If an international MBA has crossed your mind, you’ve probably taken a minute to look at the price tag of a programme or two.
Now that you’ve picked yourself up off the floor and still can’t manage to shake your desire to pursue this amazing experience, you’ve got the difficult task of figuring out how you’ll fund your education.
It’s hardly the only challenge you’ll face as an international grad student. There are also study visas and accommodation to secure – and that’s before considering how much effort goes into every application and the dreaded GMAT exam.
But, you won’t be able to get your visa without having your finances in order first. So it’s not even worth worrying about accommodation yet. You can (and perhaps should) worry a little about GMAT preparation, but MBA financing also takes some time, and you can’t start on it too soon.
How do international MBAs finance their education?
There’s no simple answer to this question. Every student pulls together a unique financing package, and yours is going to be inherently different from everyone else’s.
Generally speaking, however, MBAs pay for their education using the same basic sources:
• Personal (and/or family) savings
• Scholarships and bursaries
• Personal sources of unsecured credit (such as credit cards)
• Family or personal loans
• Private or government loans
While it is possible for many international grad students to work in their host countries, the demands of an MBA programme are intense, and it’s not always possible to manage working and studying at the same time. Most MBA students can’t factor simultaneous employment into their budget, and it’s not advisable if you can avoid it.
Instead, it’s best to focus on funds you can obtain before leaving for your studies.
And the reality is that you’re probably going to look at all of the potential funding sources and make use of a combination of options.
Which sources should you consider first?
Scholarships and bursaries should always be your first port of call. This is free money for your education; you need never repay it (unless you do something that causes the provider to rescind the package).
Many universities, especially American ones, place you within their financial aid system as soon as you’ve accepted a seat at their institution. Some provide you with an aid package along with your acceptance letter (perhaps helping you to choose their institution over another). But there are plenty of other options, and it’s worth it to investigate as many as you can.
Then, it’s time to consider your personal savings, and depending on the cultural norms in your country – your family’s financial assets. But, you shouldn’t start trying to squeeze for the last tiny coin from your family – it’s really only a matter of noting what’s available if nothing else comes through. After all, not everyone has a small personal fortune that they’re willing to dole out.
Family loans, on the other hand, are becoming a norm in many parts of the world. Whether it’s a small amount or a large amount, it’s critical to have everything in writing. Not only are their legal frameworks for personal loans in most countries, but you’ll need to demonstrate how you received whatever money you have to receive a study visa.
If you live in a country where the government offers or subsidizes study loans, you will also want to investigate these before you approach private lenders; usually, their interest rates and repayment terms are favourable.
And then there are private study loans
As an international student, there are three different private loan sources that you should investigate:
• Private local banks
• Private banks in your host country
• Private loans from international providers, like Prodigy Finance
Your first stop is likely to be a private bank in your home country. Logic would tell you that these institutions are best placed to provide you with a loan – they have access to your financial history and your credit records. But, you may want to brace yourself for a bumpy ride.
Local banks, especially in emerging economies and developing countries, often aren’t in a position to lend to international students. They’re unable to price the risk on those that are leaving the country as soon as they receive their loan – and many can’t fathom that an education could cost that much (remember how you first felt?).
There are other challenges that you may need to tackle as well, for example, loan disbursement in local currencies which then require you to pay the transfer and exchange fees. And, depending on the level of bureaucracy, it could take months to finalize your loan and secure the proof needed for your visa application.
Believe it or not, you may have access to loans in your host country. But, don’t start jumping up and down yet, these aren’t always as easy or as straightforward as you may like.
Banks in your host country are almost always going to require a local cosigner with strong financial standing. That’s perfect if you have family in your host country that are willing to back you up – or if your university is willing to act as a cosigner for you (though, you shouldn’t expect that as a norm, only as a bonus).
It’s at this point that many accepted students throw their hands up in frustration. Some loans are unavailable, others don’t cover enough of the expenses, and then there are those with prohibitively high interest rates.
So, what’s this about Prodigy Finance?
Prodigy Finance is a lending platform that provides postgraduate loans to international students from 150 countries attending the world’s top universities, who would otherwise have no alternative access to finance. The loans are collectively funded by a community of alumni, institutional investors and qualified private investors who receive both a financial and social return. Since 2007, Prodigy Finance has provided more than US$323 million in funding to over 7,100 students with exceptionally strong repayment.
Take a moment to learn more about Prodigy Finance loans and which schools are currently supported. After all, funding shouldn’t be a barrier to education – nor should it keep you up at night; your GMAT prep will do that all by itself.