What is the reasonable all-inclusive cost of an MBA program in India in 2018?
Kicking off the InsideIIM Community section with probably one of the most important questions. How much is the MBA worth spending on? What do you guys think? Over the years we have asked our users in our surveys. You can find last year's data here.
I personally think that MBA education in India has become a little too expensive and the outcomes haven't kept pace with the fees that a lot of schools charge. If you take out the top 10-12 schools in India, the average salaries rarely cross INR 12-13 Lacs but schools are charging in excess of INR 15 Lacs for the same.There are two costs involved here : the actual tuition fee + the opportunity cost of the amount of time you are out of the job market. In such a scenario, it really does make sense only for freshers to go to certain business schools because they don't have a job so don't have to let go of money. Hopefully, they will graduate with an in-hand salary that justifies all the cost.
Schools like FMS, JBIMS and TISS are unique and exceptions. There is clearly a high demand for these schools.
For others, I would be very circumspect. I know an engineer from a good engineering college in south India (not IIT) who earns INR 14 Lacs per annum and has 24 months work experience. I don't see how it makes financial sense for him to go to even some old IIMs. It is justified only and only if the person wants a change in a role/industry/domain on graduation. ISB is also extremely expensive for this guy. Although ISB is only 1 year it costs close to 35 Lacs + he loses 14 lacs (plus variable pay) = almost 0.5 crores to do a MBA! Is it worth it?
There are of course many other reasons that determine this decision which aren't always rational, For e.g. A person wants to go back to student life. A person has a financially strong family which will fund it. A person desperately wants to enter a new industry and wants to pay that price. A person wants exposure - International or with peers from other industries and backgrounds.
Admission decisions are crucial. 10 years back it was a no-brainer to join most top b-schools if one got an admit because the returns were extra ordinary when compared to the fees. It isn't the case anymore so choose carefully!
Other important factors to consider when choosing a Business school and weighing up the fees and salary :
1) Alumni Network and Potential benefits from the quality of that network2) Brand name of the school. Do people recognize your schools's brand in the industry? It is not important what your relatives think. It is more important what recruiters value. For e.g. it is not a great decision to drop XLRI in favour of a new IIM. No matter what your relatives say - they may never have heard of XLRI or even Jamshedpur. Doesn't matter.3) International exposure - Your Only BSchool Once (YOBO - we even have a book in the Shop with this name!) and you want as many diverse experiences as possible.4) Quality of Professors - This is a tough one to gauge from the outside. But, generally talking to alumni helps. There are some professors whose lessons you remember for life. It is invaluable. I would keep this in mind very strongly if you do value tuition. For e.g. many years back I had written this : https://insideiim.com/10-best-courses-i-attended-at-iim-indore/?src=inscomm
I think the answer is subject to two clauses:
1. Which B School you are doing it from
2. What is your profile strength compared to your peers in that B School
How does one know one's profile strength before joining a Business school? You can't make admission decisions on a hypothetical evaluation of yourself against hypothetical peers before knowing them.
One should keep in mind that batch strength is increasing every year and average salary gives only a partial glimpse of overall placement in that college. Eg some extraordinary nmat college may charge 18lacs just for tuition fees. However providing a batch( of 500 strength )package of 18 lacs or above is almost impossible in India.
Education institutes compel student to start their corporate life as soon as they are done with studies. What, if a person wishes to go for phd after mba and has taken a loan of 18-19lacs. Chances to pursue interest becomes very limited since one has to repay a huge outstanding amount.
Education should be accessible to all and just for its sake. Thats why the ever increasing competition inside iim because everyone wants the best placement
I'd say that the evaluation process of sorts should depend on a careful analysis of the following factors:
- The degree of the urge to switch the field/domain/industry one is currently working in
- Long-term growth prospects post an MBA
- Expected salary from a B-School versus the cost of studying there
- Reason of doing an MBA
Let's talk about all the aforementioned factors one by one.
1. The degree of the urge to switch the field/domain/industry one is currently working in: There are instances galore when one is so infuriated with one's current job that they need a big carer overhaul. If there's hardly any job satisfaction and one is sure about their unexplored interests in a managerial career, then I would suggest that the cost-benefit analysis, more or less, goes out of the equation. On the other hand, if one is highly dissatisfied with his/her current job but doesn't know where his/her interests lie then shelling out lacs on an MBA course is a big gamble to say the least!
2. Long-term growth prospects post an MBA: Comparisons have been laid out between the fess of doing an MBA and the first salary one is offered from the campus. I feel that such a comparison is inherently inadequate since the chances of rising up to the top echelons of the corporate hierarchy (the CXO level) post an MBA increase manifold and isn't a direct function of the initial salary one bags from his/her B-School. The bottom-line is that the growth rate, both in terms of salary and position, is much superior to one not holding a PG degree or most of the non-MBA PG degrees.
3. Expected salary from a B-School versus the cost of studying there: The cost of completing an MBA course from a B-School doesn't matter much to those who are able to afford it easily, especially when they are getting the privilege to belong to a reputed brand name. However, there are many who face great travails in financing their MBA and do expect a minimum threshold salary at the end of it to be able to at least fulfill their financial obligations. IIM A and XLRI are among the most expensive B-Schools with fees shooting up to 21L-23L for the entire course. IIM I and IIM L lie somewhere in the middle of the fess spectrum charging 13L-14L to their participants. Then there are a few gems such as FMS, JBIMS, etc. at the other extreme end charging less than 1L for the entire course.
4. Reason of doing an MBA: The correct price that one must be willing to pay for his/her MBA depends deeply on the underlying reasons behind doing it. Some do it merely for the rich experience of being around the best minds and profiles of our country, having a taste of the pedagogy of some of the finest professors, going back to the student life, hone their communication and life-skills, etc. For such aims, one shouldn't and doesn't mind the quantum of fees and chooses the institute which offers the best of these at any God forsaken price. Such aspirants don't shy to shell out 4L-5L more for living the amazing experience of a foreign student exchange. However, for others, whose aims are in the line of getting a fat package, climbing up the corporate ladder without having to wait for decades and supporting themselves and their family financially, the RoI angle, rightly so, becomes all too important.
I don’t downplay the role of long term growth prospects of the MBA but I believe that an MBA education that forces the person to be in debt for 6-7 years after graduation and in a sense leaves the person with no choice but to keep working to service his/her education loan is not ideal and at the b-school selection stage itself people need to be made aware of this reality. It is not necessarily a life of freedom. And students need to know this. And hence, ROI discussion is crucial with a more short term implication as well.