For students, an MBA degree can bring an array of benefits, with freshly-minted graduates at many top schools set to receive more than $100,000 in starting salary compensation this year. However, the degree does not come cheap. At the top end of the market, an MBA can easily cost a six-figure sum, on top of the lost earnings from full-time study.
And, perhaps more so than usual, funding has become an even more pressing concern for MBA applicants this year due to the economic uncertainty unleashed by the coronavirus pandemic.
“Undoubtedly, COVID-19 has affected some applicants’ abilities to fund their MBA ambitions and impacted students all over the world,” says Leila Guerra, vice dean for education at London’s Imperial College Business School. “With the global uncertainty and economic turmoil that has dominated the past year, MBA applicants have evaluated very carefully the significant financial investment of an MBA.”
And even with economists upgrading their forecasts for the global economy, that presents potential students with another financial dilemma: whether to leave a hot labor market to pursue a full-time MBA.
“The crisis has accelerated the need for recruiters to hire MBA graduates who are prepared to innovate and lead in times of increased disruption,” says Guerra. “So while the effects of COVID-19 will be felt for many years to come, this is also a moment of opportunity. An MBA is as, or even more, relevant than ever.”
The big question: what is the value of an MBA?
On top of these considerations, the value of an MBA been put into sharper focus given the wave of petitions for fee refunds because of campus closures at the depths of the pandemic. However, the pressure on schools to lower fees is likely to ebb given that many campuses in Europe and the US are starting to reopen with large numbers of students being vaccinated against COVID-19.
“Given that all faculty, staff and students need to be vaccinated, we have fully returned to campus this year as of August 2,” says Shelly Heinrich, associate dean of admissions at Georgetown University McDonough School of Business in Washington DC. “Thus, tuition will remain as normal.”
Other economic impacts are coming into focus. Admissions directors say that credit conditions have tightened as banks cut back on lending during the crisis. “Unfortunately, we saw many candidates who faced problems getting loans from banks and financial institutions, especially those coming from developing countries who have experienced deep depreciation of their currencies,” says Paula Amorim, MBA admissions director at IESE Business School in Barcelona.
IESE has added new financial institutions to its funding options. Caixabank is now offering Spanish and international students loans for tuition with very competitive conditions. The school also added GyanDhan to its portfolio, which offers loans to Indian students. However, many financial institutions across the world will require a local resident to co-sign an international student’s loan, and this can be a significant barrier to accessing credit.
Other ways to pay for an MBA: corporate sponsorship, scholarships, and more
Some schools report evidence that employer support has been dwindling as companies have looked to cut costs in response to the crisis, or seek to protect the safety of employees. “Research shows the prevalence of employers sponsoring MBAs or even investing in L&D [learning and development] has fallen as companies adjust to a new and uncertain reality,” says Imperial’s Guerra.
“Defining how the skills, knowledge and networks acquired during the program will bring value to the company will provide a strong business case to any sponsorship request.”
However, with the labor market thawing as companies launch projects to drive future growth, some schools sense an opportunity for prospective MBA students to negotiate successfully for company sponsorship. “We haven’t seen a big drop-off due to the crisis,” says Georgetown’s Heinrich. “Now that hiring is picking back up, I would recommend students try to negotiate this into their current offers of employment as a benefit.”
On top of corporate sponsorship, Georgetown is set to announce additional application fee waivers and reductions to help those from lower socioeconomic backgrounds for whom the high cost of an MBA is prohibitive.
Many academic institutions have increased their range of scholarships and bursaries that applicants can apply for in response to the pandemic. “We have given a record number of scholarship[s] during the last academic year,” says Jan Hohberger, associate dean of the full-time MBA at ESADE Business School in Barcelona.
At Imperial, this includes partially subsidizing the cost of hotel quarantine for international students traveling to the UK from high-risk countries such as India, where coronavirus cases have been high. Further resources such as a hardship fund and increased pastoral care have been made available during the pandemic for students in need.
Most schools provide MBA scholarships ranging from partial to full tuition coverage, even a full ride with living costs paid, in order to admit a competitive and diverse class. Typically, students are automatically considered and there is nothing additional needed to secure funding, but some schools require essay prompts.
Beyond that, students at many schools can apply for teaching assistantships once they begin their studies that provide a modest wage to help offset the cost of their studies. But IESE’s Amorim advises against taking any sort of part-time job, given the intensity of the MBA program, especially in the initial months. “IESE is very academically demanding, and it is not feasible to work in the first half of the course,” she says.
Another option on the longer MBA courses typically found in North America is to complete a summer internship, with students from the top schools typically receiving a monthly intern salary of about $9,000.
Is an MBA worth it right now?
Despite the current economic environment, business schools and admissions consultants insist that the return on investment in the degree best known for producing future leaders has never been clearer in an age of upheaval.
“An MBA delivers enormous long-term value,” says David White, founding partner of admissions agency Menlo Coaching in the Netherlands. “Not only can the MBA be a first entry point into lucrative fields such as management consulting or investment banking, it can accelerate your career and future earnings in every field by helping you build a network, become a better communicator and a better people manager.”
Benoit Banchereau, director of MBA admissions at HEC Paris, agrees. “We believe the value of top ranking MBAs versus lower ranked programs is increasing because companies are becoming more selective,” he says. “That’s why we did not compromise our academic standards and selectivity during COVID.”
HEC and many other top schools did not need to: they dramatically increased the number of applications and admitted students this year.