How to Finance the Full Cost of Your MBA

Written by: Eric Lucrezia, creator of?Candidate Coach, author of the book series?"Getting into an MBA", and co-host of the weekly vidcast,?MBA Waves.

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Get ready to spend $500,000 on your MBA! Think I’m joking? By some estimates, the Stanford full-time MBA program could run about half a million US dollars, during its prestigious, top-ranked two year course of study. For many MBA hopefuls, it’s absolutely still worth it when you look at the career opportunities that follow, particularly in terms of salary potential.

Continuing with the example of #StanfordGSB, which is not necessarily the most expensive place to do your MBA, the two biggest expenses will be your tuition, which for the 2022-2023 academic year is just about $77,000, and the cost of living, which could be easily between $40,000 to $50,000 per year in California. Already we’re in the ballpark of $250,000 US, and we didn’t even factor in the opportunity cost of not earning your salary for two years, which depending on where you’re coming from could already mean 70-100K USD per year, pre-MBA, that you’ll not be making. You’ve also got to count on paying for medical insurance, transportation, books and supplies, a mobile phone plan, and perhaps subscription to the Financial Times and a gym membership.?

One thing that many people applying for an MBA don’t consider is the cost of the many networking events that come with doing an MBA, and you certainly don’t want to miss! For many, this is where the magic happens - where you connect with alumni, hiring managers, investors, who knows...where the power of a top-ranked MBA network can connect you to that golden opportunity you’ve been dreaming of. At an M7 school like Stanford, some of those networking events could cost a pretty penny after a few cocktails and perhaps dinner at some higher end bars and restaurants where business elites like to wine and dine. Believe me, it adds up!

The good news is - for those who manage to get admitted and who can afford the program - the return on your investment is often a great one when you consider your career trajectory post-MBA. But what if you don’t have that kind of cash? Honestly most of us don’t, and you may be asking “How can I finance an MBA program?” Fortunately there are options available that can make it possible to finance the enormous MBA costs ahead of you, mostly in the form of scholarships and loans.

Nearly every business school out there offers some kind of scholarship program, generally as a means to attract top talent. To start with, here’s a hard truth: while many schools may offer some need-based scholarship, the vast majority of scholarships out there are merit-based. Financial need alone is not a valid enough reason to expect financial support for your studies - you need to be a great candidate and have financial need! So my best advice is to focus more on your GMAT score than writing a sob story in your essay. Let’s look a bit more closely.

When you apply for scholarships at business schools, I would divide them into two main categories - internal and external. Very often, internal scholarships essentially function like tuition discounts, coming off the top of your total cost of study. These could be merit-based, which is usually heavily based on GMAT (or GRE) score, but other factors as well, depending on the school, and you should ask your recruiter directly about these factors, if it’s not already immediately clear on their website. Diversity-based scholarships are also extremely common, as having a diverse MBA class is one of the most prized values and data points of nearly all MBA programs (and companies) around the world. A diverse MBA class (or batch) creates an environment of greater learning, broader intercultural exchange, development of deeper empathy, and a richer experience for all involved. That said, two most common diversity scholarships target underrepresented nations, and women, regardless of nationality. For those holding multiple passports, speaking multiple languages, or have lived, worked, or studied around the world, make sure this is immediately visible on your CV and your application...these aspects of your profile could pay off in spades! Other diversity-based scholarships may include cash for LGBT students or people with certain disabilities, or we could even talk about diversity of professional backgrounds in the batch. The third main type of internal scholarships has to do with timing, where business schools may offer a discount for applying early, to incentivize applications in earlier admissions rounds and decision making. The earlier you apply and/or commit to a particular school, the more scholarship money you may be entitled to.

In terms of external scholarships, these are often linked to a particular school or MBA program, and you may have to apply via the school; however, the source of the money (and often the decision of who the recipients will be) is external to the school. Very often these external scholarships are companies, governmental agencies, chambers of commerce, not-for-profit organizations (NGOs), or even private citizens such as alumni. These are often linked to specific career pathways or national origins. Also, don’t forget to search online for other such external scholarships not linked to the school itself which could be an additional source of funding, particularly in the US, where tuition prices are particularly high, and in turn many more organizations exist and offer financial aid opportunities to offset these costs.

In terms of loans, I get it - no one likes the idea of taking on debt, but I assure you that the vast majority of MBA students do borrow money to cover at least part of their funding and living costs during their MBA program, but take solace in the fact that if you properly research the best fit programs for you and your career (not necessarily based on rankings), you should have a significant growth in salary, particularly by your third year of employment post-MBA, which is why - by the way - rankings companies typically survey alumni three years after graduation for salary data, when significant ROI is usually met. That said, you should be able to repay your loans within a reasonable amount of time, and from there, it’s pure gain in your future income.?

Bank loans are the first option for most people; however, if you are studying abroad, most traditional banks do not offer student loans for foreign students, unless you have a co-signer who lives and earns enough money in that country, who is willing to take on the legal obligation of repaying your loan in the event that you should be able to pay. This is understandable since banks may find it difficult to recover their investment, should an international student suddenly go back home and “forget” to pay their debts. There are some exceptions to traditional banks, so it’s always worth inquiring with the schools to which you’re applying if they have relationships with any local banks that are happy to lend to international students. More than likely, if you’re planning to apply for a bank loan, it would be a bank in your home country, but depending on where you come from, that could mean exorbitant high interest rates.

To address this problem, various non-bank lending companies have appeared over the years, specifically seeking to provide financing options for international students in MBA, master’s, and other programs overseas. Prodigy is the most famous of these, but there is a growing list of other reputable options, including CommonBond, Future Finance, Lendwise, Sallie Mae, Propelld, and many more, including some that are specific to certain nationalities, such as HDFC, the Bank of China, and FIDERH, for Indian, Chinese, and Mexican nationals, respectively. Each of these institutions has their own policies and eligibility requirements, but usually their interest rates are lower than those of traditional banks and are better adapted to the needs of international MBA students.?

In the end, many options exist to make financing your dream of completing your MBA possible. Whether you’re going to Stanford or any of the many prestigious business schools around the world, you absolutely want to start early in developing an application strategy that includes a strong GMAT score and essays that tell a great story about you, to make you as competitive a candidate as possible for admission and to meet the requirements for an MBA scholarship or two, knowing that you’ll also very likely take a loan of some type as well. The earlier you start your MBA research dn application journey, the better, and that may include working with a professional coach or admissions consultant to give you that edge in the face of massive competition. For more information and a free consultation, check out: www.candidate.coach.

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