MBA Fees: A two-year IIM programme can put you in debt for over 12 years

NEW DELHI: A two-year management programme at Indian Institute of Management (IIM) Jammu can place a graduate in debt for 152 months or over 12 years. A graduate of IIM Rohtak can look at over 11 years of equated monthly instalments (EMI) for the two-year programme. That's how expensive an MBA programme at an IIM now is. To put this into perspective, a graduate from a management studies department at Indian Institute of Technology (IIT) Delhi, one of the top-ranking b-schools in the country, will be debt-free in under four years.

Careers360 obtained placement data from annual reports of all 20 IIMs. Of these, 12 had given the average salaries for the top 50% of the batch -- the top half to bag the most lucrative packages in 2021-22 -- and all had mentioned the average and median salaries for the full batch. From this, the average salaries for the bottom 50% of the batches were calculated, along with tax deductions and net take-home salaries. The loan tenures were calculated on the basis of this, taking the fees for the two-year programme at the specific IIM as the principal amount and the education loan interest rate at 9.5% per annum. The last is fairly standard although the State Bank of India (SBI) education loan interest can be 10.2%. The maximum EMI is 30% of the net monthly salary.

Take IIM Jammu for example. While the average salary is Rs 13.78 lakh, the average salary for the top 50% was Rs 17.83 lakh. That would mean that the average salary of the bottom 50% was Rs 9.73 lakh. After deducting 25% for provident fund, employees’ state insurance and other standard deductions, and applying the tax rate based on income slabs to the remainder, the monthly take home is just about Rs 57,738. At 30% of the take home, the EMI would be Rs 17,321. The fees of IIM Jammu for the same batch was Rs 13.80 lakh. Assuming it is fully funded by a loan with no margin money, the principal repayable at the end of the two years becomes Rs 15.66 lakh.

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Assuming they make no part-payments on the principal amount for the entire loan period, a fresh IIM Jammu graduate will be in debt for over a decade despite attending a public institution subsidised by the government. Although the newer IIMs are still government-supported, they charge nearly as much fees as the established ones –IIM Ahmedabad, IIM Calcutta, and IIM Bangalore – which are financially autonomous and no longer receive government funding.

IIM fees, salaries

With the exception of IIM Ahmedabad, IIM Tiruchirappalli (IIM Trichy) and IIM Visakhapatnam, all IIMs recorded 100% placements in 2021-22, meaning all students registered for placements found jobs.

Eight IIMs did not divulge data on the average salary for the top 50%. For them, this figure was extrapolated from data they did share on mean and median salaries as well as averages for the top 20% or top 25%. Where this figure was calculated from other data, the numbers have been highlighted.

IIM average package, top and bottom 50% (In Rs for 2021-22)

IIM MBA fees 2020-21 and education loan

For the batch graduating in 2022, the applicable fees were set in 2020-21. That year – and for the years since – IIM Ahmedabad, IIM Bangalore and IIM Calcutta were the most expensive with a two-year MBA programme costing Rs 20 lakh or more for the batch. At the other end of the range that year were IIM Sirmaur, IIM Sambalpur and IIM Bodh Gaya.

Then there are several who charge between Rs 12 –16 lakh. By comparison, departments of management at the Indian Institutes of Technology charged far less, with the most expensive one, IIT Kharagpur Vinod Gupta School of Management charging Rs 10.29 lakh for MBA. This was still less than the lowest IIM fee.

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Given below are the two-year MBA fees at IIMs and the corresponding EMI loan tenures for the bottom 50%.

IIM fees for MBA 2 years (2020-21), loan tenures in months

IIT Kanpur charged as low as Rs 3.56 lakh and IIT-ISM Dhanbad, Rs 3.67 lakh. Despite this, they seem to manage fairly high average salaries. The fee at IIT Kharagpur Vinod Gupta School of Management was Rs 10.29 lakh in 2020-21 which was lower than that of all IIMs but in 2021-22, its graduates were placed at higher average and median salaries than 13 IIMs, all of them charging more. IIT Delhi, whose department of management studies (DOMS) has ranked higher than all but four IIMs in the National Institutional Ranking Framework (NIRF) 2023 ranking of business schools charged Rs 9.83 lakh – again, lower than all IIMs – but has average and median salaries that are more than over a dozen IIMs’. That said, even the highest average and median salaries at the IITs – both at IIT Bombay – are lower than those of the top IIMs.

Their fees are given below. Once again, where average salaries were calculated, the figures are in bold.

IIT DOMS: Fees, average salaries (2020-21), EMI tenure (months)

IIM MBA fees and debt

Taking all IIMs together and based on the 2020-21 fees, graduates would have left an average of Rs 17 lakh in debt, including the interest owed. For the bottom 50% earners in the placements, this can roughly translate into 94 months or 7.8 years of EMI payments at an average of Rs 26,548. This is of course, assuming a static salary and no part-payments on the principal amount.

The average salary of the bottom 50% across IIMs is Rs 15.97 lakh. For the IITs, this is Rs 13.15 lakh, calculated following the same method adopted for the IIMs. But the highest likely tenure for the bottom 50% earners graduating from the IITs DOMS is 67 months (at IIT Jodhpur) or less than six years. IIT Mandi was not included in this.