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With tuition at a two-year MBA program from a leading US business school now well over $100,000, the issue of how to pay for your MBA is under increasing scrutiny for potential applicants. The fact that The Financial Times last year reported salaries at the world’s top 20 business schools ranging from $127,600 at HKUST to $192,179 at Stanford GSB, suggests that MBA graduates at these schools will get a handsome return on their investment.
But not everyone will make big bucks at graduation. How you manage the additional costs of your MBA can greatly affect your level of student debt, and subsequent financial plans.
The hidden costs
Beyond tuition, fees, and room and board, there are additional costs for recruiting and networking activities that aren’t necessarily in many students’ budgets. Obtaining loans for educational costs can be a good investment, but increasingly we are seeing students spend extra money on upscale apartments, restaurants, entertainment, and extravagant vacations in order to keep up with their classmates. While we are all for having a good time while in school, our recommendation is to be wise when it comes to your expenses. You don't want to be saddled with overwhelming debt for the next 10 to 15 years.
Leave no stones unturned
Before you sign any loan documents, draw up a realistic budget for your studies and see what resources might already be available. An increasing number of prospective students are turning to family members to help them pay for their MBA degree, with almost 40% expecting their parents to contribute or provide interest-free loans, according to a 2011 Graduate Management Admissions Council survey. Remember to take the time to show them how you intend to manage your finances during the one or two years of your studies. While your family are likely to support your educational pursuits, and will not make the same demands as a bank or loan scheme, it will reassure them to know that you are being realistic about the investment you are making.
And though many companies have been tightening their belts in the current economy, a well argued case to your employer can still generate positive results. Among full-time MBA programs, over 80% of schools report that their students will receive funding from their company. And employer contributions for part-time and Executive MBAs are even higher, given the ability to contribute to specific internal projects rather than general career progression.
Scholarships are another possible source of funding, with the schools themselves among the biggest source of opportunities as they seek to attract a diverse pool of talent. Many business schools provide a list of available scholarships on their websites, based on criteria such as academic achievement, geography, or non-profit and entrepreneurial activities. There are also numerous partnerships with companies whom are keen to support the next generation of business leaders.
One such example is 10,000 Women, a five-year $100 million initiative from Goldman Sachs that involves business schools around the world. Such scholarships can be as competitive as the MBA admissions process itself, and at Fortuna Admissions we regularly work with clients on their scholarship applications to help them demonstrate why they would be a suitable recipient for these awards.
To attract the best and brightest, business schools will also offer financial aid in the form of tuition waivers. High GMAT scores and other areas of personal and professional achievement will often make the difference, but it is also important to show your own level of commitment. Based on our experience working at the top schools, we recommend that you also make every personal effort to save money for your MBA to the best of your ability. Having no savings because you just spend all your money on your wedding is not a good excuse, though schools such as INSEAD hear this all the time.