Financing your MBA – How to pay to the B schools

Entering the world of a top MBA program often comes with a big frill attached – the money required to take care of your tuition fee, living expenses, textbooks etc. A somewhat scary fact about MBA is that this amount is by no means small. It is rather fairly significant. But do not let this pause your efforts or desire to pursue MBA as management education is a long term investment.

First of all let’s understand the meaning of Financial aid

Financial aid can be given by the college/ university, banks, organizations and governments in the form of loans, scholarships, grants, sponsorship etc. At least 50% of the MBA students take some sort of financial aid.

Each MBA aspirant should assess the amount of funds required (depending on where one is applying). Subsequently one should subtract the amount of personal funds available to arrive at the additional funds needed. Please note that if you are considered as a ‘dependent’ by the US federal rules, your parents’ income will also be counted to assess fund requirement. However, if you are considered ‘independent’, then only your (and your spouse’s) income will be counted to find the funds needed.

There are various ways in which financial aid can be arranged to fund your education, as described below.

Federal Student aid:

Almost all business schools use FAFSA (Free Application for Federal Student Aid) for application for federal financial aid. The application is submitted online via the website www.fafsa.ed.gov

Please ensure that you complete the forms appropriately and completely. Please note that this form of financial aid is not easily available for international applicants

Scholarships:

While there are some scholarships available and aspirants should apply for scholarships, depending on relevance, scholarship is not a very dependable mode of financial aid. Number of scholarships is typically limited and many of them do not cover the full cost of an MBA. Hence, even if you manage to get a scholarship, need for a fund is not satiated.

For scholarship programs of respective b-schools please refer to their financial aid section. It is imperative that you apply early to stand a fair chance.

Loans:

Loan is the mode on which 50%- 60% of b-school students rely for financial aid. Many loan programs require a US citizen as co-applicant/ cosigner and this condition becomes a problem for many international students. In case you are likely to face this issue, please choose schools which offer guaranteed loans to their students.

Sponsorship by employer:

This is probably, the best way to finance your MBA so far as monetary liability/ dependence is concerned. Your current organizations may fund your education with certain conditions (work with your organization for minimum 3 years post MBA etc.). Even with this condition, sponsorship is a good option to take as a major part of your post MBA expense and mental stress are taken care of.

Make sure that you bargain for a good position/ compensation deal with your employers.

SOME USEFUL LINKS

http://www.iefa.org/

http://www.internationalstudentloan.com/

http://www.finaid.org/

US B schools which give loans without US cosigner

While one gets involved in the mba application process, it is also important to think about what one will need post selection. One of the most important things you would need after you get the admit – money to finance your MBA.

While most of the top business school offer (or intend to offer) loans (without cosigner) to international students, recession has taken some toll. Owing to economic situation, banks have cancelled tie ups with some top b-schools and cancelled loan programs.  A few mba programs impacted due to this have found some alternate solutions.

Here is a list of b-schools (and corresponding universities) offering loans with no cosigner requirement to international applicants. This list also has very useful and latest links that would give you good information on loans offered by various b-schools.

Duke University – Fuqua school of business: Fuqua offers relatively low interest rate of 8.25%, in partnership with Coastal (a local financial institution)

Visit this link for further details: http://www.fuqua.duke.edu/student_resources/financial_aid_executive/financial_assistance/#doc5

Harvard Business School – Harvard University Credit Union partnered with the university to give education loan without cosigner to international students. No further details available. Please visit http://www.hbs.edu/mba/admissions/internationalapplications.html for announcement regarding loans for international applicants.

University of Chicago – Booth school of business: Via participation with “International Student Loan Program”, Chicago Booth offers loan with cosigner to its MBA admits. The amount of loan will exclude any other financial aid/scholarship (offered by the bschool) from the tuition fee.

Please read http://chronicle.uchicago.edu/090528/international.shtml for details

University of Pennsylvania – Wharton business school: Citi had cancelled its loan program in October 2008. Now, through a tie-up with Digital Federal Credit Union, Wharton offers loans to international students with no co-signer. Your tuition fee and living expenses can be covered by this loan but please note that interest rate is at a premium.

For further details, visit http://www.wharton.upenn.edu/whartonfacts/news_and_events/newsreleases/2009/p_2009_4_853.html

University of Michigan, Ross school of business- Ross gives loans without cosigner to all international admits. This is done via ‘International Student Loan Program’ in tie up with the university’s credit union. This comes with a floating interest rate, upto 20 years repayment period and 6 month grace period after you pass out.

Please visit http://www.bus.umich.edu/admissions/financialaid/loans/Private.htm for information. The loan application guidelines are available at http://www.bus.umich.edu/pdf/RSBUMCUInternationalStudentLoanProgram.pdf

Yale school of Management – Yale university: Through this loan without cosigner you can cover you tuition fee excluding any aid/ scholarship given by Yale. Repayment period of 10 years is fairly okay and grace period of 6 months after you pass out can be treated as another positive factor here. Fixed interest rate is 7.75% and origination fee is 5%.

Visit http://mba.yale.edu/MBA/admissions/financial_aid/loans.shtml for details

MIT Sloan –MIT Sloan has various loan options. Please visit http://web.mit.edu/sfs/loans/sloan_loans.html for details.

Stanford – Stanford GSB has partnered with Citibank and Star One Credit Union to give loans without cosigner. Visit http://www.gsb.stanford.edu/mba/financial_aid/loans.html for information.

Tuck – A self funded loan program, with loan term of 10 years, variable interest rate (currently 9%), 3 years grace period after graduation and loan amount equal to tuition fee minus financial aid by Tuck

For further details, please visit http://www.tuck.dartmouth.edu/admissions/aid/loans.html

Stern – NYU (New York University): For international students without cosigner, Stern offers 2 types of loans (a) Chase Select International Loan – by JP Morgan Chase (b) Global Student Loan – by Global Student Loan Corporation (GSLC) and HSBC. This currently applies to Indian students but will expand to include other countries also.

Please visit http://w4.stern.nyu.edu/finaid/types.cfm?doc_id=3489 for further details. A maximum of USD 50,000 can be borrowed. Interest rates are slightly higher at 13.5%

Haas (University of California – Berkley) –Loans are provided under a program called “Berkeley MBA Student Loan Program”.  Upto USD 20,500 can be borrowed through ‘Federal Direct Loan Program’. The interest rate is fixed and is fairly low at 6.8%. Repayment term is 10 years and grace period is 6 months.

Visit http://mba.haas.berkeley.edu/admissions/finaid/index.html and http://mba.haas.berkeley.edu/admissions/finaid/federalloanoptions.html for more details