With the costs associated with obtaining an MBA Degree accelerating, prospective students are needing to consider all possible sources of supplemental income to fund their MBA Degrees. While there are a significant number of MBA scholarships available, applying for these scholarships is quite competitive and there may just not be enough scholarships to cover your particular need. This situation pushes prospective MBA students to find other means of funding their MBA studies. After you’ve exhausted your search for all available scholarships, fellowships, and grants, you may still need to supplement the budget for your MBA program. This is when an MBA loan becomes a viable source of funding.
The Cost and ROI
The average total cost (including tuition, school fees, accommodations & food) to attend the top 10 B-schools well exceeds $150,000 in 2015, ranging from $102,0001 for Insead’s 10 month program in Singapore, up to $200,3702 for Stanford’s two year program. Top business schools are ranked (in part), based on the salary gains of their graduation students. Alumni are able to earn an average of 95.8%3 more after getting their MBA Degree. Thus, obtaining a costly MBA Degree is still considered a good long-term investment and the MBA loan is simply a means to finance it. You can still recover your costs easily assuming you’ll land a good-paying job after getting your MBA degree.
If you are studying within your own country, you will typically have access to the widest number of loan options. To broaden them still, you can decide to have a person co-sign the loan commitment. Many governments have both National and local programs and agencies set up to facilitate funding for higher education. You can also look at loan programs offered by your local banks and credit unions. Your B school will probably already be working with a Bank/Credit Union. Any mortgage, credit card, or association you may already have an account with are also viable sources for loans. Do your due diligence and compare rates and terms for your loan from all these sources.
Studying abroad does not necessarily mean that you’re not eligible to most of the lending sources available to the domestic student. In fact, if you have a resident cosigner, you’ll be able to obtain a loan from most of the same entities that are open to domestic students.
If you will not have an eligible cosigner for the loan, then you can still look to see if your school works with a creditor institution that offers such loans. Many of the top MBA schools do. There are also banks such as Prodigy Finance that offer loans to international students without cosigners.
Your B School and their Role
Your B school wants your business as a successful student to their program. As such, most business schools implement and facilitate loan programs for their students. They partner with banks, private lending institutions, and the government to provide loans to their students. Take advantage of any and all loan programs they may already have in place.
Criteria, Accreditation, Fees
The criteria for obtaining loans are different than for scholarships or grants. Factors such as your work history, assets, past and present salary, and the MBA program you wish to attend may determine which loan programs are available to you. Lending institutions generally will provide loans only to programs in accredited schools4.
To find out which MBA loan program is best for you, consider the following factors: interest rate, repayment options, upfront fees, and availability of interest subsidies. And to help you find MBA loan programs, browse through a list of MBA Loans.