How to Finance Your MBA
If your goal is to earn an MBA, one of your primary concerns is likely the cost of business school. MBAs are notoriously expensive -- some private, two-year programs can cost up to $150,000 for tuition alone. On top of this steep price tag is the fact that a high salary after your MBA is no guarantee. However, if you strongly feel that earning an MBA is essential to your personal and career goals, there are options for you to make this degree more affordable. Some of these options are school-specific, while others are through external organizations. Below are some financial aid avenues that are worth exploring for your MBA:
- Need-Based Scholarships -- Some MBA programs offer need-based grants and loans to their students. To be eligible for such aid, applicants must fill out a Free Application for Federal Student Aid (FAFSA) form as well as any financial aid documentation required by the school(s) they are applying to. Financial aid for an admitted student can vary from year to year, depending on the candidate's financial situation.
- Merit-Based Scholarships -- Some MBA programs actually offer a limited number of merit-based scholarships to their students. Merit-based fellowships and scholarships are options for applicants who do not qualify for need-based financial aid. Merit scholarships, particularly at prestigious MBA programs such as Wharton or Kellogg School of Management, are quite competitive, and typically require that applicants have extensive academic, professional and extracurricular credentials. Some merit aid packages are combined with low-interest loans due to schools' budget constraints. Some business schools, such as Stanford's Graduate School of Business, don't offer merit aid at all. If you don't qualify for substantial need-based aid and are interested in merit-based scholarships, check with the schools you are interested in and conduct some research on the requirements to apply for these scholarships.
- External Scholarships -- Grant money doesn't always have to come from the schools you are applying to. According to Stacy Blackman, founder of an MBA admissions consulting firm, resources like FastWeb, FinAid and Peterson's list scholarships offered by external companies that students can apply to their education.
- Part-Time Work -- Some people may wish to stay in the job market and make money while earning their MBA. For such students, part-time and/or online MBA programs may provide the necessary flexibility to allow them to balance work and school. If this option appeals to you, keep in mind that it requires a lot of discipline, organization and time management to balance work and school. Do your research to find the best and most reputable part-time MBA programs that match your credentials, interests and goals.
- Sponsorship -- Wouldn't it be awesome if your employer actually paid for your graduate school? Well for some employees, this happy fantasy is a reality. Many companies see MBAs as an investment in their employees and are willing to partially or fully fund certain workers' business school ventures. Lorrie Lykins, who directs research services for the Institute for Corporate Productivity, told The New York Times, "In talking with a lot of our members, Fortune 500 companies and Global 200 companies, what we're hearing is that they are really ramping up tuition reimbursement programs because, as we come out of this recession, the war for talent is really going to heat up in earnest more than ever before." Oftentimes for sponsorship, you as the employee need to reach out to your employer to formally request it, and to show your supervisor that you are worth the investment. Wharton Business School offers advice and sample sponsorship proposals on its website.
- Loan Forgiveness -- For MBA graduates who enter the non-profit or public service sectors (and as a result relinquish a high salary), some schools offer loan forgiveness programs. For example, while Stanford's Graduate School of Business does not offer merit aid, it does provide a loan forgiveness program for its graduates who make below a certain income threshold.
- Planning -- Next to all of the options above, this one sounds like a no-brainer, and wholly unnecessary to discuss. However, thorough research and planning are essential as you navigate your decision to apply for business school. As Stanford's GSB website puts it, "MBA candidates are encouraged to begin saving personal resources far in advance of applying to the program." Other experts agree, including Francesca Di Meglio of Bloomberg Businessweek, who explains how having your finances in order and good credit can help offset the costs of business school and even help you obtain better education loans.
Another important consideration when planning for your future is whether you truly need to attend business school to achieve your career goals. Considering all of your options and the potential paths towards your professional dreams could help you save money and time. As Dale Stephens of The Wall Street Journal explains, many people believe that an MBA will give them the tools necessary to succeed in the business world, whereas the opposite is actually true -- the level of drive, organization and savvy necessary to gain admission into a strong MBA program is a better predictor of success. "[Do]n't kid yourself," Stephens tells his readers. "What matters exponentially more than that M.B.A. is the set of skills and accomplishments that got you into business school in the first place. What if those same students, instead of spending two years and $174,400 at Harvard Business School, took the same amount of money and invested it in themselves?"
"A Smart Investor Would Skip the M.B.A," online.wsj.com, 1 March 2013, Dale Stephens, http://online.wsj.com/mba-headlines/articles/SB10001424127887323884304578328243334068564
"Employer Sponsorship to Pursue an MBA for executives," wharton.upenn.edu, http://www.wharton.upenn.edu/mbaexecutive/financing/approach-your-employer.cfm
"Find a Sponsor to Pay for that M.B.A.," nytimes.com, 15 March 2011, JingYing Yang, http://www.nytimes.com/2011/03/15/education/15iht-SReducation-mba15.html?pagewanted=all&_r=0
"How to Pay for an MBA," businessweek.com, 3 February 2008, Francesca Di Meglio http://www.businessweek.com/stories/2008-02-03/how-to-pay-for-an-mbabusinessweek-business-news-stock-market-and-financial-advice
"How to Pay for Your M.B.A.," usnews.com, 13 May 2011, Stacy Blackman, http://www.usnews.com/education/blogs/mba-admissions-strictly-business/2011/05/13/how-to-pay-for-your-mba
"Stanford Graduate School of Business: Financial Aid," gsb.stanford.edu, 18 September 2013, https://www.gsb.stanford.edu/programs/mba/financial-aid