Is a Queen’s MBA really worth $58,000 or a Rotman MBA $56,000? Why would you pay $56,000 for a one year Ivey MBA when you can get the same degree from HEC for $10,500, or $23,000 from DeGroote? Is a Schulich MBA worth $42,000? If so, why is an MBA from Alberta only $23,000 or McGill even less at $10,300? What is the value of a $12,000 MBA from Ryerson versus a $38,000 degree from Sauder? All of these are good schools offering very valid MBA programs. Some of them are internationally ranked and some are not, but that is not what sets the price for an MBA.

In part it has to do with location. In Canada universities are regulated by the provinces. Some years ago, the Ontario government deregulated tuitions for professional schools such as medicine, law and business. The argument was that since graduates of professional schools would earn a great deal more than graduates with an arts degree, they should pay proportionately more for their education. Tuitions were allowed to rise to meet market demand and since some of the bigger schools were competing internationally, they began to price their programs accordingly.

Quebec, on the other hand regulates the tuition levels for all university programs and for political reasons the province will not allow the universities to charge more for professional programs then they do for any other. That is why internationally recognized schools such as HEC Montreal and McGill have low tuition levels and schools like Carleton and Ottawa which draw students from Quebec try to keep their tuitions competitive. 

While provinces such as B.C. and Alberta still regulate tuitions for business schools, they have allowed them to increase above the levels for non professional degrees. That is why schools such as Alberta, SFU, Haskayne and Sauder are relatively inexpensive compared to some major schools in Ontario. So what you pay for your MBA depends in part on where you live or where you are prepared to go for your degree.

 Another reason given for high tuitions is because graduates of those schools supposedly get high paying jobs immediately upon graduation. That is only partially true and even then, the statistics can be misleading. According to information supplied to CanadianBusinessSchools.com, Rotman graduates are among the highest paid with an average starting salary of $85,000. Rotman also claims that 94% of its graduates are employed full time within six months of graduation, so it would seem that its $56,000 tuition fee might be justified. But Rotman has a relatively small program and its graduates tend to be concentrated in international banking and finance, where the starting salaries have been traditionally higher than other areas. But with the ongoing crisis in international banking, the opportunities for either the jobs or the salaries may not be available much longer.

Queen’s School of Business on the other hand, claims its graduates have an average starting salary of $80,000 but only 75% are employed full time after six months. Compare that to Alberta where 94% of graduates are working after six months or Sauder with 90%. While not cheap, their tuitions are considerably less than Queen’s $58,000 and the starting salaries are comparable. Obviously both Alberta and Haskayne at the University of Calgary benefit from the oil boom in that province while SFU and Sauder have designed international programs that meet the needs of Canada’s gateway to the booming east. At the same time the Queen’s MBA is more general in nature and the Ontario economy is not that robust.

Business schools will claim that another reason for high tuition costs is that business faculty demand higher salaries than non business faculty. And it is true that the growth of university based business schools has increased the demand for faculty thereby driving up the salary scale for business PhD’s. But the main inducement the schools use to attract the top faculty is not salaries, but the opportunity for independent consulting. Established professors at recognized business schools (particularly those near a major metropolitan centre) can often double or even triple their income through independent consulting.

The real reasons for high tuition fees at some business schools are not the guarantee of jobs or the cost of faculty. It is the struggle for international rankings and the cost of marketing. It is generally supposed, but not always accurate, that the best places to get an MBA are from schools that are internationally ranked. The publications that publish the rankings and the schools themselves certainly push this message every chance they get. A top 10 ranking in Forbes, Business Week or The Wall Street Journal brings publicity, applications from prospective students and makes it easier to attract top notch faculty. A top 10 ranking in The Financial Times places the school among the elite of business education facilities around the world. Schools will strive to get international recognition because it attracts both domestic and international students (who pay more for tuition), reinforces the decision of existing students to attend and most importantly enhances the image of the alumni, who are then more likely to donate to their alma mater. In other words, potential students line up to get in; world renowned faculty enquire about openings and alumni write blank cheques to get their name on a class room.

If you are internationally ranked, you want the world to know. So you advertise. And if you are in a highly competitive market like Toronto, with four internationally ranked schools within spitting distance of each other, you advertise a lot. That is why schools such as Queens, Ivey and Schulich spend literally tens of millions of dollars each year. And it doesn’t take much to spend a million dollars. A half page black and white ad in the Ontario edition of the Globe and Mail costs over $30,000 (with discounts). If you are advertising your six information sessions with 3 ads each session, you have just spent over ½ a million dollars. Do this once in the spring and once in the fall and you have just spent over $1 million advertising information sessions in just one newspaper. Add in at least one other newspaper plus the costs of a radio campaign, localized media on elevators in the Bay street area, printed materials such as brochures, promotional events and the cost of the information sessions themselves and you have the attention of every ad agency and media outlet in the Toronto area. And since the MBA programs must be self sustaining, the cost of the marketing campaigns gets added to the tuition.

Finally keep in mind that the best school for you is not always the most expensive. For example Business Week just published a list of the top 50 undergraduate business programs in the United States. While number one ranked Wharton costs $36,000 (all costs in $US) per year, number 2 ranked McIntyre cost only $8,700 per year and number 7 ranked Brigham Young, only $3800 per year, both considerably less than higher profile but lower ranked Stern at $36,524, or Boston College at $35,674.

Think about that when you are making what will be one of the biggest decisions in your life.

Compliments of www.CanadianBusinessSchools.com

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