Simon Business School Lowers Fees to Raise Attraction

One US business school has admitted that it was charging too much for its full-time MBA program and will reduce its price tag by 14% for those students entering in the fall of 2016.

At a time when convention seems to dictate that the cost of an MBA can only increase, the decision taken by Simon Business School at the University of Rochester is certainly a refreshing one. Tuition across the two years of the full-time Simon MBA will be cut from US$106,440 to US$92,000, taking it under the US$50k threshold each year. To put this in context, a number of the highest-ranking business schools in the US now set students back more than  US$100k each year, as seen in the annual budget planners of NYU Stern, Stanford and Wharton. Looking at tuition alone, the Simon MBA will now ask for US$46k each year, compared to approximately US$64k at both NYU Stern and Stanford and US$71k at Wharton.  

‘Sticker price’ put people off the Simon MBA

The decision taken by Simon Business School to reduce fees appears more than a mere marketing trick to gain publicity; it’s one which has come as a result of a lengthy reassessment of the institution’s place in the US business education market.

Andrew Ainslie says that he spent much of his first year as dean of Simon Business School getting a feel of what the school had to offer, and where it might be falling short:

“The sticker price of the Simon MBA is relatively high compared to our peer schools,” Ainslie admitted this week. Simon Business School’s dean did qualify this fact by highlighting scholarship resources available at the school, but, fundamentally, he concluded that prospective MBA students wouldn’t necessarily get as far as this in their research before turning their sights elsewhere:

“That [scholarship] generosity wasn't visible unless you were engaged with us and had already applied,” he says, adding; “we believe that prospective students often overlook Simon due to our sticker price.”

The school says that while its MBA scholarship provision will continue to be generous, it will dip slightly to accommodate the fee fall – it therefore doesn’t expect annual revenue to take a hit as a result. Instead, the bottom line for Ainslie is to enhance the Simon MBA’s prospects of making it onto the target lists of talented applicants: 

“This approach makes the Simon Business School significantly more competitive and accessible to qualified prospects. Students need to find the right program for them and sticker price shouldn’t be a barrier to having our program in their consideration set,” Ainslie concludes.

The importance of MBA scholarship provision

There is a wider point here about MBA scholarship provision and the proportion of students who join programs on discounted prices as a result – numbers that aren’t always forthcoming to applicants on first glance at a business school’s profile. Simon’s dean told Poets & Quants that a number of schools had simply fallen into the habit of rising tuition by a few percentage points each year and then increasing their MBA scholarship provision accordingly, to ensure they can keep attracting the brightest students possible. Harvard Business School, for instance, now charges tuition of just over US$61k each year yet says that around 65% of MBAs receive some form of financial assistance (internal or external sources); meanwhile Stanford estimate that more than three-quarters receive support in this sense.

Whether this situation originally came about by accident or design is a moot point. What we can say is that applicants in every region of the world cite the availability of financial aid and the possibility of obtaining an MBA scholarship as one of the most important factors behind their choice of business school.

In the US and Canada it was applicants’ third most-cited factor, behind a school’s reputation and its ROI (return on investment) potential, according to the QS TopMBA.com Applicant Survey 2015. In Western Europe, scholarships came second only to reputation, and in all other regions of the world it was the most important factor for applicants.