MBA Debt Burden: The Embarrassing Data Point That B-Schools Stopped Reporting

Poets&Quants has examined the average MBA debt burden at the top 25 U.S. business schools and a handful of others, and come away with two key conclusions: Debt is rising at most schools, and that fact has prompted most schools to stop reporting their student debt burdens altogether. Since 2016, most of the top B-schools have decided that publishing MBA debt data scares off potential applicants — and before the coronavirus pandemic, when schools upended admissions protocols and extended application periods and saw a flood of applicants as a result,.

In 2017,, all but four of the top 25 schools reported their graduates’ debt burden to U.S. News & World Report. Last year, only 11 of 25 reported the data. Now that the widespread MBA app decline has reversed, will schools be more forthcoming about debt? We’ll find out later this month when U.S. News releases its annual trove of rankings data.

CALCULATING MBA DEBT BURDEN WHEN SCHOOLS WON’T REVEAL THE DATA

In the meantime, estimation is essential to understanding the MBA debt landscape. And so P&Q looked at four schools that did report their debt burden in 2020 — UC-Berkeley Haas School of Business, Duke Fuqua School of Business, , 15 schools graduate MBAs with six-figure debt, with the highest amount at the University of Pennsylvania’s Wharton School — a whopping $145,186 — followed by USC Marshall School of Business ($140,107), MIT Sloan School of Management ($135,588), NYU Stern School of Business ($128,953), and Dartmouth College Tuck School of Business ($128,373). The highest non-estimated MBA debt average is at Duke Fuqua School of Business, which comes in at $119,125.

The lowest overall MBA debt burden in the top 25: the University of Washington Foster School of Business, where MBAs graduated in 2019 with an average of $41,082 in debt. Still, that was a 28.2% increase over four years earlier.

Among schools where estimates were not necessary, the biggest increase in MBA debt between 2016 and 2019 happened at Texas-Austin McCombs School of Business, where debt increased 38.6% to $82,937 from $59,860. Stanford GSB was next, growing its individual debt average 37% to $109,747 from $80,091. Notably, Harvard Business School had the smallest increase: just 1.3%, to $87,539 from $86,375. (We also know that in 2020 just over half of HBS grads graduated with debt, and that they averaged $90,000, a year-over-year increase of just 2.8%.)

One big bright spot: The percentage of MBAs who graduate with debt has declined at most schools that still report the number. In 2016, 18 of the top 25 schools reported an average of 54% of their MBA grads had debt; in 2019, of the 12 schools reporting the number, the average had dropped to 48.6%. The apples-to-apples comparison of the same 12 schools in 2016 versus 2019 shows the percentage of debt-ridden MBA grads declining at 10, the same at one, and growing at just one school, Indiana Kelley School of Business, where it jumped from 45% to 55%.

Also bright: At four schools in the top 25, the actual amount of MBA debt has actually decreased since 2016, with averages falling at Yale School of Management, Virginia Darden School of Business, Emory Goizueta Business School, and Indiana Kelley. The average decrease was 8.9%, but that is skewed by the Kelley School’s huge drop of more than 20%, from an average of $70,146 to an average of $55,834. Debt also declined at four other schools we examined: Vanderbilt Owen Graduate School of Management, Ohio State Fisher College of Business, Rochester Simon Business School, and Arizona State Carey School of Business, though it was up at three others. Debt at the lower-ranked schools overall was basically flat: Of the seven schools we examined, the average was $52,463 in 2019, down slightly from $54,851 in 2016.

Most notably, one school, the University of Wisconsin School of Business, saw a 75% jump in debt — the biggest increase of any school we looked at, including all of the top 25 — but as Blair Sanford, Wisconsin’s assistant dean of MBA and master’s programs, points out, focusing on the increase alone misses the fact that Wisconsin has the lowest average debt out of all top 40 MBA programs, and only 35% of graduates were in debt. “We pride ourselves on being able to deliver a great return on investment for our students,” Sanford says. 

MAYBE IT’S NOT SO BAD AFTER ALL

And then there are those who say the degree is still worth it, and the debt doesn’t faze them.

At Reddit, “eskimoroll” writes: “It took me 3 years to pay off my $150k loan and that’s even with the first year out of school (HBS) working on my own startup where I paid myself a relatively small amount to keep burn rates low. I then transitioned to FAANG (Facebook, Amazon, Apple, Netflix and Alphabet, formerly Google) and that made the payback pretty easy even with high cost of living in the Bay. I traveled the same amount as usual for vacations (trips to NYC, Chicago, Hawaii, ski trips, etc.) but I also traveled a lot for work which helped with points and status. My wife and I spent in moderation but not anything that would be considered indulgent. She also worked which helped our income situation but she earned significantly less than I did.

“It’s interesting how that student loan felt like such an enormous and insurmountable burden upon graduation but in a very short amount of time, it turned into an afterthought. I didn’t really think about it much and when larger chunks of money fell my way from bonuses or vesting stocks, I just threw them into the loan and it worked out. I probably could have closed that loan out sooner than I did but I had a really low interest rate on it so I just let it ride for a bit.”

Redditor “KCSunshine111” writes that he graduated from an M7 almost four years ago and has been working as a product manager at two different startups since graduation. “My salary started at ~$100k, am now at ~$150k. I’ve never gotten any form of a bonus, so that is my total comp (not including options since that’s highly intangible at a startup).” He adds that he took out one private and one Stafford loan each for both years, for a total loan amount of about $160k. “I’m still paying off my loans. Since changing companies last year and the pandemic, I’ve had more money to throw at it. I expect it will take me just over five years total to pay it off.

“I’ve been living in cities with a very HCOL (high cost of living), but I’ve been able to find somewhat cheap apartments. I don’t spend much on ‘fun’ (clothes, alcohol, gadgets), but I don’t cheap on food (used to eat at restaurants pretty frequently, though I usually brought lunch to work) and I was taking nice vacations a couple times a year.”