Financing an MBA
| Author | Maureen Williams |
| Function | MBA Marketing Manager |
| Organistation | Cranfield School of Management |
Embarking on an MBA programme is a big investment of both time and money, and a decision not to be taken lightly. Tuition fees for US business schools average around US$40,000, and they can be up to €48,000 for a one-year programme in Europe. Then there are your living expenses on top of that, plus travel costs if you are considering studying abroad.
Most business schools will give detailed information about the costs of their programme on their websites, so take the time to check these out – there will be big differences between schools – and contact them if you can’t find the information you are looking for. Then draw up a realistic budget of your expected expenditure, not forgetting to allow for some leisure activities and holidays if possible.
If you are planning to take a one-year full-time MBA programme, you will not be able to rely on part-time work to help fund your studies – a one-year programme is very intensive, and there is no time for anything other than work and, hopefully, some social life! It may be possible to work part-time during the second year of a two-year programme, and you may also be able to earn money on project work or an internship.
So what are the options for funding your MBA? Many students rely on their own savings, parental help or a partner working, but most will have to take out a loan to cover at least part of their expenses.
Loan Schemes
Many governments provide loan schemes, for example the US Federal Loan Scheme, and the UK government sponsored Career Development Loan scheme. The Graduate Management Admission Council (GMAC) sponsors an MBA Loans Program in the US, and the Association of MBAs (AMBA) in the UK also organises a loan scheme. Some banks offer special loans for MBA studies. All of these schemes offer more favourable interest rates and repayment periods than normal borrowing, but they differ from country to country and some may only be available if you study in your home country.
Awards and Scholarships
There are a number of organisations that provide awards or scholarships for postgraduate studies, including the MBA. Among these are: the Alban Programme, which provides awards for students from Latin America to study in Europe; the Chevening Scholarships, administered by the British Council and available in 150 countries around the world for study in the UK; the Commonwealth Shared Scholarships Scheme (CSFP) which enables students from developing countries to study in the UK; the Ford Foundation International Fellowships Programme (IFP); the Fulbright awards that enable American citizens to study abroad and foreign students to study in the US; the Marshall Scholarships for US citizens to study in the UK; and the Rotary Ambassadorial Scholarships. The organisers of the World MBA Tour offer the QS Quacquarelli Symonds Scholarships, which are open to candidates who attend one of their MBA Fairs and who complete their MBA Applicant Survey.
Many schools will also have their own scholarships, which they will promote on their websites. These may be provided by alumni groups or companies that have a close association with the business school, and they may be targeted at specific industries, nationalities, women or ethnic minorities that are under-represented on the programme. At Cranfield, for example, our scholarships include one for British farmers, funded by the John Beckett Charitable Foundation, two for the Voluntary Sector offered in association with the Cranfield Trust, two for women offered in association with the Aurora Network, a Cranfield Alumni Australian Scholarship, and Director’s Diversity Bursaries for candidates from certain regions, including Latin America, Eastern Europe and China.
The majority of scholarships will be for full-time study and, even if they cover full tuition fees, few will also cover accommodation and other living costs.
Scholarships are normally awarded on the basis of merit or need, or a combination of the two. Competition is likely to be intense – in a recent TopMBA survey of nearly 4,000 potential MBA candidates, 74% of respondents were hoping to fund their studies through a scholarship.
Company sponsorship
If you are planning to study on a part-time or modular basis you may be able to secure funding from your employing organisation. The nature of such sponsorship differs widely from company to company, with the amount of money involved varying from full tuition fees, accommodation and full salary, to a small contribution towards the overall costs. It is important to establish the precise conditions of such sponsorship in advance – you may have to sign an agreement to stay with your company for two to three years after completion of the programme. It is more difficult to secure such funding now than it was 15 years ago. At Cranfield in 1990 more than 80% of part-time MBA students were sponsored by their company. Today the figure is less than 60%, and very few companies will offer full sponsorship; they expect some financial commitment on the part of their employee.
You may have to put together a business case to convince your employers to sponsor you, and your chosen school may be able to offer advice on this. On most programmes, for example, you will be able to carry out a major project based on your own organisation as part of your studies. If carefully chosen, this can be of real commercial value to the company.
Occasionally it may be possible to persuade a new employer to reimburse your fees when they take you on after completion of your MBA, but you will need excellent negotiation skills in order to achieve this!
Apply for funding early
In the end it is likely that you will fund your MBA studies through a combination of savings, scholarships and/or loans. You need to allow plenty of time to research the various opportunities in detail, and to complete the sometimes complicated application forms.
Although you will not normally be able to secure a loan or a business school’s internal scholarship until you have been offered a place, in the case of some external funding bodies you need to start the funding application before securing a place on a programme. One of our students, who received a Chevening Scholarship, says: "I had to apply for the scholarship more than a year before I was planning to start my studies – I hadn’t even applied to any business schools at the time. I think it is quite common that sponsoring organisations have early deadlines, which is important for other potential MBAs to be aware of."
Useful websites:
Alban Programme: http://www.programalban.org/
Association of MBAs: http://www.mba.org.uk/
Chevening Scholarships: http://www.chevening.com/
Commonwealth Scholarship and Fellowship Plan: http://www.csfp-online.org/
Ford Foundation International Fellowships Programme (IFP): www.fordfound.org/news/more/11272000ifp/index.cfm
Fulbright Awards: www.iie.org/fulbright
GMAC sponsored loans scheme: www.salliemae.com/mbaloans
Marshall Scholarships: http://www.marshallscholarship.org/
QS Quacquarelli Symonds Scholarships: http://www.topmba.com/
Rotary Ambassadorial Scholarships: www.rotary.org/foundation/educational/amb_scho/prospect/