MBA Fees & Financing - How do you all do it?

Question

First post, long time lurker.

As most of you, I'm currently in the process of applying to several business schools, some with a more "dream school" quality to them, others more as back-up. What really concerns me about these programs is the fees. Top schools like HBS or INSEAD charge $60-$80k, excluding living expenses. As a Canadian used to subsidized education, these fees appear astronomical. I recognize that the increase in salary will pay for it, but these amounts are still high to me.

I have two main questions:

1) How do you all do it? Are scholarships common / difficult to obtain? Do you pay from savings or take out a loan? I'm pretty debt-adverse and I'm still wrapping my head around how to finance all this.

2) How good are my chances of being admitted to a top tier MBA program with a good financial aid package? Here is my background:

Age: 27 y/o at matriculation
MBA Interest: management, strategy, int'l business
GMAT: 760 / 6.0
GPA: 10.0 / 10.0 (valedictorian)
Profile: Engineer with 3-4 years of experience in energy / environment research and government regulation
Extracurricular: captain of sports teams, volunteer with Engineers without Borders, volunteer tutor / mentor at local community centre
Languages: French and English (both native speaker level), German (fluent)

Thanks for all the help. So that this thread doesn't revolve around me, feel free to post similar questions and concerns!

asimov · Answer

1) Most of the students pay for their MBA education with student loans. Don't worry, your school will help you get a loan. There are limited scholarship opportunities, but those are hard to come by and generally do not cover the full cost of attendance. If you attend a top-tier (~top 20) school, you should be able to land a job post-MBA to cover the student loans.

2) Your stats is definitely very impressive. However, for MBA, the more important aspect is work experience, and to a certain extend your fit at the particular school you are applying for. Thus, it's hard to give you a good evaluation/advice without knowing your work experience and the schools you are aiming for.

krussell · Answer

I'm Canadian as well and our top schools aren't much cheaper. Rotman and Ivey are both around the 70k mark, and Schulich, Queen's, Desautels, and Royal Roads are high up on the tuition rates too.

It's a bummer, but it's an investment. They say you'll likely pay off the 100k in debt within 5 years.

Sailorette · Answer

I'm glad you came out of lurkdom

1) How do you all do it? Are scholarships common / difficult to obtain? Do you pay from savings or take out a loan? I'm pretty debt-adverse and I'm still wrapping my head around how to finance all this. 2) How good are my chances of being admitted to a top tier MBA program with a good financial aid package? I find it easier to address your two questions together. While most people do finance their MBAs via a combination of savings and loans (with an emphasis on the loans), the fact that you've identified yourself as debt averse might mean that it's not a good route for you to take. As a previous poster mentioned, we can provide much better feedback if we have an idea of what you want to do after the MBA. If you are single, like to travel, and are targeting a position with the Big 3 in MC, I'd probably encourage you to pursue the best program you can get admitted to and put a plan in place to pay off the loans within 3 years or so. If you want to work in environmental policy, continue with significant volunteer work, or go into government, I would recommend you submit applications at programs ranked 20 - 40, which will provide you with plenty of opportunities upon graduation, but that you are much more likely to receive scholarships from. I do think you have a great profile, and would expect you to have a good shot at a partial/full ride from a program like Duke, Kelley, or Darden. You'll just have to evaluate which program(s) will best get you to your post-MBA goals, and decide how much you're willing to borrow to get there. Good luck with your apps!

Badyouken · Answer

Thanks all, interesting posts.

I should clarify my post a little bit:

While I am relatively debt-adverse, I am not against the idea of taking out a loan. But I'd rather see it in the 5-figure area than 6 figures. I was more curious to learn about the specifics of your payment schemes.

My goal with this MBA is to gain a better understanding of management / economics to move from a technical engineering position to management and / or strategy. Management consultant, with a focus on energy / resource industries, would also be in my field of interest. I see this degree as a way to balance and complete my profile, not as a catapult to career superstardom. I am not interested in i-banking.

So far I'm applying to INSEAD, Schulich, HEC Montreal, and IMD.

shaselai · Answer

i will be borrowing most of it... insead is nice but 1 year is tough with internships etc. especially i am career switching..

Sailorette · Answer

Since I'm not yet in school, I can't speak much as to payment schemes. If you have an idea about what your total borrowing might look like, find an amortization calculator somewhere on the web, assume a 10 year payback term, and something around 6% interest (I've seen rates from 3% to 9% lately).

If you don't know what your borrowing might look like, check the schools' websites. Many of them have very detailed breakdowns of what their students' spending looks like and will provide that total number (tuition + fees + living expenses) to the student loan companies. Then run the amortization calculator as described above.

Play around with the numbers- is the minimum payment something that you think you can comfortably fit into your anticipated future income? If you want to pay it all off in five years, does that seem feasible? Would it be worth it to you to delay an MBA for another year to save up for it, so you don't have to borrow any living expenses?

It's all about finding your comfort level.

tmino · Answer

Here are a couple financing options (some were already mentioned above):

- Regular student loan (some schools have schemes and can guarantee a loan, though the loan amount can vary case by case)
- Corporate scholarships (you need to apply for these separately, check in advance due to early deadlines)
- School scholarships (merit based)
- National scholarships (from funds/institutions in your home country where applicable)
- National loan schemes (also from your home country where applicable)
- Internship (2 year programs have a summer internship where you can make around $15K-$30K depending on internship)
- Consulting projects (many schools require students to do a consulting project (e.g. MIT, LBS) which can be paid as well)

In general, I would always go for the higher ranked program (e.g. top 10), despite any scholarships from lower ranked programs (e.g. top 20). Just my personal opinion. The network you get in the long term and better post-MBA career opportunities at top schools often outweigh the short term cost advantages of lower ranked programs by far in the long run. But again, just my own opinion :-)

. Some have stellar careers after attending a top 50 b-school!

. Some have stellar careers after attending a top 50 b-school!

nink · Answer

Here's something that no one has mentioned yet.

Due to the legislation that Obama signed while back (where Federal Gov't is now directly lending loans - including Stafford, etc), some of my classmates are going nuts because a lot of the private lenders are trying to get out of this business.

For example, few of my classmates used Citi to take out student loans and couple of weeks ago, Citi sold off their student loan business to various lenders. When my classmates logged into their online account to make monthly interest payments, they found out that Citi sold off their loans to the Department of Education. Now, they are trying to figure out exactly who owns their loans and where to send the payments and etc.

So if you are borrowing money for bschool, be aware that this can happen in the future, especially if you are taking out private student loans.

SaMoCU · Answer

I'm a recent admit to CBS, and start August, 2013. I expect to be a green card holder before the end of the year (Canadian, married to a US citizen)...are there more loan opps available to perm residents. I heard FAFSA is an option for US citizens, but is it one for perm residents?

Thanks!

Thanks!

nink · Answer

It doesn't matter whether you are a permanent resident or a citizen. You need to file FAFSA anyway (with either status). It's a requirement to get a loan. You get the same exact benefit (in terms of loans) with either status.

pranrasvij · Answer

i was looking into FAFSA and several other loans. Looks like for graduate studies, we only get loans at a higher rate of 6-8%. There are other govt loans for undergrads are at 3-4%... anyone have any ball park figures?
there are need based scholarships and other private scholarships but the amounts are small so you still need loans or savings.....

nink · Answer

It's true. Unless you are getting some scholarship (or you have personal savings), you will have to finance significant portion (if not all) through direct loans (via gov't) and other private loans. (MBAs won't qualify for grants and other federal financial aid that undergrads qualify)

Luckily, I don't have to take out any loans for bschool but for many of my classmates, the interest that accrues every month equals hundreds of dollars (excluding the subsidized Stafford interest)

whiplash2411 · Answer

As nink mentioned the FAFSA is applicable for both US citizens and permanent residents. Only people who are on an F1 or H1B visa etc are ineligible to apply.

saubhikdas · Answer

Hi All,
I am also quite worried about the MBA fees and Financing.I am from India and have above 4 yrs of experience in IT consulting.I am planning to appear for the GMAT by next January and intersted to apply US and Some of the EU business schools.My main concern is that in US it is difficult to get a sturnd load of aroubd 60K if you dont have a co-signer.I dont have any relative or somelese else whose name I can give as a cosigner.So I am not sure how to go aboout it.Also the 1yr course in EU will cost around 50K(max).But not sure about the loan procedure in Europe.

If anyone can highlight the above points it would be very helpfull.

Thanks,
Saubhik

nachoa18 · Answer

Hi all,
Do you know if a private loan with cosigner can be denied? and what could be the reasons? 
I am asking that because I may have found a cosigner but he is worry that his current salary and other existing loans won't help me qualify for a private loan with Citibank (I will probably have to borrow the full cost+living expenses).
Any insights, advices???

Sailorette · Answer

Sure, it happens. The most important thing for a cosigner to have is a great credit score, then salary comes into play. If your cosigner does have significant outstanding loans, they might negatively impact his credit score, which I think would be a larger concern than salary (unless we're talking about a salary that is less than what your loan repayment amount is).

I don't think there's any way to know with certainty until you submit the applications. Do bring up your concerns about the process as early as possible to the financial aid office at your school, and they will help you navigate the paperwork and provide you with options for Plan B if you need one.

Good luck!

lifeisshort · Answer

BIG QUESTION not yet addressed:

If you are an American citizen entering a  foreign  MBA program located  outside  of the UNITED STATES, such as in Asia or Europe, how are you attaining financing for the program?

Because, unless I'm mistaken, Federal Loans (Stafford/Sallie Mae) are viable  only  for domestic U.S. schools, as are private grad-level loans from U.S. banks. For instance, Citibank stipulates, "You must be enrolled or planning to attend an undergraduate or graduate program at least part-time at an accredited college or university in the U.S."

So, for those US citizens entering foreign MBA programs (and who are not employer sponsored), how can you finance it?

MBA Fees & Financing - How do you all do it?

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