Let's face it: an MBA is expensive - substantially more than most master's programs. And when you start adding up living expenses, books and transportation costs, the total price tag can be enough to make some potential MBAs think twice.
A high price tag, however, doesn't have to be a dealbreaker. One reason is that many MBA programs will pay for themselves in the long run.
When considering an MBA program, “in a large respect you're going to look at costs, but you have to look at costs in the context of the return on investment,” says Salomon Medina, associate director of financial aid at Rice University's Jones School of Business.
According to Keegan Pierce, associate director of international admissions at ESADE Business School, to make that investment, a potential MBA student should ask herself, “what is it that I can contribute through my own sources, and what is it that I can get through the school that I'm applying to, and how can the school help me out?”
Beyond savings and family funding, support generally comes in two forms: scholarships and loans.
For many budget-conscious students, MBA scholarships based on merit are the holy grail of MBA financing, because they don't have to be paid back. They're usually highly competitive, and many are restricted to certain groups of applicants. For example, many business schools offer scholarships just for women or students from specific countries.
For business schools, these scholarships are a way of recruiting a more diverse group of students. For example, Bath School of Management offers a “third sector” scholarship specifically for participants who come from NGOs and non-profit organizations.
According to Rachel Foster-Borman, the school's MBA admissions and marketing director, the school offers this scholarship because it values people from the sector, but finds that “roles in the third sector are typically not as lucrative as [similar] roles in other industries.”
To determine an applicant's suitability for this type of scholarship, business schools will usually look at a variety of factors.
“It's not just looking at GMAT scores,” says Jones' Salomon Medina.“They're looking at everything: they're looking at experience, they're looking at recommendations, they're looking at career trajectory.”
ESADE's Keegan Pierce would agree. “For us, there's no one specific factor that tends to trump all others,” he says. The school looks “closely at the essay and the arguments that you put forward for why you are deserving of the scholarship.”
Furthermore, business schools are looking for students will will add something to the incoming MBA cohort, whether that's being an active classroom participant, or organizing student clubs or social outings.
According to Pierce, “we look for people who we feel like are going to be outstanding in a number of ways, and not just they happen to look good on paper.”
[Use FIND MBA's MBA Scholarships directory to find scholarships.]
After scholarships, loans are another main funding source for MBA students. In the US, student loans have traditionally come from the federal government's department of education, but as that funding shrinks, banks and other private financial institutions are increasingly filling these needs.
“On the government side here in the US, they're really limiting funding for graduates to student loans,” says Jones' Medina. However, Medina notes that some states (such as Texas, where Jones is located) also offer loan programs that are separate from the federal government.
However, in the US (and many other countries), international students who would like to take out loans will usually require a citizen or permanent resident to co-sign.
Many business schools also have arrangements with banks, who can provide loans to students. In some cases, international students may be eligible for loans trough these partner banks, sometimes without a co-signer.
Other funding sources for your MBA
Beyond personal savings and help from family members, some MBA students find that their employers might also be willing to foot some of the bill, although it might take some convincing.
“The important thing is to make the case to your employer as to what value the degree will bring back to the company,” says Salomon Medina.
Often, this kind of arrangement might come with a caveat that the student will have to return to the company, MBA in hand, for a certain amount of time after graduating.
Additionally, a summer internship or project can be a good way to bring in more money. Typically, the summer between the first and second years of a two-year MBA program “is when people get back to earning money, which can go towards their living expenses and their tuition,” says ESADE's Keegan Pierce.
“And often times those internships continue on a part-time basis into the final portion of the MBA.”
General MBA financing tips
- Apply early: Applicants who apply in early application rounds usually have access to more scholarship money.
- “Look for competitions linked to your MBA program with financial prizes associated and opportunities for funded final projects,” according to Bath's Rachel Foster-Borman.
- Be transparent: According to ESADE's Keegan Pierce, asking about scholarships shouldn't be the first point of contact with a school, but if you intend to apply for a scholarship, it's good to communicate that early on.
- Ask about payment options – you might not have to pay all at once.
- According to Jones' Salomon Medina, MBA applicants “can look at professional or civic organizations that they're involved in,” who might not advertise that they have education funding programs.
Photo: 401(K) 2012 / Creative Commons