Once you get admission to an MBA program, the business school expects you to finance the cost of the MBA education. Having said that, most business schools offer loan, scholarship, and financial aid to ease the burden on you.
There is no doubt that an MBA is an expensive program and this large financial burden discourages many candidates from applying to business schools. This section attempts to present several suggestions on financing the MBA education.
Financing the MBA education needs proper planning and discipline. Below are several suggestions on how you should go about preparing yourself to finance your MBA.
There are primarily five sources to finance your MBA. Most of the students depend on various combinations of these sources.
Some companies offer sponsorship for covering their employees’ education. In return, employees agree to come back to the firm and work for few years after they complete the MBA program. This offer is normally given to top performers who the company wants to retain for a longer time. This type of sponsorships is quite popular among top consulting and investment banking firms.
Even if your firm, where you are currently working, does not offer sponsorship opportunities and if you are one of the top performers in your organization, do not hesitate to ask your employer for the company sponsorship, if you wish to continue working in the same industry after you complete your MBA.
Loans are the most common source of financing the MBA program. Your chance of getting education loans is higher if you have a great credit rating and a great past payment history. In a country like India, lending firms ask for a personal guarantor (preferably parent or spouse) also to make an applicant eligible for the loan.
Lending firms look for your past payment history, how much debt you have taken, for how long you have taken the debt, and different types of loans you have taken before determining your credit rating. A higher credit rating means lending firms are willing to offer you loans at attractive rates.
Most business schools tie up with lending firms who offer loans to students at attractive rates. Reach out to the admission office of your school to find the details of these lending firms.
Business schools offer scholarships and awards to reduce the cost of the MBA program. These scholarships are either merit based or need based.
Stanford, for example, offers Siebel Scholars Program. Under this program, five students are offered $35,000 each and are chosen by a faculty committee based on academic achievement and demonstrated leadership within the Stanford GSB community during their first year.
Chicago GSB offers merit based scholarships which range from $10,000 to $30,000 per year. Tuck School of Business offers scholarships that range anywhere from $5,000 to full tuition for applicants based on merit and need. Cornell’s the Roy H. Park Fellowship is a two-year full-tuition fellowship award for up to 25 full-time Johnson MBA candidates who have demonstrated outstanding leadership potential.
All top business schools have some kind of scholarships and awards available to admitted students. Spend some time finding out what kinds of scholarships are available at your business schools, the requirements, and the submission deadlines.
4.Special Fellowship Awards
There are few fellowship awards that are given to particular demographic groups also.
In the USA, Forte Fellows Program, for instance, is offered by some business schools and are given to women applicants.
The Toigo Fellowship program identifies and supports exceptional minority students studying at Toigo partner schools. Another popular scholarship is the Consortium fellowship which links top-tier students, MBA programs, and corporate partners, providing merit-based scholarships.
Some companies from investment banking industry offer fellowships and scholarships to business school students from a particular community.
The Goldman Sachs MBA Fellowship, for example, is designed to increase the level of interest in and awareness of careers in the financial services industry among Black, Latino, and Native American business school students.
Even fortune 500 companies offer scholarships to students from the particular community.
The bottom line is that while it is difficult to find the sponsorship opportunity for your MBA, you must invest sufficient time and do research to identify resources that can help you finance your MBA possible.
To cover the cost of your MBA education, students use their personal savings also. Many applicants start a couple of years before they apply to MBA programs saving money and cutting down on their expenses. The more you use your personal savings, higher the chance that lending firm offers you a loan at attractive rates.
To finance your MBA, it is important that you act aggressively in finding scholarships and sponsorship opportunities.
Although business schools offer a number of scholarships and awards to their admitted students, unfortunately, you can’t rely on such opportunity and hope that you will surely get one of these scholarships. Competition for such scholarship is typically very high and there are lots of candidates vying to get one of these scholarship prizes.
Spend enough time and effort in finding out whether there are any other scholarships available that are not well publicized. Applying to such award makes it relatively easier getting the prize.
HOW TO PREPARE YOURSELF FINANCIALLY?
Business schools expect that students should have personal savings to finance their MBA. However, the reality is that most of the students do not have enough savings to finance the cost of the MBA education.
If you are in the application stage, focus as much time as possible researching all possible sources of scholarships. But do not expect that the scholarship aid office will offer you lot of money.
On the other hand, if you are thinking of applying two to three years later, you can take following steps to prepare yourself financially.
Keep a good credit history: You credit history determines the rate at which lending firms offer you the loan. Spend time in maintaining a good credit history. If you have a poor credit rating, spend some time clearing up your debts. A good credit rating can help you save thousands of dollars by getting loans at attractive rates.
Maintain a cash reserve: If you plan early, you can start saving more and reducing your expenses. Loans and scholarships are not the only means to finance your MBA.
Build relationships with Co-Signers: If you are an international student applying to US business schools, having a co-signer can help you reduce your interest rates by several percentage points. You don’t get a similar benefit if you are applying for the loan on your own.
Spend a good amount of time researching private scholarships and fellowships.
There are many corporate entities which set aside a certain amount of money for scholarships/awards, but they do not get utilized as not many candidates are aware of them.
Worrying about financing your MBA should not avoid you to apply to your dream business school. MBA is an investment that offers various rewards later in your future. Getting admission to an MBA program is the hardest part. Once you get admission, you will know various channels to fund your MBA. With proper planning, diligence, and a little bit of cleverness you can finance and meet the cost of your MBA education.
If you are an Indian, you may be interested in this article as well : Top MBA Scholarships for Indian students in USA