How to arrange MBA Fees and Funding

Pursuing an International MBA is every individual’s dream and it has never been a trivial task. Getting an admission to your dream B-School and arranging fees and funds is possibly the most important and difficult part of an MBA Application process.

After all of your hard work to get into your dream B-School, the next step is how to finance your MBA?

There are 3 important steps you should follow while arranging your funds/fees for your MBA program.

1. Budget your total expenses:

The very first exercise is to do budget estimate of total expenses of your MBA program and cost of living. You will have a fair clue of where you will land after counselling and shortlisting your schools. A typical two year MBA program costs roughly USD ~70000 which may includes

1. Tuition Fee – This is invariably the largest portion (~80%) of your total expenses. This is sometimes easy to pull down as almost all schools have scholarships that shave off some portion of standard tuition fee.
2. Living expenses or cost of living – includes lodging, food and other day to day general expenses.
3. Study material cost – This may not be significant but it is worthwhile to know that in some schools you may need to pay for the lecture notes, case studies etc., which are not part of tuition fees.
4. Travel cost – Again not a significant cost but needs to be included for traveling to school and for collective academic tours.

2. Identify sources of funds:

In parallel with your application process, investigate and keep a diary your potential financial sources. The best place to start with is asking about the sources of loans and current students from your school’s admission committee. Current students can provide you near real time information on all aspects of funding due to obvious reason that they were in the same position as you are, a year back. Following is an extensive list of financial sources:-

1. Individually sponsored banks Loans – Nationalized and other reputed banks in all countries offer educational loans on one by one basis to prospective MBA students at relatively high interest rate (~13% to ~15% as educational loan carries higher risk as compared to home loan or other tangible assets loan). However the loan amount sanctioned is limited (maximum USD 50K) and may not be enough to cover the cost of a standard 2-year US brand MBA. Banks also demand at least equal value collateral (usually without an exception for loans over US$ 6000) to cover their risk. Initiate discussion with bank as soon as you receive your admission as process could be time consuming and may take more than a month to get through. This early discussion is required to understand the terms and conditions of the bank.
2. School sponsored bank loans – Reputed B-Schools also have tie-up with some banks to let you access full tuition fee loan. For top 5 schools such as HBS, Wharton, and Stanford etc. you may find it relatively easier to get loans amounting to full tuition fee without a guarantor. However, at other schools, even for banks that have tie up with schools and that are willing to lends may impose additional conditions such as to ask for a local guarantor or collateral. Hence it is recommended to get in touch with school to assess whether you are eligible for such bank loans or not.
3. Scholarships – There are both B-School sponsored and open scholarships in the funding space that you may want to tap into. These are zero cost sources that are highly competitive and are awarded based on merit and quality of your application. B-School scholarships awards have fairly strong correlation with applicant’s GMAT score, hence it is always advisable to strive for exceptional score (>740) to stay competitive in race for scholarships. Contact the scholarship department of your B-School to list out all available scholarships and assess your chances of getting through. Some schools ask to write additional essays to apply for scholarship. Additionally, it is always recommended to apply in the earliest rounds so that your application (if successful) may be considered for scholarship early in the queue when funds are still not exhausted. Apart from B-School scholarships, some of the publically announced scholarships in India are Aga Khan, Fulbright program, AAUW- International fellowships for women, In lakhs, Rotary Ambassadorial Scholarships and Stanford Reliance Dhirubhai MBAFellowship (only for Stanford MBA). You may find detailed information on their websites.
4. Non-Bank Educational Loans: You can also arrange your funds/fees from non-bank finance companies either in India or abroad such as:
   • Credila
   • Global Student Loan Corporation
   • International Student Loan Program

    

5. Internships/Apprenticeship – Summer internships are norm in US schools and more or less mandatory in European schools. A good internship can let you earn a few thousand dollars along with giving necessary boost to your post-MBA career. Not very significant source but it still can pay for some expenses.
6. On campus jobs – Campus jobs are quite rare and in most schools, you may not find the time to do anything apart from MBA curriculum. Hence this is not reliable.

3. Start your MBA and scholarship application early

Obtaining scholarships/funds is top most priority of every applicant and due to limited funds the process to obtain funds is very competitive. Hence it is always advisable to start both MBA and Scholarship applications as earliest as possible to have access to financial sources before they are exhausted. It is highly recommended to go for Round 1 application to ensure that you are top of the line applicant when scholarships can be generous.

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