You want to attend business school, but have no idea how to pay for it. The first step may be to start researching funding options as soon as the thought of enrolling in an MBA program crosses your mind. By looking into options to finance your coveted degree as soon as possible you'll be ready to focus on what counts when it comes to b-school: learning and advancing your career.
'Financing an MBA is not easy for most of us,' Amina Kandil, INSEAD Class of 2012, writes in the French business school's blog. 'However, we all managed to do it. Indeed, I have never heard of someone who truly wanted to complete an MBA and had to give up her project only because of financing concerns.'
Kandil recommends to start saving right away to reduce the size of your debt. She also advises to apply as soon as possible for scholarships to broaden your opportunities as well as to look into alumni loans, such as those offered through Prodigy and SoFi -- if available at your business school -- that offer competitive interest rates. Furthermore, Kandil counsels MBA candidates to talk with business school alumni to find out more about how they funded their degree, as well as to check in with business school administrators to learn more about MBA financing options.
There are number of ways to help pay for an MBA program, at least according to researchers with the Graduate Management Admission Council, or GMAC, as well as Stacey Dorang Peeler, MBA admissions director at Penn State Smeal College of Business.
Government and private loans are available to pay for business school. According to the GMAC mba.com Prospective Students Survey, 2012 Survey Report, 51 percent of prospective students surveyed planned to take out loans to fund their graduate management education. However GMAC researchers pointed out that the percentage of prospective students taking out loans has decreased from 61 percent in 2007, as more potential students planned to finance MBA programs with personal or employer funds. Dorang Peeler, with the Smeal College of Business, said international students still must rely very heavily on private or bank loans.
Personal funds could include personal savings and earnings, as well as money provided by your parents, spouse or partner. Many students work after college and even during business school to pay for MBA programs. According to the GMAC survey, 49 percent of those surveyed planned to use personal savings to pay for business school. Forty-seven percent would rely on personal earnings; 42 percent on parental support; and 11 percent on spouse or partner earnings to finance their education. Dorang Peeler said that Smeal students did rely on savings and help from family members to pay for MBA programs.
Grants, fellowships and scholarships for all types of students -- including women, military personnel, and minorities -- should be available at business school. You should research potential options in advance in order to apply as early as possible for these scholarships. Interestingly, GMAC researchers report that the percentage of prospective students who plan to use grants, fellowships and scholarships decreased from a high of 64 percent in 2007 to 49 percent in 2011, likely in favor of personal and professional funding. At Smeal, merit-based scholarships are available, according to Dorang Peeler. Graduate students who work at Smeal could also receive full tuition, a stipend, and health insurance, she said.
More than one-fourth, or 28 percent, of prospective students interviewed by the GMAC planned to attend business school fully or partly funded by their employers. On average, the percentage of employer assistance used by prospective students has increased from 8 percent in 2007 to 13 percent today, the GMAC researchers reported. Smeal's biggest 'company' sponsor, according to Dorang Peeler, is the military: several students are receiving funding through the G.I. Bill and Yellow Ribbon Program.
In 2012, on average, prospective students planned to finance 24 percent of their business school education using personal savings and earnings; 23 percent using loans; 18 percent using parental support; 17 percent using grants, fellowships and scholarships; and 13 percent using employer support. The remaining 5 percent would come from spouse and partner earnings (3 percent) and other sources (2 percent). In 2011, 16,358 individuals from all over the world who registered on mba.com contributed to this GMAC survey. Meanwhile, Dorang Peeler said that Smeal's officers continue to offer about the same amount of aid -- if not more -- this year as they've offered in previous years.
'The best advice we can give from the admissions committee perspective is to put forth the strongest application possible,' Dorang Peeler said. 'Putting yourself in the running for merit-based aid that you don't have to pay back is the best way not to accrue excessive debt via loans, some of which may have high interest.'
Earning a business school degree is a smart investment, according to GMAC research. Eighty-six percent of the class of 2011 alumni surveyed by the GMAC in September had jobs. Seventy-four percent of employers surveyed by the GMAC planned to hire MBA graduates in 2012, up from 58 percent in 2011. Alumni from the class of 2007 reported full return on investment just after four years following graduation. The median annual base salary for all full-time MBA alumni from the classes of 2000 to 2011 was $95,000. Graduate Management Admission Test registration and testing volumes are at or near all-time highs. All of these, GMAC researchers said, show a growing need for workers with advanced business degrees.