Money! That’s one of the biggest concerns for many MBA students. How do you afford your MBA?
It’s not cheap. According to the 2016 US News & World Report, the average cost of a top ten business school program is $125,000 over two years. And that’s just for tuition. When Investopedia added in an additional $40,000 for boarding and books, plus $20,000 for peripheral expenditures, the cost rises to $185,000 for a Full-Time MBA. That’s not a small sum.
However, the cost is worth it. According to an analysis by PayScale in 2014, an MBA from a top school earns seven figures over twenty years. In fact, an MBA from Harvard Business School can make $3,233,000 over twenty years, but that doesn’t lessen the initial cost. Thankfully, you don’t have to bare the burden alone.
There are a number of sources for funding your MBA that you may not have considered. Based on research by the 2015 Executive MBA Council (EMBAC):
- 23.2% of students receive full sponsorship.
- 35.6% of students receive partial sponsorship.
- 41.2% of students are self-funded.
So, before you decide not to pursue an MBA because of cost, take a look at these five options:
Ways to Fund Your MBA
Corporate Sponsorship
One of the most well-known sources of MBA funding is corporate sponsorship. Depending on the company where you work, you can receive financial support from your organization to pursue your EMBA. Unfortunately, with challenging economic times, fewer companies are willing to pay for an EMBA education. But it’s still possible if you start the conversation in the right way.
The EMBA program at the Wharton School shares these tips:
- Educate your target person on the value of an EMBA using success stories.
- Get your target person to help you understand the decision-making process.
- Brainstorm how your job can be redesigned at no cost to the firm to make EMBA attendance possible.
- Obtain an endorsement from the person.
- Get your target person to make an introduction to the next key decision maker.
- Obtain resources and a buy-in from a key decision maker.
The key is to present your case based on the ROI your company will receive, and make sure you show 100% commitment to returning to the firm. The greatest fear most businesses have is that you’ll leave.
MBA Scholarships & Fellowships
Scholarships aren’t just available for undergraduate students. There are a multitude of grants and scholarships given by external organizations to help aspiring MBA students fund their education. There are scholarships available for generic MBA applicants as well those specific to different ethnicities, genders, and backgrounds.
To begin your online scholarship search, take a look at these websites:
You can also take a look at these specific Fellowships available for varying backgrounds:
- Women
- Minorities
- International Students
Federal Loans
The US government offers a few different loan options for each academic year: the Stafford Loan and the Grad PLUS Loan. The Stafford Loan is limited to only covering $20,500 for a year, but the Grad PLUS Loan can cover the full cost of attendance to your school.
To apply for one of these loans, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). Completing your FAFSA is quick and easy, and it will give you access to a large source of federal aid. There are multiple yearly deadlines, so be sure that you fill out your FAFSA as soon as possible once you get accepted into your MBA program.
Personal Loans
If you can’t receive or don’t want a Federal Loan, you might consider getting a personal loan to finance your MBA. The key is to find the right lender with an interest rate you like. After all, the MBA is only two years, and if you choose a bad loan, you could be paying it off for the next 10 to 15 years.
The great thing about personal loans is that they can sometimes have rates even lower than the government. However, unlike Federal Loans, private loans do not have an income-based cap on monthly repayments.
That’s why it’s so important that you don’t take out too much. Ji Choi and Andy Promsiri, the Full-Time MBA Financial Aid Team at the UCLA Anderson School of Business, offered a warning.
“Just because you qualify for X amount of loans doesn’t mean you have to take it all! Look at your savings, your budget and the cost of education to see how much you will need for tuition, books, living expenses, travel, and ‘surprise’ expenses and borrow accordingly.”
Personal Financing
Your final option for paying for your MBA is paying for it yourself. The first place to look is your retirement savings, such as your Roth IRA. If you’ve already saved aggressively for your retirement, you can use that money to help you get your MBA. The good news is that you’re exempt from the 10% early withdrawal penalty when you put your funds toward a qualified higher education. You’ll still face income tax, but the tax burden will be less.
You can also consider less traditional options like crowdfunding. Prodigy Finance provides MBAs with loans to eight different European schools. Rather than focusing on credit history, it uses a predictive model and interest rates start at 6%. Or you can try CommonBond, founded by Wharton Alumni, to get a loan if you’re enrolled in a top-20 program in the US.