How to Pay For an MBA

MBA degrees don’t come cheap. Although salary increases come with the territory, and often promotions, tuition fees can soar into six-figures at top US business schools.

Luckily, there are plenty of ways you can pay for an MBA, and we’ve found the best of them.

Scholarships, fellowships and grants

The average MBA candidate has 30 percent of their total financial costs covered by scholarships, grants and fellowships, according to data from entrance test administrator GMAC.

At the Stanford Graduate School of Business in California, approximately half the MBA cohort receives fellowship funds each year. The average fellowship is about US$35,000 per year, and funds are allocated to students based solely on demonstrated financial need.

Other business schools award scholarship dollars based on merit. At the University of Chicago Booth School of Business, all scholarships are allocated in this way: based upon educational achievement, professional goals, competitiveness and more. Chicago Booth’s Wallman Fellowship, for instance, covers full tuition (US$72,000 per year) to someone who demonstrates commitment to advancing the interests of women in business.

According to GMAC, the proportion of business school students receiving scholarships has increased year-over-year in 2018. Brandon Kirby, admissions director at the Rotterdam School of Management in the Netherlands, says, “schools recognize the significant investment a candidate makes when choosing to pursue an MBA, so scholarships play a role in this equation.

“We prefer to keep things minimal and offer only three types of scholarships – merit, diversity and needs-based, which all have different criteria.”

Employer support

Because MBAs are for advancing one’s career, getting an employer to fund your course makes sense.

However, the proportion of MBA candidates receiving full or partial funding from their employer has fallen in recent years, but with some effective convincing, they’ll still open their wallets.

Data from GMAC shows people are more likely to get employer funding for online MBA degrees, followed by EMBA programs and part-time courses. That’s because students typically maintain full-time work, so their employer doesn’t lose them for up to two years, like in a full-time MBA.

Funding is typically used to cover some or all tuition fees, but some employers can also help with maintenance costs for travel and living expenses. Another arrangement some employers offer is to deduct tuition costs from your annual salary and pay it directly to the business school. This way, you can avoid paying some tax on it.

To ensure employer support, you’ll need to sell the benefits of the qualification and stress their return on investment (ROI).

Some elements of the MBA ROI are clear, such as developing advanced analytical knowledge and increasing pay. But, admissions consultant Stacy Blackman says some are harder to measure because they’re qualitative. She says, “For example, the valuable networks and prestige afforded by an elite MBA brand can’t be assigned an absolute value or number.”

Get a part-time job

One of the best ways to defray tuition costs is to earn while you learn. The proliferation of online and part-time MBA degrees has made this possible for more people than ever before.

However, full-time MBA students can make some cash on the side to help fund an expensive business school program.

Schools often advise candidates not to take a part-time job during a full-time MBA, because the course is intensive, and it could leave you stretched.

One option is to complete a summer internship; if you’re on a two-year MBA that’s typical in the US. At Harvard Business School in Boston, the median monthly base salary of MBA interns this year was US$8,000. Pay appears to be highest in consulting, where at Harvard the base salary was over $US12,000.

An added bonus is a full-time job offer could be made following a successful summer internship.

Bain & Company, one of the top consultancy firms, last year offered 200 internships to MBA students and it typically hires 90 percent of them. The average annual intern (associate) salary at Bain is between £79,000 (US$102,704) and £87,000 (US$113,105), according to jobs and recruitment website Glassdoor.

Crowdfunding

While it’s a little unconventional, crowdfunding can be a great way to pay for an MBA. With banks in recent years less willing to lend, particularly to international students who don’t have a US credit rating, crowdfunding is one option for securing a loan.

SoFi, an online lender founded by Stanford Graduate Business School students, provides loans to some MBA students, for example at Columbia Business School and the Yale School of Management. The minimum loan you can take from SoFi is US$10,000, rising to the total cost of business school (tuition, living expenses, travel, books, etc).

For those who do secure loans from a bank or government, online lenders such as SoFi tend to offer competitive interest rates to refinance a loan, so you’ll (hopefully) end up paying less than you thought.

Business school students could also turn to crowdfunding websites such as Indiegogo or GoFundMe. They would post their pitch online and attract money from a numerous retail investors, who typically pledge small amounts. But this isn’t an easy option, with candidates often having to post regular updates on social media and create videos, to secure the money they need.

Although total MBA costs can be astronomical, the associated benefits remain huge, including a prestige brand, salary bump and global alumni network.