Borrowing in troubled times
When it comes to student loans, the MBA landscape has changed dramatically since the financial crash. International students heading for a top business school in the US used to rely on programs such as CitiAssist program for a loan of up to $150,000 without a US co-signatory. With the demise of this and various federal loan programs, business schools have reacted to try to address the fix international applicants are in. Harvard Business School and the University of Michigan have created finance packages by partnering with credit unions; Chicago Booth, Kellogg and NYU Stern are among a number of schools that have signed up to the Affiliated Loan Program run by GMAC and Deutsche Bank which allows international students to secure loans without a co-signer. Duke-Fuqua has gone a step beyond by putting its money where its mouth is, agreeing to underwrite overseas student loans itself and pay off any defaults that may arise.
Alumni rise to the aid of future students
But it is MBA graduates themselves that are now proposing more radical funding solutions in the form of an alumni-sourced lending market. Leading the way is UK based Prodigy Finance, a community-based loan program set up by three INSEAD alumni in 2007. It has raised over $30 million from alumni at schools including INSEAD, the Manchester Business School, Oxford Saïd and Vlerick Business School. To date the company has had zero defaults on any of their loans to MBA students from over 80 nationalities.
And in the US, a Stanford GSB graduate is behind SoFi, which lent over $130 million last year for both business school and undergraduate study at more competitive rates than the banks. And CommonBond, which lends to MBA students at prestigious business schools such as Harvard, Wharton, Kellogg and Stanford, with more in the pipeline for 2013.
It seems fitting that MBA graduates should be behind such initiatives, and that alumni are the primary investors in their alma mater - who better to understand the financing needs, and show belief in the earnings potential of the next generation of business school students?
Whatever the funding options you rely upon, the bottom line is that studying for your MBA is potentially one of the best investments you could make in yourself… and one of the biggest. But the investment varies depending on the school you are aiming for, the course length, the school’s location, and more. So take the time to work out your list of target schools, and calculate financing needs accordingly.
Judith Silverman Hodara, former Wharton acting Director of MBA Admissions and Co-Director at Fortuna Admissions
Rose Martinelli, former Chicago Booth Director of MBA Admissions and expert advisor at Fortuna Admissions.
Fortuna Admissions is an MBA coaching dream team of former business school professionals from top-tier institutions, including Wharton, INSEAD, Harvard Business School, London Business School, Chicago Booth, IE Business School and UC Berkeley Haas.