MBA Financing – Top Secrets from a Stanford Graduate

By - Jul 26, 12:00 PM Comments [0]

Daria Gonzalez, Stanford GSB graduate and MBA Strategy client, told us why she had chosen Stanford, how to win an MBA admissions process if you are a non-traditional applicant, DOs and DON'Ts about financing, and how to find a job in Silicon Valley.

Financing
Financing is a very important aspect. I will start from the very beginning: Stanford hosted an event in Moscow, and when I came to this meeting, there were several Russian Stanford MBA graduates. They were happily saying that funding should not be a concern since there are lots of scholarship programs and loans. They were also stating that all MBA programs have a similar cost, and at a particular moment, if you are not a billionaire, the sum of money you need would become so big that $10,000 would not make any difference.

As for me, I have never been a financially rational person, did not save money and did not control my expenses, which would be right, actually. Each applicant usually has some savings, which he or she brings to a business school. The most significant expenses there include a tuition fee, and housing (by the way, housing may be even more expensive than the tuition, like in California, for instance). If your savings are relatively small, you can usually take a loan from one of US banks, and a top-school may even act as your backer.

The thing I did not know was that if you worked for an NGO, a school is almost obliged to give you a full tuition fee waiver. I was not aware of this opportunity, although I had worked for an NGO, and did not receive my waiver, as a result. If you do not outline it clearly, the school will not make a difference between a state company and an NGO, and in the first case, it is the company that sponsors your education. Besides, I did not take the chance to get a need-based discount, although my family's financial situation matched the criteria.

Important Tip: Ask for Fees Reduction!

Not only international students but also those from the US are not aware of these aspects sometimes. At Stanford (not sure, whether it is true for other universities), you have a certain credit line and a credit limit you may use. This limit is divided into quarters Q1, Q2, and Q3. Therefore every year you have three equal tranches. Initially, I imagined that I should live on my savings and then ask for a loan. Never ever do that! Take out a loan first. Why? Let me explain.

First, I thought that loan interest would be charged immediately, but it turned out that it starts after six months from graduation. While you are still studying, you cannot make payments towards a loan, hence everyone has equal opportunities. It is pretty simple: when you run out of savings, you start spending the loan. However, if your annual limit is 60 thousand dollars, for instance, you will have 20 thousand per quarter. That is why, even if you were spending your savings only and run out of funds by the third quarter, you would be able to ask only for 20 thousand, and those 40 thousand that you COULD take in Q1 and Q2 would not be available anymore.

As a result, those who spend all the savings at the beginning, hoping that they will be able to live without a loan for a long time, make a mistake: they graduate with zero funds. The credit limit is not that big, if only you are not going to spare money, which is hardly possible at Stanford. You will certainly want to participate in events on campus and global trips: imagine that all of your classmates are going, and you are not. That is why you should use the loan first and keep your savings for extra expenses and, most importantly, for the period after graduation, when you will be looking for a job.

Do not repeat my mistake: when I had graduated, I had only two thousand dollars left and no job at all. Here, if you are a non-traditional applicant, like me, and not a US-citizen with work experience in the US or a person who worked hard during two years to land at McKinsey or a bank, it would be an extraordinary challenge to find a job in the US. Besides, recruitment decision-making at one company takes two months on average and sometimes even longer. However, these two months would seem like years, if you have only two thousand dollars left and no pre-paid accommodation.

Do you want to know how to survive, when you graduated from Stanford with 2 thousand dollars left? Stay tuned for the next part and follow us on Facebook.

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