aren’t yet many online-only programs at the Top 30 bschools but they are likely to sprout more in coming years, and the current hybrid options might be worth looking into, depending on where you’re at with your life situation and circumstances and your current motivation and priorities.

 
 
 
Another post on this topic here: If the main reason for getting the MBA is financial…

Filed Under: online MBA Tagged With: ROI

($) “Is my school f-cked?”

May 3, 2016 by EssaySnark

If you’re just joining us, then you may not know the tight focus of the EssaySnark blahg: We concern ourselves (obsessively so, some may say) with the admissions policies and practices of the top MBA programs in America, and to a lesser degree, those in Europe. “What,” you may wonder, “is defined as a ‘top…


While much of the blahg is available completely for free, the content here is reserved for members with full blahg access only ($9.95/month for six months, cancel anytime). Please login to view this content or purchase a membership.

Filed Under: the admissions consulting industry, tuition Tagged With: rankings, ROI

An early conversation you need to have with yourself.

July 3, 2015 by EssaySnark 1 Comment

EssaySnark does not condone talking to yourself.

People look at you weird when you do.

(Not like we have any experience with that or anything.)

Today however, even though it’s a long holiday here in the U.S., we thought we’d put up a post with a recommendation to do exactly that. Whether or not you’re celebrating Independence Day in America, you will hopefully have a few minutes to yourself at some point in the next few days. We suggest that you take some time – you could even do it right now, as soon as you finish reading this – and sit yourself down and have a little conversation. A pen and paper may be useful for this exercise, though you can do it all in your head too. Or, you could involve any partner or parents or significant others in your life, though you may want to talk to yourself about the topic first to see where you stand with it.

The conversation we recommend that you have with yourself is,

“Can I really afford this?”

Otherwise known as, “Holy Guacamole, Bschool Is Expensive!!!!!!!!!”

Higher education in the U.S. is an industry that gets away with constantly raising its prices. As in, every single year, tuition increases at almost every single bschool that we’ve ever heard of. Nice job if you can get it, eh? Of course, the school administrators are always claiming that they don’t have enough money to fund their important programs. The business schools on many top campuses are actually revenue-positive; MBA programs and all of their associated degree opportunities tend to bring in profits for the parent university. In this otherwise-unrelated video, Rich Lyons, the dean of UC Berkeley Haas, justifies the ever-increasing tuition at top schools by claiming that they are providing more value today than they did 10 years ago . And he states that average salaries of graduating MBAs has also been increasing over that time.

That may be true, but just because the average is going up does not mean that YOU will score a starting salary that’s at that number. (Remember, that’s how averages work – there’s a bunch of datapoints above and below the average, and sometimes they are way below.) Nobody can guarantee you what your exiting salary will be. What we can guarantee you is you’ll be on the hook for the same cost of tuition as everyone else is.

You cannot go into this assuming you’re going to get a bunch of scholarship money. Please do not misunderstand the situation. About 25% or so of admitted students get some offers of free money, and those typically are reserved for the applicants that the schools most heavily want to bring on board their programs – meaning, exceptionally high achievers, and women, and underrepresented minorities. If you’re in one of those groups then yes, there is more of a chance for such financial aid freebies but nobody should presume that it will be coming. Look at it this way: If you believe that you deserve to get paid for the benefit of increasing your lifetime earning potential then you have a mighty high view of your value in this world. Most people are happy with simply getting in to a top school, much less going into the process with their hand out. Perspective, people.

Our Accepted Student’s Guide covers a whole bunch of actions you should take once you’re in at a top school. Most people wait till they’re, uh, accepted before picking that up, but it wouldn’t hurt to take a gander at it earlier in the process. This is especially true for some of you international students wondering about financial aid.

The best kindness you can do to yourself NOW, sitting here a full year out from when you’ll actually be starting your MBA, is to begin saving. You will need more money than you realize to fund this little endeavor – and yes, that’s true even though you’re likely planning on getting student loans to cover the bulk of it. Most (all?) student loans do not disburse to you until you’re physically on campus, about to start the actual education itself. They typically do NOT cover the costs of actually GETTING TO campus. As in, moving long distance. Furnishing a new apartment. PAYING FOR that new apartment. They also don’t cover the couple-thousand-dollar-or-more deposit that you’ll be required to pay to hold your spot once you’re admitted.

If you’re interested in going to school in an expensive city – and face it, if you’re an international student, all American cities are going to seem expensive (have you seen the rents in the San Francisco Bay Area these days????) – then you really need to start implementing a financial plan, starting NOW.

Every little bit you save from this day forward will help you.

We recommend opening a special savings account (or shoe box) where you only put stuff in, and don’t take anything out, every single week for the next six months. And put stuff of significance in. If you only deposit $20 (or its equivalent in your currency) every week, you’re going to end up with $500. That’s chump change in the context we’re talking. Try for $50 a week, minimum. If you end up with $500, then that’s $500 more than you have saved now, but it’s still not going to take you very far in the real world. Don’t forget, too, most people need way more than that in actual application fees this Fall, just to get those apps in at the schools. Begin your active savings endeavor today.

And spend some time this weekend looking at the actual cost of attendance at these schools. Be honest with yourself. Is your financial situation such that you’ll be able to really pull this off? Many people only face up to this once they’re accepted, and then it’s like being doused with cold water: You get the coveted win and you’re in! But then you realize that it’s out of reach. How completely awful and depressing that would be.

Reality, Brave Supplicants. We invite you to live in it.

To review: The nearly-identical post last year exhorting the past season’s crop of BSers to do the same. We should just put this blahg on autopilot, republishing the same thing we said the year before. And the year before. 🙂

Filed Under: tuition Tagged With: ROI

A Tale of Two Bschools

October 12, 2012 by EssaySnark - Discusses Wharton, Penn State Smeal Leave a Comment

Recently we’ve been talking about is the MBA worth it —  the whole  “is there a bubble?” thing is the perennial topic. It’s fun to bash the MBA when people like George Bush and Mitt Romney and Jon Corzine and Raj Rajaratam have them and Steve Jobs and Bill Gates and Richard Branson did/do not. And the MBA ain’t cheap. The “is it worth it?” question is very important — it’s a valid debate for society but it’s especially important for you.

Our admittedly biased position is that the MBA is, in fact, still worth it.

But others who answer the question — like, academics and scholars and smart people who study this — are implicitly saying an MBA from a Top 20-ish school is worth it. The conclusions from “those who know” when factoring in the ROI on an MBA and starting salary and all that jazz are usually the same: If you go to a top school, then the MBA will pay off financially. If not, the numbers aren’t there to justify it.

You can get a solid business education at a slew of non-Top-20-ish schools, and they’re usually MUCH cheaper. A Penn State MBA will teach you the same things as a U Penn one. At both places, you’d get to do all that networking that you think is so important to talk about in your essays. Smeal is $35k in tuition per year and Wharton is $62k. Then on the other end of it, Smeal reported that 84% of their 2011 grads had full-time job offers three months after graduation.  Not so shabby, right? Wharton said that 95% of their grads had offers in that timeframe.

But the Smeal class is only 84 students, so that’s about 70 people with offers three months out. And only 64% had offers at graduation. Talk about stressful. You go through that whole process and then you’re unemployed. Ouch.

Wharton had about 661 grads seeking employment that year (out of a class of about 850 – the others were going back to the original employer or starting companies or other such fun things). Of the 661, 97% of them — or 638 people — had full-time offers by three months out. An even more telling statistic is that 95% (628) had accepted the offers. That tells us that they were good offers, that the person wasn’t settling.

What is even more striking is the difference in average student profile at these schools — median GMAT at Penn State is 650 compared to U Penn of 720.

For those rankings-obsessed, as of this writing, Smeal is pegged at #31 by USN&WR, 44 by BW. Smeal is a good school.

Here’s a table to make these comparisons easy.

Smeal Wharton
2010 BW ranking #44 #3
2011 class size 84 850
median GMAT 650 720
median GPA 3.3 3.5
# apps 500 (est.) 7,493
acceptance rate 37% 17%
annual tuition* $35k $62k
# grads seeking employment 84? 661
% employed 3 mos out 78% 95%
% with offers 3 mos out 84% 97%
# with offers 3 mos out 70 636
median base salary $87k $120k

*Tuition data is for the class entering in 2012; the 2011 grads probably paid less. Tuition at most schools seems to be rising a ridiculous 3% per year. You will pay more than these numbers.

Back to what an MBA is: an education. Remember that tenured bschool faculty have PhDs. Smeal has some smart cookies;  some of their profs went to high-end schools like Carnegie Mellon. These faculty are no slouch.

We are not singling out any specific schools based on any awesome or awful factors they may possess. We just chose Penn State and U Penn for this exercise because they both have Penn in their names. We’re obviously trying to make a point.

If the only school you can get into is one further down the rankings, based on factors of GMAT score or age or what have you, you’ll still likely get a good EDUCATION at that school (if you pay attention and do the work). You’ll certainly have a different experience in a class of 85 compared to one of 850; there’s pros and cons to both. And if you’re coming from a developing country and an $87k starting salary makes you a little lightheaded in comparison to what you’re able to earn today, then absolutely, a school like Smeal can be an awesome choice.

But the doors leading out of Smeal may not easily take you to the same  lofty salary destination as those coming out of Wharton. They’re only 200 miles away from each other, and within the same Top 50 on the school rankings, yet they seem to exist in parallel universes.

You don’t have to go to a Wharton to have a fabulous life. Other schools represent real options that should be carefully considered. Just make sure you’re accounting for ALL the realities of this bschool proposition as you determine where’s the right fit for you.

Filed Under: lower-ranked schools, tuition Tagged With: ROI Bschools: Wharton, Penn State Smeal

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