The steady and significant rise in the number of aspirants taking up MBA clearly demonstrates its importance as a being a stepping stone to lucrative and successful career in corporate sector. Candidates who immerse themselves in the rigorous preparation often fail to consider the actual cost of an MBA degree in India.
To evaluate the ‘real cost’ of a MBA degree, we should not only consider the Program Fees but also adopt a holistic approach that covers the following:
- Pre-MBA Cost: Preparation + Application Cost
- Program Cost: Tuition Fees + Cost of Living
- Opportunity Cost
Pre MBA Cost
Pre-MBA Cost, as the name suggests is the cost incurred by the aspirants before they actually get selected and/or enrolled to the MBA program.
Considering that most of the candidates appearing for MBA entrance exams opt for preparatory classes; Coaching fees make a major part of the Pre-MBA Cost. According to rough estimates, training for different sections take place separately and cost about 25000. Add to this the cost of mock tests, crash courses and training material cost; a candidate ends spending about Rs 1-2 Lakh on coaching itself.
Another Pre-MBA Cost that is mostly ignored by all is the application cost. The average cost of management entrance exam applications are more than Rs 1600. In addition, if you want to apply for different institute, you will have to apply for each of these individually, which will surely leave a dent in your pocket.
The most prominent cost of MBA Programs is the actual tuition fees and cost of living associated with it. If you consider major and reputed institutes offering two year residential management program; the cost of a MBA degree or PGDM can easily set you back by Rs 12 to 15 Lakh. The cost may also be significantly more, if you are planning to pick a popular specialization or a particular institute.
Besides, students also incur expenses for accommodation cost, food charges, industrial visits and student exchange programs as well as any other paid optional service offered by the Institute.
MBA Program Cost is quite a large amount and not many are in a position to pay it on their own and opt for an Education Loan. In such scenario, one must also consider the loan interest rate which generally tends to be in the range of 10.5 to 12%; this would further increase the overall cost of MBA course.
The main reason behind MBA becoming such a rage in recent time is its effectiveness in accelerating growth or jump starting a career with a massive boost to make it more lucrative in terms of pay as well as position. Many professionals, who have been working for some time look at MBA as a way to jump start and reinvent their career. However, in doing so they ignore the resultant opportunity cost i.e. foregone salary, professional experience and perhaps a promotion. While updating your skill set sounds great, if the aggregate appreciation in your pay and position are not going to be more than what you would end losing in terms of opportunity cost; then MBA is a bad idea for you.
MBA surely has helped many professionals to climb the corporate ladder much quickly than the traditional route but there are different types of costs associated with it; some obvious while some are hidden. Being a significant step in your career, cost of a management degree will impact your personal and family finances not only in present but also in future. Therefore, before joining the MBA bandwagon, it is very important to understand and evaluate the total ‘real’ cost versus the benefits of an MBA Degree in India.