Today, MBA is considered to be one of the most sought after postgraduate courses across the world as it offers a lucrative career path and attractive pay packages. However, MBA in itself is an expensive affair hence opting for a college with the highest return possible has become the primary decision making factor for many students.
The ROI Calculation on MBA Program
In general, when we make an investment we always think about the returns that we can derive from that investment, and the same holds true for a management program. The big difference here is that it is a person’s future which is at stake.
Now the question here is that – ‘Will your MBA investment justify the job that you do?
Let’s answer this question with the help of an example. On an average, let’s say the cost of an MBA program in India is INR 6 lakh and there is a student who enrols for that program to pursue an MBA and once he completes his post-graduation, he starts working and draws an annual salary package of INR 3 Lakh.
When we divide the annual salary package by the amount invested we get an ROI of 0.5. Ideally one would expect this figure to be 1 or greater than 1.
This ROI too comes with a great deal of risk as there is no guarantee whether a person will even get a job or not after investing his time and money. In fact, according to the data on the AICTE website submitted by colleges themselves, it is clearly stated that only 35% of the students are actually employed. This emphasizes on the fact that why taking this risk is not a viable option for many.
Ideal ROI Scenario for B-Schools
Now in an ideal scenario, let’s assume the financial risk involved is borne by the institute and not the students. In that case, the institute should be liable to return the fee to the students if it is unable to place them. Else, it should charge the students a fee only after it gets them placed. In this situation the risk taken by the students would be minimal in terms of the time they invest with the institute and their financial risk would be zilch.
To conclude, we need to create an ecosystem in the management education space wherein the course fee and annual salary package are almost equal and the financial risk needs to be borne by the institute and not the students.
The author is COO & Co-Founder, Sunstone Eduversity