Facing the question of how to finance your desired MBA might make you feel as though you’ve reached a deadlock. It might seem like “mission impossible”, as most people don’t have the option of going to the bank to order a bank transaction for thousands of dollars to pay for the course.
Indeed, finding money to pay for all the expenses that go with an MBA – tuition fees, health insurance, living, travel and costs on books and educational materials, is one of the biggest challenges facing many MBA students. However, as with everything, there is also a good news. Funding your MBA is possible! It is important to be well informed about the numerous options available and finding the best one depends on the personal efforts of every would-be MBA. That’s why a thorough research of all available funding resources is a must.
Naturally, at the start of your research, the first question would be how much do you have in your personal bank accounts? Can you rely on your parents to support you or would their savings go on a new house or a series of cruise trips for the next 10-20 years?
As a matter of fact, it’s the exception rather than the rule to pay for the whole MBA bill from your own and your parents’ financial resources. However, if not paying for all MBA costs, many students use savings to contribute to part of them. The luxury of having the cash in a bank account is a privilege for only a few. The rest rely on the other funding options available on the market.
Most of the business schools have institutionalised scholarship programmes providing scholarships to a limited number of students who meet certain criteria. Schools’ criteria range is very wide – merit, experience, nationality, entrepreneurship, gender, financial need, etc. In general, scholarships are awarded to exceptionally able, talented and high-potential candidates.
Some schools extend scholarships to a limited number of students – three to ten, while at some schools their number is bigger. At some schools, the number of MBA students receiving scholarships can reach up to 80% of all students. There are fixed-amount scholarships, full scholarships or partial scholarships that cover between 10% and 90% of the tuition fees. Apart from the scholarship, some schools provide even for the costs of living.
According to findings of the Financial Times in its 2016 Global MBA Ranking, about 45 percent of students have received scholarships, at around $32,000. “More than half of students (56 percent) in North America receive a scholarship worth around $37,000 compared with a third of students in Europe who receive only around $20,000,” reads FT in its “MBA by numbers: inside the $200,000 cost” article.
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Grants and fellowships
Governments, private foundations and other type of NGOs are also a significant resource of funding. Like schools and their scholarship programmes, they have developed various educational grant schemes awarding grants to a limited range of students - to students of a certain religion, ethnicity, nationality, or academic interest. The common thing about all grant and scholarships is that they are awarded to students demonstrating exceptional academic and professional record and showing potential for future success.
The list of grant and scholarship awarding organisations is long as each country with a developed business education sector usually has such bodies. But to name few, the list includes the U.S.-based Fulbright Commission, British Council, British Foreign and Commonwealth Office, the German Academic Exchange Service (DAAD), the Netherlands Fellowship Programme (NFP) and MENA Scholarship Programme (MSP), also in the Netherlands, European Union’s Erasmus+ programme,the Ford Foundation International, the Aga Khan Foundation, the American Association of University Women and many others.
Those who work can explore another resource – corporate sponsorship. According to Todd Rhoad, co-author of books for MBA aspirants "The industries that would offer greater opportunity would be the industries that strive to hire top-tier MBAs, such as consulting, private equity, technology (Google and Amazon) and investment firms."
Those companies have institutionalised tuition assistance programmes under which they provide financing for employees’ MBA study while, in return, the employee commits to the organisation. Each company determines the level of commitment and the return that it wants through a formal retention mechanism. The list of companies that offer tuition reimbursement programmes as part of their customary benefit structure, including high-profile nationals and internationals include also ADP, Deloitte, UPS, Raytheon, Lockheed Martin, AT&T, Intel and Disney
Apart from this, some corporate sponsorships are extended under special deals between business schools and their corporate sponsors which provide a limited number of scholarships to students.
As a matter of fact, getting a sponsorship is not the easiest way to finance your MBA and a Financial Times survey proves it: “Though sponsorship can cover the whole cost of the MBA, only a minority of students receive this,” reads the Financial Times in its “MBA by numbers: inside the $200,000 cost” article. “About 10 per cent of those students that responded to the FT survey [for 2016 Global MBA Ranking] received sponsorship, at an average level of $70,000.”
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And the final option is borrowing money for your MBA. Many banks have special loan programmes for students providing special soft-term student loans. Banks know your credit history and they can best assess your creditworthiness. Loans with competitive interest rates, grace periods and long repayment periods are also available due to collaboration between schools and banks. Chase, Citibank and Sallie Mae are known for their student loans.
Apart from banks, non-banking financial institutions and private organisations offer funding options for prospective MBA students. London-based Prodigy Finance is one of the best-known programmes. It is a platform for alumni and other community stakeholders to offer funding to students while earning a commercial rate of return.
Some loan programmes are subsidised by the government if one can demonstrate financial need or eligibility for government assistance. The Stafford Loans in the U.S. and the Career Development Loans in the UK are widely known as such programs. Similar loan schemes exist also in other countries in the world and finding the best loan depends on the personal research of each would-be MBA.
Well, now at the end of the research, you are surprised how many options there are on the market, aren’t you? Finding the best way to finance the MBA requires a sound plan, demanding a thorough research of all available options.