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New Student Financing Trend: Borrowing From Parents

As the cost of business school soars, a growing number of students are turning to their parents for help in financing their business education, according to a recent Bloomberg Businessweek article.

Economic uncertainty and younger students contributing to new B-school financing trend

These days a two-year MBA program can amount to upwards of $150,000. In the aftermath of the economic crisis, tighter lending policies and economic uncertainty can leave students hesitant or unable to borrow money from the government or private lenders. Instead, business school students are turning to their parents for help in the form of interest-free loans or tuition gifts.

According to Bloomberg Businessweek, another factor contributing to the trend is the age bracket of incoming business school students. Almost a third of GMAT test takers today are younger than 24 and have not had the chance to accumulate personal savings to use for their education. Many parents don't seem to mind investing in their children's education, the article notes, citing a GMAC survey that found MBA students in the U.S. rely on their parents to pay for about 20 percent of their MBA program, on average. That number drops to 10 percent for students between 24 and 30 years old.

Financial aid offices are also initiating conversations with business school students and encouraging them to consider other sources of funding beyond government-subsidized student loans.