MBA Financing

Financing the MBA is probably the biggest issue for most people considering it. This is especially true for foreign students, as the US Dollar is usually strong and financing opportunities are more difficult to find.

Calculate the Return on Investment for an MBA

A political campaigner in Washington, D.C., Kate Doehring, 31, decided to pack her bags and move to the Midwest to earn an MBA in a place with a cheaper cost of living. “I was looking at Georgetown and George Washington here,” says Doehring, who is about to finish her first year of business school at the University of Wisconsin—Madison. “To stay in D.C., just sheer cost would have been at least double or triple than Madison.” Like many prospective MBA students, Doehring looked at her MBA as an investment and weighed the cost of living, lost wages and potential debt along with a projected post-degree salary of $100,000. Average salary after graduation compared with debt, referred to as salary-to-debt ratio, is one tool for calculating the return on investment for prospective MBA students. “I used just over $100,000 annually, plus or minus $10,000,” says Doehring, who is on target to finish the program with less than $15,000 in debt. “I used $100,000 as a benchmark because those numbers were communicated when I did my campus visit.” According to data submitted to U.S. News by ranked business schools, UW—Madison had the highest annual salary-to-debt ratio for full-time MBA graduates who found jobs paying an average of more than $100,000 in salary and bonus within three months of earning their degree. Students at Wisconsin School of Business can expect a 7.4-to-1 salary and bonus-to-debt ratio. That translates into an average salary and bonus of $114,815 and $15,481, on average, in debt. Of the other ranked business schools with grads earning more than $100,000 in salary and bonuses, these schools had the highest salary and bonus-to-debt ratio for the Class of 2015: the Marriott School of Management at Brigham Young University at...

MBA by numbers: inside the $200.000 cost

When it comes to value for money, European MBA programmes outperform their North American counterparts. Nine out of 10 of the best value-for-money programmes in the Financial Times Global MBA ranking 2016 are in Europe, while 44 of the North American programmes are in the bottom 50. But what are the cost considerations that underpin such comparisons? A full-time MBA programme can be a mighty investment. Not only do most come with a hefty price tag but, unlike part-time or online MBAs, also bring an added penalty in lost salary, or opportunity cost. A full-time programme at a top 100 school costs on average just under $200,000, according to a survey of MBA students graduating in 2012, conducted as part of the FT’s 2016 rankings. This includes tuition, accommodation and day-to-day costs totalling $112,000, and an opportunity cost of $106,000. As for tuition, the 101 schools ranked by the FT in 2016 have average fees ranging from less than $30,000 for Birmingham Business School to around $135,000 for the top four US programmes: Harvard Business School, Stanford Graduate School of Business, the University of Pennsylvania’s Wharton School and Columbia Business School. Data from the class of 2012 show that students paid tuition fees of $78,000 on average. Part of Europe’s value-for-money appeal boils down to course length. Full-time MBA programmes last about 18 months, but in Europe they are typically a year, or 10 months at Insead. Some North American programmes have one-year and two-year tracks, but most students opt for the longer version, which lasts on average 21 months… Read full story: Financial...

Scholarships up the ante in fight for top MBA students...

First, as a teenager, she emigrated from Zimbabwe, which at the time was plagued by economic undertainty and instability, to Germany, where she completed her undergraduate studies. Her African roots provided her with a second piece of good fortune for business school, since they qualified her for a full scholarship under the Kofi Annan Fellowship programme, named after the former UN director-general. This bursary covered the €25,000 fees for her masters in management at Berlin’s European School of Management and Technology (ESMT), plus money to cover food and rent. Ms Ndlovu insists she did not choose the school for the scholarship. But she cannot deny that securing financial aid has made studying a comfortable experience — even more than her undergraduate existence, when she had to work part-time to pay her living costs. “I feel the difference now a lot because I know the pressure you have to fund your own studies,” she says. “It is pretty excellent.” Scholarships have traditionally been seen as a way of enabling those who would otherwise struggle to get a postgraduate education to achieve their dream. It is why alumni are often more willing to give to support financial aid rather than a new campus building. However, business school endowment strategies are increasingly being driven by the use of financial aid as a carrot to lure the most promising students rather than to enable access to education for the most needy. Sarah Brown, a former financial consultant from San Francisco, received substantial offers from Stanford Graduate School of Business (GSB) and the University of Pennsylvania’s Wharton School. Ms Brown, who asked for her real name not to be used in this piece, admits the generous scholarship offered to her by Wharton, more or...

How to Get an MBA Scholarship

Some tips on how to increase your chances for getting more money A big question on the mind of many an MBA applicant: “How do I get a scholarship?” “It’s a question that everybody asks,” says Garry Cooke, assistant dean for student recruitment at the University of Illinois at Chicago’s College of Business Administration (UIC). Indeed, an MBA is expensive, and when you include living expenses and the opportunity cost of taking a year or two off from work, the grand total for getting the degree might seem astronomical. Fortunately for many cash-strapped applicants, many business schools tend to award scholarships to promising MBA applicants. This year, for instance, China’s CEIBS awarded around 12 million yuan (around 1.85 million USD) in merit scholarships, which was distributed to some 80 students, covering between 20 to 80 percent of tuition costs for each recipient. At NYU’s Stern School of Business, around 20 percent of all admitted students receive merit-based scholarships, the majority of which are awards for either full tuition or half tuition. Merit scholarships are just that: they’re given out based on how well an applicant has done, often in past academic and work endeavors. “These are awarded based on applicants’ academic and professional achievements, personal accomplishments, interview performance and potential contributions” to the MBA class, according to Yvonne Li, the director of admissions and career services at CEIBS. How do business schools make these decisions? In terms of potential contributions to an MBA class, “work experience is very important,” says Christine Cordt, MBA marketing manager at the Frankfurt School of Finance & Management, since a student with a strong background will be able to bring a lot to the table during class discussions. Additionally, according to Cordt, when awarding...

10 MBA Programs That Stick Grads With the Most Debt...

When it comes to student loan debt, graduate students get slammed. In fact, about 40 percent of the approximately $1 trillion in outstanding student loan debt comes from graduate and professional degrees, according to a 2014 report from the New America Foundation. Unfortunately for prospective MBA recipients, those programs don’t buck the trend. Among the class of 2014, the average debt load for those who borrowed was $56,157, according to data reported to U.S. News by 84 ranked schools. That amounts to about $635 in monthly student loan payments over the course of a standard 10-year repayment plan, according to a student loan repayment estimator. That figure assumes 6.41 percent interest, which was the 2013-2014 rate for federal Graduate PLUS loans. And that doesn’t include any debt borrowed for an undergraduate degree. If that sounds tough, imagine graduating from New York University, where the average loan bill for borrowers in the class of 2014 was $116,533. Repaying that debt – the most of any b-school reporting data to U.S. News – would require more than $1,300 per month on a 10-year plan at 6.41 percent. With an average annual base salary of $112,096, some NYU graduates may be able to handle those monthly bills. For those making less, enrolling in an income-driven repayment plan can help make payments more palatable. On average, 44 percent of 2014 graduates borrowed to earn their MBAs, according to the 77 ranked schools reporting that figure to U.S. News. Of the eight schools among the 10 most debt-ridden reporting that number, 55 percent of 2014 graduates borrowed to earn their degrees. [Discover the eight student loan repayment myths experts want to see disappear.] The following business schools had the highest debt among 2014 full-time...

How to Pay for Your MBA Program

Getting into a masters program for business is the first step in achieving your post-graduate education. However, finding out how you are going to pay for your Masters in Business Administration is integral in making the whole plan work. Here are the various costs associated with an MBA program and ideas on how you can affordably pay for it. Masters in Business Administration Costs: While calculating the costs of an MBA program, you should keep in mind that there are many additional costs other than tuition. To get an idea of the comprehensive costs associated with an MBA, factor in all of the costs listed below. Tuition & Fees Registration Fees Loan Fees Room & Board Books & Supplies Miscellaneous Cushion Keep in mind that many school related costs increase each year. A conservative approach is to estimate an increase of 5% in school tuition and fees each year. Other living expenses may increase as well, such as your rent or the price of gas. How to Pay for Your MBA program: There are several ways that you can pay for your MBA program and you’ll likely use all or some of the methods. The first thing every student should do is utilize as many scholarships and grants as possible. Next, you may be eligible for federal assistance for your school fees. You can cash flow a portion of the expenses if you continue to work and allocate some of your income for schooling. If you have money in savings set aside you can use that for school fees as well. Whatever balance is remaining after scholarships, grants, and personal contribution can be covered by student loans. Ways to Cut Back on Costs: One of the best ways to...

How I Paid Off My $90000 MBA in Less Than 2 Years...

arlier this year, Americans broke $1.2 trillion in student debt. The growing student debt load is causing widespread economic ramifications, delaying home purchases, and influencing spending habits, typically for a decade after finishing college. However, just because most graduates today are living with student debt for a large portion of their lives does not mean that you should. I made my last student loan payment 736 days after my graduation. That’s just a little more than two years. And I did it while earning a salary within $5,000 of the median income level in the United States ($51,371). Here’s how I did it. Start paying during school. The entire estimated cost of attendance for my MBA program at the University of Denver was $90,000– of which $67,000 was for tuition. Even for high earners, that is a lot of money to have on hand to pay for tuition and living expenses–so taking out some student loans was the inevitable choice. People told me that it would be impossible to work full-time and go to school full-time, but I didn’t find that to be true. I kept a full-time job in finance while going to school full-time, and I graduated with a 3.74/4.0 GPA. I had some savings going into school, but not enough to pay for everything as time went on. After I did some budgeting, I found that I could afford to pay around $7,000, roughly half of my tuition, each quarter out-of-pocket and get government-backed student loans for the remainder. By limiting my loans to Stafford loans, I knew I would be getting the best interest rate possible. And by paying what I could afford during school, I kept my total loan burden to less than $100,000…Read...

Getting an MBA may be cheaper than you think

Are you thinking about a business degree? Are you worried about the cost? Relax. A number of top business schools are now doling out substantial quantities of financial aid. So says a new survey of business school financial aid offers by the business education website Poets & Quants, which found that the top 25 business schools are awarding an estimated $232.7 million in grants in the current school year. At Rice University, about 94 percent of students are receiving some financial aid, for example. And Harvard Business School is giving away about $31.5 million, spread among 65 percent of its 1,868 students, according Poets & Quants. “Every one of [these schools] is discounting, and some of them are discounting fairly aggressively,” said John Byrne, editor in chief of Poets & Quants, adding that “the scholarship game has really heated up” over the past five years. UCLA’s Anderson School of Management more than doubled its funding from $5.8 million to $12.1 million in the last five years, for example, and the average grant awarded by Washington University’s Olin Business School rose from $26,200 to $31,328. But the financial aid largesse is not limited to the top schools. According to the Graduate Management Admission Council, 96 percent of full-time, two-year MBA programs offered financial aid in the 2013-2014 year. (Those awards may help offset some of the increase in business school tuition: The Association to Advance Collegiate Schools of Business reports that tuition rose an average of 23.2 percent for North American business schools between the 2007-08 and 2011-12 academic years.)…Read full story:...

The MBA scholarship wars

Highly regarded institutions across the U.S. are increasingly providing deep MBA discounts as they fight ferociously over the most talented applicants. (Poets&Quants) — “Discount MBA degrees. Get ‘em while they’re cheap!” It’s not a sign you’ll see hanging from any respectable business school, but highly regarded institutions across the U.S. are increasingly providing deep MBA discounts as they fight ferociously over the most talented applicants. Rivers of scholarship cash are flowing from schools to candidates—well over $200 million a year from the top 25 U.S. business schools alone—drastically cutting MBA costs for many students. As the money pours forth, it’s countering the rise in tuition costs, creating a two-tier market for a business education. There’s the high sticker price for the degree, and then there’s the discounted price for the most sought-after candidates. At the moment, the battle for students has become so frenzied that several prominent schools are quietly negotiating with candidates, often competing with rival offers from other MBA programs. And some second-tier institutions have quietly contacted at least one major admissions consulting firm to present a highly unusual proposition: send your most impressive clients to us, and we’ll give them scholarship funds that we’ve set aside especially for your clients. Surging numbers of international applicants and a growing number of MBA spaces globally have ratcheted up the intensity in the battle for students. In turn, schools are spending more and more money on scholarships, says Alison Davis-Blake, dean of the Ross School of Business at the University of Michigan. Some buy candidates who will improve a school’s standing in business school rankings, which measure incoming GMAT and GPA scores and outgoing salaries and job offers. Other schools are simply hoping to land the best and brightest...

Slight Decline in Number of Self-Funded Executive MBA Students...

For the first time in five years, the percentage of students who fully fund their Executive MBA (EMBA) education has declined slightly, according to the results of the 2014 Membership Program Survey of the Executive MBA Council (EMBAC). “With organizations facing challenging economic times and accordingly changing their tuition reimbursement policies, we’ve seen the responsibility for financing the degree fall more on students. Even so, business leaders continue to see the value of the EMBA experience.” The percentage of self-funded students decreased from 41.2 percent in 2013 to 39.8 percent in 2014. Partial sponsorship also increased from 34.7 percent in 2013 to 35.6 percent in 2014, with full sponsorship also increasing from 24 percent in 2013 to 24.6 percent in 2014. “While this is encouraging, time will tell if it becomes a trend,” says Michael Desiderio, EMBAC executive director. “With organizations facing challenging economic times and accordingly changing their tuition reimbursement policies, we’ve seen the responsibility for financing the degree fall more on students. Even so, business leaders continue to see the value of the EMBA experience.” In addition, 53 percent of programs offered scholarships and fellowships. Total program costs rose by approximately 2 percent from $73,401 in 2013 to $74,883 in 2014. EMBAC sponsors its Membership Program Survey each year to help track industry developments. In 2014, 285 member programs throughout the world – or 92 percent – participated in the survey. Survey data also offered the following highlights: Consistent Demographics • In 2014, the percentage of women in EMBA programs remained consistent at 25.4 percent. In the past five years, the percentage has ranged from a high of 26.7 percent 2012 to a low of 25.2 percent in 2011. • The average EMBA student age is 37.5...

New Loan Available for International Students Doing Their MBA in the US...

Prodigy Finance has launched a new loan scheme for international students who are doing their MBA in the US. The loans will be available for international students at 15 business schools, including the University of Virginia’s Darden School of Business, Harvard Business School, and MIT Sloan School of Management, among others. (See a complete list of business schools below.) The loans are capped at the cost of tuition, and can only be used for tuition. Foreign full-time MBA students are eligible to apply, while US citizens and permanent residents are ineligible. Many banks don’t lend to students who are studying internationally. To fill this need, Prodigy Finance uses a “community finance” model, by which alumni help fund loans that are intended for current students. Loan recipients pay interest of between 6 and 12 percent, depending on their profile and current Libor rates, which means that the alumni providing the money receive a return on their investment. Terms vary by business school. Since launching in 2007, Prodigy Finance has distributed around $50 million to some 1,300 students. It provides loan schemes to students doing their MBAs at business schools all over the world, including Germany’s ESMT, France’s HEC Paris, Singapore’s NUS Business School, and the UK’s Oxford University Said Business Schools, among others. In the US pilot program, loans are available for international students doing their MBAs at the following business schools: Carnegie Mellon University – Tepper School of Business Cornell University – Johnson Graduate School of Management Dartmouth College – Tuck School of Business Georgetown University – McDonough School of Business Harvard Business School MIT – Sloan School of Management New York University – Stern School of Business Northwestern University – Kellogg School of Management UCLA – Anderson School...

Have B-Schools become debtors’ prisons?

MBA grads are shouldering record levels of debt as tuition rates head skyward, making the degree a risky investment In 2008, Brian Jenkins moved to Malibu, Calif., to start his MBA at Pepperdine University’s Graziadio School of Business and Management. He had big ambitions for B-school, expecting the degree to help him land a six-figure-salary job in human resources at a top company. Pepperdine seemed poised to deliver. When he was a mere applicant, the admissions director gave him a personal tour of the business school, which commands a stunning perch overlooking the Pacific. His student experience was “amazing,” he says, handing top marks to his professors and classmates. The weather – “perfect every day” – was an added perk. To pay for it all, Jenkins took out $120,000 in loans. But his six-figure-salary job never materialized. “The career services staff basically said, ‘We’ll help you edit your resume, good luck out there,'” he recalls. “A lot of [my classmates] found jobs paying $55,000 to $65,000 per year, and they were very excited that they had a job.” In fact, Jenkins’ class earned a mean base salary of $69,167, according to Pepperdine’s official stats. They also owed an average $66,242. When the economy was doing well, and there was upward mobility, MBAs made sense, Jenkins says. “People were able to manage their debt load.” Wallowing in a sea of B-school debt MBAs like Jenkins are shouldering record levels of debt, approaching a tipping point that makes the degree – no matter how good the experience – a risky investment that isn’t always being approached with financial caution and restraint. It’s now common for many graduates to leave a top business school with six-figure debt, and in some cases, MBAs...