Paying for the course is probably the scariest thought when considering an MBA. Leaving a job, moving country, leaving behind family and friends are manageable. But where will you find the $30-70,000 needed for your education? Different nationalities approach MBA financing in different ways.
TopMBA surveys over 3,500 MBA applicants each year to understand their attitudes. We establish if financing is a barrier to MBA study. There are many funding options, ranging from: educational loans, career development loans, scholarships and corporate sponsorship. Although 70% of MBA applicants look for some form of scholarship, only 13% of applicants say they would not take an MBA without a full scholarship. Beyond this common desire for a scholarship, applicants of each nationality place emphasis on different sources of financing. In North America, loan financing is the dominant means, with over 80% of candidates expecting to borrow money to pay for their MBA. In Europe, loan financing is also expected to be utilized by over 70% of applicants. In India and the Middle East, where there is lower loan availability, only 40% expect to borrow money to finance their MBA. This compares to 56% in Latin America and 65% in Asia. Parents and family play a much more important role in Asia, as well as Latin America and Central and Southern Europe. Worldwide, 39% of applicants look for help from relatives, but in these regions, nearly 50% of applicants will expect relatives to play a major role in helping them finance their studies. Not surprisingly, in more affluent regions, like the US and Western Europe, personal savings are more important than relatives. Given that the MBA is a post-experience qualification, most candidates have worked for a few years and saved up funds to pay for their MBA. Worldwide, 62% of candidates expect to use some of their own savings. This rises to 75% in the US and 82% in Western Europe. Surprisingly, few who take full-time MBAs are sponsored by companies, primarily because most people prefer to keep their career options open and do not want to be tied to re-joining their former employer. Only 23% of applicants expect any kind of company sponsorship and, in practice, less than 10% actually receive any form of corporate contribution to their full-time MBA studies.
By far the most popular MBA financing method is an education- or career loan and, increasingly, the terms of these loans are dependent on the choice of business school. HSBC is offering Cranfield and LBS students the opportunity to take out a loan to cover all tuition fees, as well as living expenses of up to £10,000, or two thirds of the salary earned in the previous year, whichever is the greater. Unlike most schemes, the HSBC Bank Loan Scheme is available to students from anywhere in the world. Interest is charged at 2% above HSBC Bank's base rate for the duration of the loan. There are no up front commissions and no early payment redemption charges. IESE in Barcelona has a loan scheme offered through Banco Santander Centro Hispano (SCH), which is very similar to the HSBC scheme. It is school specific and is available to all students accepted by IESE, irrespective of nationality. The trend towards school-specific loan schemes also exists in the US. The Wharton School in Philadelphia offers a loan programme, through Citibank, which guarantees most accepted students a prime plus 0.5% interest rate loan, with a 15-year payback period, and no co-signers or credit check required. Harvard Business School also offers a similar scheme through Citibank. In general, in the US, applicants are subject to stricter financial scrutiny post September 11th. For applicants interested in studying abroad, major domestic banks in most countries have excellent education loan schemes offering low interest rates along with relatively easy approval processes. Terms differ country by country and applicants need to enquire locally.
Most schools have a financial aid department able to advise on sources of scholarships and other financing options. This should be the first port of call for anyone offered a place. topmba.com has surveyed business schools to see if scholarships are available to international candidates. In the US, 54 out of 75 schools answered "yes". In Europe 63 out of 108 schools answered "yes". A scholarships database will be available on topmba.com from Summer 2005. It is worth pursuing available scholarships, but, even if you have to borrow the money, Trevor Boomstra, an MBA at Manchester Business School, concludes, "I had faith in myself. I was sure an MBA was the right thing to do. So far, this has been a great experience - all the learning, new friends, international contacts, everything!"
American applicants should look into FAFSA, which is financial aid available only to US citizens. However there are options for international students wishing to complete an American MBA programme. Jack Day from the Drucker Graduate School of Management, says: "financial aid is requested from the same pool for domestic and international students". The awards are meritbased and the committee uses GMAT scores, the student's personal statement and work experience to make the determination. Many schools also offer work assistantships to help provide students with income while they complete their MBA. Bentley offers Graduate Assistantships to international MBA candidates that meet the criteria of merit and diversity. These positions will compensate for three quarters of the tuition in exchange for 12 hours per week working as a Research Assistant for a faculty member. Merit is determined by academic background, and work experience, along with GMAT and TOEFL scores.
- The AAUW Education Foundation offers a specific MBA Award for women in their final year of study. Info by email from: email@example.com
- Can HELP have loan programme for international students who have a loan co-signed by a credit worthy US citizen. Website: www.iefc.com
- GATE Student Loan Program, has similar requirements with repayment after the MBA is complete. For more info: www.gateloan.com
- MEFA Loan Program is for international students attending one of over 80 colleges and universities in Massachusetts. For further details: website www.mefa.org
- Global Grants - a service for matching scholarships and international students.
See: http://www.sosab.se/nyform.html For scholarship information visit www.topmba.com/mentor - the new scholarship database will be available from Summer 2005