An MBA for free

Arizona State recently announced that it would not charge tuition any more for its full-time MBA program.  In addition, ASU plans to expand the size of the program.  Right now ASU charges $54k to in-state students (over two years) and near $90k for out-of-state students.  The free tuition offer could cost ASU as much as $20m each year.

ASU is betting on a stronger applicant pool generating more employer interest and higher rankings, resulting in a rankings boost.  To their credit ASU is taking a big risk to better position its MBA program.  They are investing money from their own endowment.

What impact will this have on the MBA market?  The answer depends on how the offer changes the matching process between students and schools.  I doubt students originally bound for Stanford and Harvard will now go to ASU for free tuition.  Also, many schools in ASU's tier already give lots of financial aid to full-time students.  If ASU already was supporting half of its class, another 50 to 60 free rides will not have a dramatic effect on the entire market.

Most importantly, tuition costs are but one part of the MBA ROI calculation.  Lost earnings are a much larger component.  The earnings bump from the degree is also critical.   Arizona State does a good job in that regard (#41 in employer satisfaction in the latest Businessweek rankings), but I have to wonder whether ASU would have been better off spending less than $20m and focusing on the student experience (#62 in alumni and #61 in student satisfaction) and employer development.

At NC State, we provide full tuition graduate assistantships to a significant share of our full-time MBA students.  In exchange, these MBAs support faculty teaching and research.  Other students receive scholarships that offset some tuition costs.  Our key differentiator is not our tuition policy; it is the "think and do" spirit of NC State and the company-sponsored projects that are a key part of our classroom experience.