Placement season at top B-Schools provide a glimpse to economic scenario in real world. In times of high economic growth, placements at top B-Schools tick all the right boxes-Students get placed in record 2 days, average starting salaries above 15 lakhs, record offers of 1 crore and above. But behind all these figures is the bitter truth of opportunity cost of doing an MBA. Irrespective of booms and busts, one thing is common amongst all the times – burden of educational loan EMIs.
Rising MBA fees and Stagnant Campus salaries
There is a dramatic rise in MBA fee from 2008-09 onwards. During 2007-09, the entire course of PGP at IIMs cost a maximum of Rs. 6.0 Lakh and minimum of Rs. 3.8 Lakh. The same is now upwards of Rs. 13.0 Lakhs. This holds true for other IIMs including the new IIMs. The fee component charged by Indian B-Schools has seen Compounded Annual Growth Rate (CAGR) of 22% from 2009 to 2015.
When the average salary growth in campus placements is much lower than that of growth of fee, Payback period (the length of time required for an investment to recover its initial outlay) increases. There were many instances where people left jobs at Rs. 10.0L~12.0L p.a. to join MBA programme and ultimately settle for 15.0L package post MBA. When opting for a 2 year PGDM from IIMs, students should also take into consideration the opportunity cost i.e., income foregone if they were employed in the 2 years of MBA. For those who are looking at better salary package and career post MBA, one thumb rule to look at whether to join MBA is that your post MBA salary should be atleast 3x~4x times your pre-MBA salary. Considering all these factors one should opt for an MBA from IIM or any top B-school in India. But for those who are looking for once-in-a-lifetime opportunity to study at the best B-school, this should not matter.