Tuition Hikes Aren’t Stopping MBA Applicants

Lower tuition costs are a selling point for MBA programs outside the U.S. But some schools are starting to bring their fees more in line with U.S. schools, and they’re finding it doesn’t necessarily deter applicants.

This week Financial Times covered recent changes at McGill University’s Desautels Faculty of Management in Canada and Vlerick Business School in Belgium. The report highlighted an interesting pattern: after dramatically increasing their tuition, these schools are attracting more applicants.

At Desautels, tuition last year nearly quadrupled from $22,000 Canadian to $79,500 Canadian (about $62,500 US right now). This made the program entirely self-funded rather than relying on government grants as it had before.

But the rising tuition didn’t mean fewer interested applicants. In fact, applications are up about 15 percent this year, on track to set a record.

Don Melville, director of the MBA program, suggests applications have increased not despite the tuition hike but because of it. His theory is that a sticker price far below that of top U.S. schools undermines prestige and suggests an inferior product to some.

As Melville told Financial Times, “When tuition fees are so far different from other schools, the question is what is wrong.”

Vlerick Business School, which has seen its tuition go from €15,000 to €37,000 (currently about $42,500 US) over the last decade, has likewise found that higher costs set prospective students at ease about the program’s value.

Yolanda Habets, head of Vlerick’s MBA program, explained to Financial Times that “With the current price we have to answer fewer questions of whether this is a good MBA or not because the cost makes people see a value in it. Before, students were almost suspicious about what was being lost in a lower fee.”

However, she also cautions that tuition hikes alone aren’t enough – they have to be accompanied by actual improvements in the experience the program offers. In Vlerick’s case, an expanded curriculum, more services for students and higher faculty salaries all factored into the new fees.

Andrea Masini, head of HEC Paris’s MBA program – where tuition has increased sevenfold over the last three years – echoes this sentiment: If you raised the price of a Fiat to the price of a Ferrari it would not mean that the Fiat immediately becomes the same quality.”

While these kinds of fast-paced tuition raises are bringing some non-U.S. programs into the same ballpark as U.S. schools, the U.S. is still safely outpacing the rest of the world in MBA program costs. According to Financial Times, the average top-25 U.S. school costs $118,468 to attend.

By comparison, even programs like INSEAD, IE and IESE run between €65,000 and €78,000 (about $75,000 US and $90,000 US as of April 2016). Moreover, many European programs are 1-year MBAs, and a weaker euro relative to the US dollar offsets some of the increases.

Overall, non-U.S. programs still tend to be the less expensive option, but results from some schools moving toward higher tuition fees suggest that lower tuition can actually be a drawback at times – an idea that may be a sign of things to come.