Resigning from a secure job, moving country, even leaving behind family and friends; potential MBAs seem to take such obstacles in their stride. But with programmes at top-flight school now costing as much as US $75,000, one question seems to occupy business school applicants more than any other: just how can I find the money to pay for my education?
Every year, TopMBA surveys nearly 4000 aspiring MBAs around the world to establish whether finance is likely to prove a barrier to study. The latest survey found that most had already looked seriously into how they would fund business school. A wide variety of methods were cited, from scholarships to personal loans. Worldwide, 74% of respondents favoured scholarships. Next came a student’s own savings at 68% followed by some form of external loan at 61%. Overall, only 28% expected to get financial help from their employer.
Favoured funding methods vary considerably from area to area. Help from family and friends appears to be most common in the Asia-Pacific region, where it was cited by 48% of those questioned, contrasting with 43% in the USA and Western Europe. Personal loans were the preferred source for over 81% of US students, but for fewer than 57% of those from Latin America. Company sponsorship was expected by 36% of respondents in the Middle East and Africa, but by only 21% of those in Latin America. Own savings were the favoured method for 80% of Western European candidates, but for only 62% of those from the Middle East and Africa.
However, whatever a student’s initial preference, in practice, the most common source of finance is now the education or career loan. We look at some of the sources of such loans across the globe.
Selected sources of MBA Finance around the world
UK citizens can borrow up to two thirds of their pre-study salary in any twelve-month period from NatWest to fund an MBA. Applicants need to contribute at least 20% of the course fees from their own resources and repayment periods range from 7 years for sums under £20,000 to 10 years for sums over £20,000. Interest is currently 6.9% APR. HSBC offers loans to students of a number of British based schools, including Cranfield, London Business School and Manchester Business School. Unlike many other schemes, this facility is open to students from anywhere in the world. Interest is charged at 2% over HSBC’s base rate for the duration of the loan. There are no upfront commissions or early repayment charges.
There are several sources of aid for US students studying at home or abroad and for overseas candidates looking to study in the USA. These include:
Citibank has a very well developed student loan division, which provides standard loans and also partners with individual schools to provide tailored packages. The Wharton School at the University of Pennsylvania, for example, offers funding through Citibank, which guarantees most accepted students a prime plus 0.5% interest rate, with a 15-year payback period, and no co-signers or credit check required. www.citibank.com
IEFC – Students interested in studying at one of nearly 400 institutions around the world may be eligible for loans of up to US $45,000 from the IEFC (International Education Finance Corporation). The IEFC has three loan programs: the Stafford for US citizens or permanent residents, Can HELP for Canadians and ISLP for foreign students. To be eligible for ISLP you must be able to provide a guarantor, who is a US citizen or permanent resident. www.iefc.com
GATE Universal is a student loan program managed by First Marblehead Corporation and Bank of America. www.gateloan.com
MBA LOANS is a private loan program run by Sallie Mae and targeted specifically at US citizens. www.salliemae.com
CA-Post-Graduate, Creditanstalt offers some loans. www.creditanstalt.co.at
French residents of any nationality who have worked in the country can apply to FONGECIF (Fonds de Gestion du Congé Individuel de Formation) for up to 90% funding of tuition fees plus a part of their current salary. www.emse.fr/ASI/AIDES/fongecif.html