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.

Innovative sources of finance emerge for MBA students...

International students may receive loans without the need for a US co-signer You have sat your GMAT, written your essays, submitted your applications and been offered a place on that coveted overseas MBA programme. Now comes the hard part: paying for it. The credit crunch only exacerbated a problem that had been brewing for years, as the big banks and other traditional lenders pulled out of financing international students. However, the recovery of western economies and the return of jobs for graduating MBA students has done little to improve the situation for students who want to study overseas. “In terms of the wider market, it is becoming more difficult,” says South African Cameron Stevens, one of the founders and chief executive of Prodigy Finance, which is working with Insead alumni to help fund loans for students studying there. He points to the decision by NatWest to withdraw from the market in the UK as recently as January as further evidence of the parlous state of funding availability. Traditional banks are not suited to the idea of MBA loans, he says, because, however global they might claim to be, they operate as a series of national branches. “It [an MBA loan scheme] sits very badly in a local banking portfolio. What they [local banks] want is the high-income local managers. But they are forced to include international students as well, who are outside their remit in terms of offering other products and services.” The first signals of a crisis in funding for international students hit in the summer of 2008, when international students studying at schools such as Chicago Booth had to scrabble to put together loan packages. To help out its international students, Chicago Booth, along with schools such...

Financing an MBA, With Help From Mom and Dad

Daniel Wesley knew as soon as he started applying to business school that he wanted to avoid student loans. He’d already racked up about $45,000 in loans from his undergraduate days and didn’t relish the idea of adding another $200,000 or so to that debt load, he says. When he found out he got into the Weekend MBA program at the University of Chicago’s Booth School of Business (Booth Part-Time MBA Profile), he turned to his mother and father, a retired construction foreman, for help. They agreed to pay for his first year of school, which he just completed, and plan to pay for his second year as well. “It is a huge advantage and definitely a relief to know that I won’t have nearly a quarter of a million in debt hanging over my head when I graduate,” says Wesley, 33, chief executive officer of Creditloan.com, a website on personal finance. Wesley is one of a growing number of graduate business school students who are using their parents as a funding source for B-school, either accepting tuition gifts from them or negotiating interest-free loans. A two-year business program at a top school can easily add up to $150,000, after factoring in tuition and fees, room and board, and living expenses. From 2003 to 2007, the number of prospective students who said they expect their parents to help them pay for business school doubled, and was approaching 40 percent in 2010, according to a 2011 survey by the Graduate Management Admission Council. The lingering effects of the economic downturn, coupled with tighter lending standards, have left many students nervous about taking on more student loan debt, says Haley Chitty, a spokesman for the National Association of Student Financial Aid...

How to Pay For Your MBA

You’re about to pony up for one of the most costly investments of your life at exactly the same moment you must bid adios to your (hopefully) substantial annual salary for up to two years It’s that time of year again”applicants are experiencing the euphoria of acceptance at the b-school of their dreams, only to be jarred by the reality that they’ve now got to come up with the money to pay for it. Popular M.B.A. applicant blogger Richard Battle-Baxter says he nearly fainted when he received his initial loan award notification. “I knew that would be coming but it was like looking at an employment offer! I mean actually… [one] year’s tuition is definitely someone’s yearly salary!” Tuition at the top programs can soar well over $100,000, and tangential academic and living expenses will also set you back a pretty penny if you’re planning on earning your M.B.A. degree in a metropolis such as New York, Boston, or Los Angeles. You’re about to pony up for one of the most costly investments of your life at exactly the same moment you must bid adios to your (hopefully) substantial annual salary for up to two years. For many, that’s a sobering realization. Finding the money: Even in these strained economic times, American banks know that M.B.A. graduates with a decent credit history are a sound investment when they start work, according to Ross Geraghty’s recent article on M.B.A. loans published by QS Top M.B.A. While scholarships and other types of “free” money are available at fewer M.B.A. programs than non-professional forms of graduate education, there are many resources available for a scholarship or fellowship that fits your background and needs. The first stop is your target program. Many schools...

For MBAs, Breaking Even is a More Distant Dream...

Higher tuition and lower starting salaries mean it now takes MBAs nearly a year longer to earn back their B-school investment than it did in 2008 The hits just keep coming for the MBA Class of 2010. First, the economy crashed just as students were stepping into their first B-school classes. Then the job market tanked. Jobs were scarce, salaries dipped, and students scrambled simply to find summer internships, let alone full-time positions. Now, a new study done as part of Bloomberg Businessweek’s ranking of top full-time MBA programs suggests it’s going to take graduates longer to see a return on their MBA investments than their peers did from earlier graduating classes. Two years ago, Bloomberg Businessweek calculated that it would take members of the MBA Class of 2008 an average of 5.6 years to recoup their MBA investment. For the Class of 2010, the number jumped to 6.5 years. Why the difference? First, post-MBA salaries were lower in 2010 (down 6 percent from the 2008 average), while pre-MBA salaries were higher, meaning the pay differential between what a grad made before and after earning the degree was not as large. In addition, the overall cost of attending B-school increased, putting the Class of 2010 in a less-than-ideal climate to begin earning a return. The MBA ROI figure was calculated using a few different data points. First, the total dollar amount the average student spends on a degree (tuition, fees, living expenses) was added to the total salary given up to attend B-school. The median pre-MBA salary was then subtracted from the median post-MBA salary, and the difference was divided into the total amount spent on the MBA. The resulting number represents the length of time, in years, it...

How much will your MBA cost?

The information you need to get a rough estimate The schools’ web-sites and application’s material should give you a very good idea of what to expect to spend for your MBA. Here is a very rough estimate (for the a 2-year full-time program): Min Range Max Range Comment Your Estimate Application $250 $700 Includes: GMAT, TOEFL, Application fees $ Tuition $20,000 $50,000 2 years at $10,000 – $25,000 $ Other Expenses $20 $200 Includes: registration and fees $ Books & Computer $1,000 $5,000 Notice many schools REQUIRE a Laptop $ Living Expenses $22,000 $66,000 Includes: housing, food and transportation (22 months at $1,000 – $3,000) $ Medical Insurance $1,000 $6,000 Notice it is mandatory for foreign students $ Internship ($24,000) $0 Your salary: 3 months at $8,500 – 0 $ Foregone Wages $24,000 $120,000 2 years at 12,000 – 60,000 $ TOTAL $44,270 $247,900 $ Other costs to consider: Traveling from and to your home country, calling your home country, moving expenses (or the cost of buying everything again), winter clothing, interviewing clothing, and so on. As you can see, the total cost of the MBA can vary widely from person to person. It basically depends on: The school you chose. See the different tuition and expenses costs for the top schools. The location. Living in big cities (New York, Chicago, Los Angeles) can make a big difference compared to small towns. Find out about the best places to live in the US, and compare the cost between cities, from Money magazine. Your lifestyle. Your intended lifestyle can make a big difference. Bringing partners (spouses, kids, etc), having a car, living alone or sharing an apartment, are decisions you will need to make. Read full...