Financing Your MBA, Part 3
Moving right along in our multi-part series on financing your MBA, we’ll take a look today at some of the options prospective MBA students have for obtaining loans to finance their time at business school. For the purposes of this post, we will focus primarily on loan programs for U.S. students. International students, stay tuned for subsequent posts that will go into greater detail about loan programs tailored for your needs.
Financing Your MBA, Part 2
In the first of our multi-part series on financing your MBA, we took a look last week at the costs involved in attending a top-tier business school. Now, with a better handle on how much money you’ll need, let’s start looking at where that funding will come from.
Students typically rely on a mixture of savings, fellowships and scholarships, employer or outside assistance, and loans to meet the cost of an MBA program. According to the GMAC 2016 Prospective Student Survey, prospective students expect to finance almost half their education through a combination of grants, fellowships and scholarships (26 percent) and loans (20 percent). Other anticipated sources of aid include personal savings, parental support, employer support and spousal or partner earnings.
Meanwhile, estimates from several top programs suggest that between 30 and 50 percent of students receive some form of fellowship or scholarship. For instance, the Stanford Graduate School of Business calculates that 50 percent of its students receive fellowships funds, while New York University’s Stern School of Business states that up to 20 percent of its full-time MBA students receive merit-based scholarships. Harvard Business School (HBS), one of the few schools to solely offer need-based aid, reports that 50 percent of students are eligible for needs-based Fellowships. About half of all HBS students receive approximately $37,000 each year through need-based fellowships, the school says.
The best place to find information about a particular program’s financial aid offerings is the business school’s financial aid office, which may be run by the parent university. Along with providing substantial information about school-based fellowships or scholarships, financial aid officers can also help students navigate the loan application process and secure alternative sources of funding. In addition, free online resources such as finaid.org, scholarships.com or Peterson’s Award Database can provide students with further guidance in financing their degrees.
School-Based Financial Aid
Schools often offer a variety of options to help students pay for their education. These options can include merit- or need-based business school scholarships or fellowships, university-wide scholarships, work-based opportunities such as research assistant or teaching assistant positions, and lists of outside resources. To find out more about a particular school’s offerings, students should refer to the financial aid or cost of attendance section of a school’s website or contact the school’s financial aid office directly.
Merit-and Diversity-Based Fellowships and Scholarships
Most scholarships provided by schools are awarded based on merit, meaning they are offered to students who have demonstrated qualities such as academic excellence, professional aptitude or outstanding leadership. Merit-based scholarships are usually awarded at the admissions committee’s discretion in order to attract the highest caliber students and can cover the full cost of tuition.
To enhance the diversity of a class, private donors, alumni and corporations also can endow a variety of scholarships or fellowships targeted towards applicants with a particular career interest, educational background, nationality, racial or ethnic identity, or gender. In addition, some schools offer financial awards to students who are already enrolled and have demonstrated leadership on campus or exceptional academic ability.
The process of applying for scholarships and fellowships varies by school. In some cases, students are automatically considered for these awards when they submit their applications to an MBA program, with no additional work required. Alternatively, some scholarships and fellowships require an additional essay, submitted either at the time of application to the program or after acceptance. A large majority of merit- and diversity-based awards are time-sensitive or based on a first-come, first-served process, so students are encouraged to apply early in the MBA admissions cycle.
Scholarships provided directly by a school are typically offered on a consistent basis year to year. However, endowed fellowships or private scholarships may not always have funds available. Students applying separately to these scholarships and fellowships should check with the head of each program to ensure they are being offered that year.
Need-Based Awards
Though not as widely available, schools may offer financial aid based on students’ demonstrated financial needs. Certain leading schools, such as Harvard, are notable exceptions to this trend in that all of the fellowships they offer are based on financial need. Need-based aid may come in the form of a grant, which does not need to be paid back, or a low-interest loan.
When deciding whether to offer a student need-based aid, the financial aid office typically weighs the student’s income from previous years; his or her spouse’s financial situation; any assets such as stocks, trust funds or home equity; and other outside funding such as employer assistance. Schools compile this information by either asking students to fill out school-specific forms or, in the case of U.S. citizens and permanent residents, using information found in the Free Application for Federal Student Aid, more commonly known as the FAFSA.
School-Based Work Opportunities
MBA programs typically discourage full-time students from working during their studies. However, some business schools, like Stern, do offer work-based financial assistance, in which students apply to work with professors on research projects or help teach classes in exchange for tuition reimbursements. These opportunities may pay up to $20,000 a year and are usually available after a student has been enrolled for at least a semester.
Loan Repayment Assistance Programs
Loan Repayment Assistance Programs (LRAPs) are designed to encourage students to pursue careers in the public and nonprofit sectors, which generally offer lower salaries than those in the private sector, by offering assistance on loan repayments. While the individual requirements of each program vary by school, LRAPs typically require that a graduate work full-time, receive an income below a certain threshold and demonstrate they required financial aid during their MBA studies. Financial support from these programs varies from covering a certain percentage of a student’s loan to assuming the full cost of a loan payment.
Next up in the series, we’ll provide an overview of private scholarships, as well as public and private loan programs. In subsequent posts we’ll examine options for international students, specific financial aid programs at individual schools and more. So stay tuned.
This article has been edited and republished with permissions from Clear Admit.
Financing Your MBA, Part I
As more and more of you are receiving your admissions results from all your hard work during the MBA application process, we wanted to turn our attention to how you’ll manage financing your MBA.
If you’ve got a spare couple hundred thousand dollars in your bank account, then you can probably skip this series. For everyone else, read on. In this post and a handful to follow, we’ll provide a broad overview of the various costs a typical MBA student faces and the types of funding opportunities currently available. Down the line, we’ll take a closer look at the financial aid processes at a diverse range of leading business schools, giving you the tools you need to assess MBA programs in light of both your own goals and available financing options.
If you’re just beginning to think about an MBA, this series can help map out the landscape, outlining the financial aid process and resources available at various programs. You can extend your research by consulting the Clear Admit School Guides and schools’ own websites, as well as through conversations with current students.
First Things First: What’s an MBA Going to Cost?
The first step in financing the MBA is getting a handle on how much it will cost. The primary expense of an MBA program is tuition. Having said that, there are a variety of other costs—including living expenses, course materials and additional fees—that can increase the total amount a student pays by a half again. Most business schools provide a breakdown of the expenses, which are posted under the financial aid or admissions section of their websites in order to help prospective students seriously consider the cost of completing a particular MBA program. Schools typically take the total cost of attendance into account when calculating the financial aid package students receive.
Tuition
Tuition at the top business programs has risen steadily for decades, often at a rate above inflation. Students can now expect to pay between $50,000 and $75,000 for a single year’s tuition at a top school, with an average total price tag of $130,000 for tuition alone. Public universities, which discount tuition for state residents, can sometimes be more affordable. For instance, in-state residents attending schools such as UT Austin’s McCombs and UNC’s Kenan-Flagler pay about $15,000 less in tuition each year than do out-of-state residents. The range of variance of costs that in-state residents pay can be explained in part by the different levels of subsidies that public universities receive and the economies of the states in which they are located.
Living Costs
The cost of living also forms a substantial part of a student’s expenses while at business school. These costs typically cover housing, food, utilities and other personal expenses, and they can vary widely by geographic region. For example, the Fuqua School of Business, located in the college town of Durham, North Carolina, estimates that students will pay $12,800 for room and board in their first year. Meanwhile, at NYU Stern, located in the center of Manhattan in New York City, the estimated cost for room and board is $25,170.
Living costs are usually based on surveys of the student population or estimates of local rental costs. Students should keep in mind that the figures posted by most schools are for single students with no dependents; those with partners or children should take into account the additional expenses of balancing family life with full-time studies. Harvard Business School, for instance, estimates that students with a spouse or partner should set aside an additional $16,900 in yearly expenses for a spouse or partner, another $13,100 for one child and an additional $8,500 for a second child. Meanwhile, Tuck, with its rural New Hampshire campus, calculates that $7,500 should be set aside for each additional family member. Prospective students with further questions may contact their target programs’ financial aid offices in order to request information about expected family expenses.
Additional Expenses and Fees
Course materials, healthcare insurance, transportation costs and other mandatory university fees can add several thousand dollars to a student’s expenses each year. For example, Wharton’s Pre-term fee is $2,000. Furthermore, extracurricular activities, particularly international trips that are often a highlight of an MBA experience, can substantially increase costs; for example, the Kellogg Worldwide Experience and Service Trips (KWEST) run into the thousands before considering a number of additional out-of-pocket expenses. To help cover these expenses, some schools allow students to apply for an increase to their cost of attendance and thereby take on more loans.
Loan Interest
Because recent legislature has rendered federally subsidized loans unavailable for U.S. citizens or permanent residents in graduate school, students relying on loans to fund their studies will see their interest accumulate while in business school. For the most part, students do not have to start paying that interest, or the principle, until several months after they graduate. Federal loans and some private loans also include an ordination fee that is tacked on to each loan disbursement. We’ll go into greater detail on loans in a later post in this series.
Stay tuned for future posts in this series, where we’ll take a closer look at the range of financing options available to MBA students—including school-based financial aid, private scholarships and loan programs—as well as specific resources for international students.
What Bain & Company Looks for in MBA Hires
Bain & Company—widely considered one of the most elite consulting firms in the world—is a coveted post-MBA destination for students at top business schools in every part of the globe. Headquartered in Boston with 53 offices in 34 countries around the world, Bain employs more than 7,000 people and counts as its clients leading Fortune 500 companies, as well as nonprofit and government organizations. And business is booming.
According to Keith Bevans, Global Head of Consultant Recruiting, the company has grown at a rate of 15 percent a year for the past 20 years, with no slowdown in sight. “We hire a little over 400 consultants a year—and that growth comes from the top business schools in the world,” he says. While the company primarily targets top-20 schools for MBA recruiting, it hires from more than 60 schools around the world and is committed to finding the best talent wherever it can.
Bevans is a Bain-lifer. He started as an associate consultant out of MIT, where he earned his bachelor’s and master’s degrees in engineering. He left Bain to get his MBA at Harvard Business School but returned upon graduation and has been there ever since. For much of his career, he was a client-facing partner in the firm’s Performance Improvement practice, with a focus on processes to improve effectiveness and efficiencies. Now he’s putting that expertise to work for his own company, and he couldn’t be happier.
His allegiance to the firm is clear, and it’s based in great part on his intimate understanding of its culture, which he describes as steadfastly collaborative and supportive. And he’s not alone. Bain frequently tops the “Best Places to Work” lists for Glassdoor, Vault and Consulting magazine, with employees praising its “great people and culture” and calling it “an incredible place to learn” and “the best place to start your career.”
It’s people, too, set Bain apart, Bevans agrees. “They are very smart, very passionate, maniacally focused on making a difference in whatever they are doing—and they wrap all of that in a layer of humility, which I think is very rare to find.”
Bain Partner Keith Bevans, Global Head of Consultant Recruiting
But interns alone are not enough to keep up with Bain’s growth. “It varies from year to year in terms of how many of our full-time hires are former summer interns, new full-time hires or former consultants. But the internship program never fills up the whole group.”MBA graduates are a big and important part of the company’s hiring, and many start out as interns in the 10-week summer associate program between their first and second years of business school. “It’s definitely an important on-ramp,” he says of the internship program, adding that it’s also a valuable opportunity for both Bain and its interns to determine fit. Notably, 90 percent of interns return to work for Bain full-time, Bevans adds. And there’s not a maximum cap on intern hires. “Our summer program is limited only by how many great students we can find,” he says. “We don’t have a target—rather I like to think of it as a minimum. If we find more great people, we will always go over whatever we set out for.” Which means there are opportunities for second-year students who may not have targeted Bain or consulting in their first year.
But interns alone are not enough to keep up with Bain’s growth. “It varies from year to year in terms of how many of our full-time hires are former summer interns, new full-time hires or former consultants. But the internship program never fills up the whole group.”
Don’t miss Clear Admit’s exclusive interview with Bevans, in which he talks about the firm’s commitment to employee training and support, goes into detail about Bain’s MBA recruiting process, shares where he looks and what he looks for in MBA hires and more. Our thanks to Bevans for making the time to share more about Bain with the Clear Admit audience.
Corporate Recruiter Q&A: Bain & Company’s Keith Bevans
Clear Admit: What sets Bain apart—not only among other consulting firms but also as an employer or company overall?
Keith Bevans: There are a couple of things about Bain people that set us apart. In my role, I have had the opportunity to travel to offices around the world hiring people, and what I have found is that Bain people are passionate about both the work they are doing and the things they are doing outside of work. They really jump right in with both feet. When you align that around our goal of having our clients be successful, you can really see the passion Bainies have for their clients—it just oozes out of them. We are having a big impact on our clients, and we are hiring people who are really energized by that.
With that as our starting point, we put them in an environment where we really do act like one team and do everything we can to support them in their professional life. From our global training programs to our onboarding program to the career counseling we provide—it’s all aligned around helping them be successful and be the best they can be. Bain people are people who want to have an impact.
Relative to other firms I think we are different in the sense that we have a very collaborative culture. We also have tremendously deep expertise in every major sector of the economy, and we bring that to our clients. “We’ve studied this and analyzed this, but why don’t we marry that with your expertise?” we’ll say to clients. We are not trying to prove that we are smarter than our clients but to work collaboratively with them to position them to succeed.
CA: How important are MBAs in your overall hiring? How many MBAs do you hire each year, both interns and full-time? Are you continuing to grow at the 15 percent rate you’ve enjoyed for so many years?
KB: MBA talent is a big and really important source of talent for us. For the last 20 years, we have been growing on average at a rate of 15 percent per year. That makes for a phenomenal slide when I put it in front of recruits. We hire a little over 400 consultants a year, and that growth comes from the top business schools in the world. The bulk of our targeted efforts focus on top 20 programs, but we have hired from almost 60 different MBA programs around the world.
With our growth, our primary focus is to make sure we are finding the most talented people out there. The breadth of schools from which we’ve hired shows that we are continuing to do innovative things through the Bain Passport and Webinar series to connect with students wherever they are. Our intern program this summer is once again—for the third or fourth year in a row—the largest we have run as a firm. It is definitely an important on-ramp, if you will. And 90 percent of the MBA interns who come for the summer return to Bain afterwards. We find the best, bring them in for the summer and very often they start their careers with us.
As for the 10 percent who don’t return—most of the time it’s actually more of a mutual thing. Maybe they tried consulting and decided it’s not a fit for them. And here’s another example of the supportive part about Bain: Even the interns who don’t come back often get support from the people who worked with them at Bain. They help them identify what parts of the internship were the right fit, and what roles might be a better match and then they help connect them with people who can help. After all, they are still Bain alums and still part of the Bain family.
Chicago Booth Names Stanford GSB Professor as Its Next Dean
The path from the Stanford Graduate School of Business (GSB) to the University of Chicago Booth School of Business is becoming well worn, as Chicago Booth prepares to welcome its second consecutive dean from the Palo Alto campus. Madhav Rajan, who chairs the accounting department at Stanford GSB and served as Senior Associate Dean for academic affairs from 2010 to 2016, will take the helm at Booth on July 1, the school announced yesterday.
Sunil Kumar, who served as Chicago Booth’s dean from 2011 until leaving to become provost of Johns Hopkins University in July 2016, also came from Stanford, where spent 14 years, ultimately in the role of Senior Associate Dean. Since his departure, Douglas Skinner, also an accounting professor, has served as Interim Dean as Chicago Booth conducted a global search for a successor.
“We sought the most outstanding candidate whose values, ambition and abilities fully comport with the distinctiveness of Chicago Booth as one of methodological rigor in its research and education, and through that commitment one of high impact on the world,” President Robert J. Zimmer and Provost Daniel Diermeier said in a statement announcing Rajan’s appointment yesterday.
As Senior Associate Dean for academic affairs at Stanford GSB, Rajan led the school’s MBA program, including overseeing admissions, curriculum, the student experience and career management. While at the GSB, Rajan also launched new joint-degree programs with Stanford’s engineering school and led initiatives toward greater integration of the business school within the larger university.
He also served as boss to Derrick Bolton, Stanford’s long-serving Admissions Director. In an interview with Clear Admit in August 2016, Rajan shared that he had, in fact, pushed Bolton to pursue other opportunities, perhaps contributing to Bolton’s decision to leave the GSB this past September to head the recently launched Knight-Hennessey Scholars Program.
“I had been encouraging him to think about other things he could do because it is a difficult job and he has been doing it for 15 years,” Rajan told Clear Admit. “The way he does it, the intensity he brings to it, the effort level—I was amazed that he did it for as long as he did it.”
A Compassionate, Supportive Leader
Rajan’s comments to Clear Admit suggest that he is a compassionate, supportive leader who offers those who work for him the autonomy to chart their own course. Of Bolton he said, “There is literally nobody at the GSB who works harder than Derrick. The amount of time, love and dedication that he puts into admissions is amazing and beyond what anyone could be expected to do. That level of commitment I have never seen from anybody, frankly.”
Asked if Bolton’s replacement (who has yet to be named) might change the school’s enduring essay prompt, Rajan offered further insight into how he leads. “That will be completely up to the new admissions director,” he said. “We have very much a notion of empowering people in their roles here, and the person hired to manage admissions will have complete latitude to run things the way he or she sees fit.”
A Beloved Teacher and Respected Scholar
Rajan has also won accolades for his teaching. In 2000, the University of Pennsylvania’s Wharton School bestowed upon him the David W. Hauck Award, its undergraduate teaching award. He taught at Wharton before Stanford, from 1990 to 2000. Next month, he is also slated to receive the Robert T. Davis Award for lifetime service and achievement, the GSB’s highest faculty recognition.
Rajan holds a bachelor’s degree from the University of Madras in his native India, as well as two master’s degrees and a Ph.D. from Carnegie Mellon University. His research has focused primarily on analyzing management accounting issues through an economics lens, especially as they relate to the choice of internal control and performance systems in firms. Cost Accounting: A Managerial Emphasis, which he co-authored, is the leading cost accounting textbook used around the world. He also served as editor of the Accounting Review from 2002 to 2008.
Returning to a School on the Rise
Rajan is not a stranger to Chicago Booth, having served as a visiting professor in 2007-08. In a release announcing his appointment, he expressed his respect for the school and his excitement to return. “The values I have in research and education are deeply valued at Chicago Booth,” he said. “People come here to do rigorous, empirically based research and analysis, which provides the basis for a transformative student experience and an extremely effective MBA curriculum. We have an exciting opportunity to take Booth’s deep strengths and leverage them here and around the world. I am thrilled to have the chance to be dean at what is unquestionably the greatest academic business school.”
Chicago Booth has been something of a rising star among leading MBA programs over the past decade, threatening Wharton’s previously undisputed place alongside Stanford and Harvard Business School (HBS) as the best business schools in the world. The Economist has ranked Chicago Booth the number one business school for five years running, from 2012 to 2016. And in last year’s U.S. News & World Report ranking, Booth tied with Stanford for second, behind HBS and ahead of Wharton.
Chicago Booth’s upward trajectory began under Edward Snyder, who preceded Kumar as dean from 2001 to 2010. In that time, the school almost doubled its number of endowed professorships, more than tripled its scholarship assistance to students, moved to a new Hyde Park campus, expanded its presence in Singapore, established a new campus in London, successfully completed a capital campaign and more than doubled its endowment. Snyder also successfully courted an unprecedented $300 million naming gift from alumnus David Booth before leaving to lead the Yale School of Management. Kumar continued that momentum, helping raise more than $300 million, focusing on student recruitment—including increasing the female enrollment of full-time programs from 35 percent to 42 percent—and expanding courses for undergraduates. Now it’s Rajan’s turn to take the baton. It will be interesting to see what his leadership holds in store.
This article has been edited and republished with permissions from Clear Admit.
MBA Alumni Tout Degree’s Value and Versatility, GMAC Survey Finds
There have long been MBA applicants who view business school as an opportunity to make a career pivot—changing industry, function or both. Indeed, according to survey results released today by the Graduate Management Admission Council (GMAC), more than half of alumni respondents currently work in an industry or job function they had no prior experience in before entering business school. Not only that, two in five alumni (39 percent) currently work in an industry they hadn’t even considered prior to starting business school.
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