Opportunity cost of doing MBA in India

Out of all study programs, MBA is a favorite course among Indian student community. Given the prospects of a rewarding career after mba in iim and other premium institutions; many candidates are treading the path of management studies. However, before making headway in this direction by considering this critical life altering move, take a pause and get down to calculate the opportunity costof pursuing  MBA in India.

While evaluating whether to go for MBA or not one should objectively evaluate the decision on parameters of overall Return on investment, opportunity cost, tuition fees, preparation cost, badge value, alumni network, choice of career etc. to clearly understand the real cost of doing an MBA. The impact of the decision to pursue an MBA on personal finance can be long lasting.

Ask yourself if MBA is financially worth?
Bear in mind that pursuing an MBA from best institutions in India has its share of financial burdens on the individuals and their respective families. This clearly implies that one cannot afford to overlook the importance of financial costs while considering the prospects of studying MBA program from a leading MBA school.
What is the opportunity cost for doing an MBA?
Tuition fee takes the major chunk of your financial resources
The first and foremost to cast a huge impact on your financial resources is tuition fee and cost of living while doing an MBA degree. A two-year residential MBA program at one of the best b-schools in India will cost anywhere from 10-15 lakh.
You can always count on the education loans available from various Indian banks. However, you must weigh your existing financial condition before going for loan of such mammoth amount at 10.5 to 12% floating rate of interest. Banks on their part will also ensure if an individual is in a position to repay the loan by sealing the contract with collateral security and other mandatory modalities.

 The opportunity cost

The whole idea of going for an MBA is to either accelerate or change one’s career. While deciding on MBA one should carefully consider the opportunity cost. Opportunity cost includes foregone salary, professional experience and perhaps a promotion. One should also evaluate the future value of any asset (by retirement age) which one could have invested into using the tuition fee and cost of living mentioned in Point 1 above.

Cost of application forms
Let’s now come to the lesser amount, but significant one when it comes to calculating the opportunity cost of studying MBA program at the top MBA College in India. The application fee for CAT exam, which is the doorway for prestigious iim colleges in india, is approximately Rs 1600. If you want to apply to other business schools accepting CAT acores, then be ready to part away with the cost of their separate application forms, which is anywhere from Rs 1500-2500. Now, let’s get to the closer understanding of taking the GMAT exam. If you want to take the GMAT once, then you will have to spend US $250. Add to this US $28, the cost of sending additional score report to each business school.
Save a portion for preparatory classes
With the country youth vying to enter the gates of a prestigious MBA school to pass out and land a job in top global brands, the number of coaching classes has also sprung up exponentially. For a written entrance exam, be ready to shell a minimum of Rs 25,000 for good coaching centers. If you are lucky to have cleared the entrance exam, add similar amount to be giving away at the coaching centre for the interview and essay writing preparation.

Giving up your career for MBA?
If you are already settled in a career before taking up MBA course, you have a lot of brainstorming to do to calculate opportunity cost. You must take into consideration the forgone salary, possibilities of a promotion, and years of professional experience you are going to forsake for MBA degree from top collages in India.
Cost of doing an MBA has a significant impact on individual and his family. One not only needs financial support but also emotional support from the family. It is important to clearly evaluate MBA option along with the impact on personal finance both in short as well as long-term. It’s important that benefits of doing an MBA considerably outweigh financial costs associated with it.