Congratulations – you did it! You’ve been accepted to your dream business school, and you are ready to go. But once the euphoria wears off, reality will set in, and you’ll realize the amount of tuition you’ll be expected to pay. If you are lucky, you might have gotten a scholarship, or maybe your company is sponsoring you by paying your tuition. For most of us, though, the responsibility of financing our two years of b-school falls on us. So what do you do now if you don’t have a trust fund?
If you are planning on going to business school, this is not the time to buy a new car or take an expensive vacation that will max out your credit cards! Many students expect the school to give them the amount they need to pay for their studies. They seem to have the impression that schools are banks, ready to provide them all the money necessary for tuition and living expenses, but that is far from the truth. While scholarships are most appealing because they don’t have to be paid back, they are also hard to get. And schools do have limited scholarship budgets.
Scholarships are generally funded by alumni or corporate sponsors who want the funds they provide to be directed in a specific way, usually a way that benefits the school or serves a specific subgroup in the applicant pool. Consequently, the majority of scholarships are merit based rather than need based, and schools must follow the donor’s wishes in choosing the eventual recipient. Therefore, if you are hoping to secure a scholarship award, you need to be above average in every category shown in the school’s Class Profile (e.g., undergraduate GPA, test scores, work experience), as well as in employability and interpersonal skills. Of course, some scholarships are designated for special groups, such as veterans, women and underrepresented minorities, and candidates with disabilities. Those scholarships might not be 100% merit based, but the recipients must still present a competitive application There are also grants and small awards for students going into specific fields, such as analytics, science, and finance. These can be easily found by searching online for “scholarships” in your field of study.
The first financing option students should look for – beyond their personal funds – is a local bank, a federal or state agency, or a private lender, such as Prodigy Finance. These organizations have reasonable interest rates, and repayment doesn’t normally begin until after graduation, when the student is employed. Schools tend to have lists of outside funding sources on their webpages under Tuition and Financial Assistance, so this kind of information is easy to find.
As with any loan, you are expected to repay the loan amount plus interest. Luckily, most MBA graduates increase their salary substantially after completing the program and can therefore pay off their loan in a few years. This is a good way to establish a strong credit rating if you are young and just starting out.
Like finding the right MBA program, finding the right lending agency requires a lot of research. Some agencies are better than others with respect to repayment terms, but of course, the interest rate you pay will depend on your credit score. Every school has a Financial Aid Office, and the officers have a wealth of knowledge and can be very helpful in directing candidates to outside sources of funding.
Many schools have information about “alternative resources” on their website, where you can find a list of international governmental funding or special groups that offer scholarships, so start digging around to learn more about those options. State and local governments can also be sources for scholarship, grant, or loan information. Contact your state department of education for details. I also suggest approaching your local fraternal and service organizations, such as the Rotary Club, Kiwanis or Lions Clubs, and local chambers of commerce, which often have competitions for scholarships. These will not cover the total cost of the program but will certainly help ease the burden of debt.
International students should investigate funding sources in their home country. Some organizations, such as Fulbright Commissions, COLFUTURO, the United Nations, and the Organization of American States, offer scholarships to international students. However, be aware that there are strings attached to these.
Employer tuition programs
Employer tuition programs were far more common ten years ago than they are now. And some firms that offer to cover the cost of a student’s tuition actually require the student to pay the tuition first and will then reimburse them once they return to work at the firm after graduation. I always encourage candidates to ask their supervisor or someone in their company whether employer funding is possible. The worst that can happen is that the company says no, but if they like you and trust that you will return after graduation, they might be willing to help. I have seen this numerous times. So don’t be shy – ask.
There are a few universities that have co-op programs in which the student works during the semester and is paid in addition to receiving academic credit for the work. Work-study programs are also sometimes available and pay a small salary. Students in two-year MBA programs get summer internships, whose salaries are quite good and provide some income.
An MBA is an investment in yourself and your future. And like most investments, be it a home or a business, it requires financing. However, GMAC data show that MBA alumni are overwhelmingly satisfied with their return on investment, so don’t let the challenge of securing financing stop you from proceeding. You are worth it, and you can do it.
Dr. Christie St-John has more than 25 years of higher ed and admissions experience, including ten years in admissions at Dartmouth Tuck. She was formerly the director of MBA recruiting and admissions, director of international relations, and an adjunct faculty member at Vanderbilt University. Having also served on the board of directors of the MBA Career Services & Employer Alliance and the Consortium for Graduate Studies in Management, Christie has a deep knowledge of MBA and other graduate admissions. Want Christie to help you get Accepted? Click here to get in touch!