How To Finance Your MBA as an International Student
An International MBA can prove to be an expensive affair; however, you don’t always have to break the bank for it. In fact, money is one of the primary concerns, which can make it or break it for so many aspirants. Given this fact, education financing has evolved from borrowing from family and friends to various legal sources of funding for your dream B-school. Universities and lending institutions are themselves sensitive now about being inclusive to students from various backgrounds. In fact, some will even go out of their way to ensure that heavy cost doesn’t deter the right candidate from pursuing their business education at their dream university.
Here are the key options to consider while planning your finances for your International MBA.
1. Student Loans
This is probably the most well-known mode of financing your education. However, within this category, there are lesser explored options. Let’s start off with the basics:
A. Regular Student Loan
This is usually from a standard Indian bank, where you show the required collateral and get the amount. The total amount can vary from bank to bank and depends on your financial profile including collateral. Interest rates tend to be high specially for emerging markets.
Typically interest rates will be in the 10-14% range, however they can go as high as 16% in some cases. While loan amounts of upto INR 25,00,000 will be available without collateral requirements, banks are open to higher amounts with the appropriate asset collateral.
B. Loan from a foreign bank
A lesser-explored option is taking a loan abroad. Specifically in the US, if you have a relative, who is also a US citizen, they can act as a co-signer to your loan. The advantage here is that American banks usually have a lower rate of interest than Indian banks. You should keep in mind, that a loan abroad makes sense only if you are working there post MBA, else it is very difficult. This is because the exchange rate is constantly fluctuating, and there will be markup on all every payment. Thus, you will pay a lot more than what you thought.
Interest rate can vary from 4 -10% depending on the interest rates (they are usually LIBOR+spread which would depend on the credit score of your co-signer) and the amount will typically cover the full tuition plus living expenses.
C. Non-co-signed loan from a foreign bank
If you have a strong repayment history, an employee track record with top companies, then you might consider this route. Similarly, if you have secured admission to a top business school like Harvard, MIT, etc. then these schools will act as your co-signer many times. Loans sponsored by universities will have very favorable terms and hence can be strong contenders for your financing requirements.
D. Loan from Non-banking Financial Institutions (NBFI)
This is another lesser-explored option among students that you might want to consider. The terms and conditions of the loan would vary from institution to institution; however, they will be typically higher than bank loan.
2. Employer Sponsorship
In this case, your employer will agree to sponsor your MBA if you agree to work with the company post-MBA. This policy varies across companies, so you might want to check with yours. This might not fly well with many people who are looking to switch careers and join a different company post-MBA. Most of the consulting firms are open to sponsor their employees looking to pursue an MBA and will have a bond where they will require them to return and serve for a period of 2 years. If you intend to explore this route, do give a serious consideration to the salary and designation that you will be returning to and best to have an offer letter prepared so there aren’t any disappointments when you return to your old employer.
3. Teaching and Research Assistantship
It is a convenient option as your work and study place will be in the same place. They usually include teacher support work, like maintaining class records, accompanying the batch on a field trip, etc. The pay is usually around 5,000 Dollars /semester per engagement in the US, which might not cover your entire MBA expense but will be of help. The post is available post a semester in business school.
4. Internships
Most Business Schools have paid summer internships across verticals like marketing, finance, etc. The pay is between USD 5,000 – USD 10,000 per month, in Europe and the Americas. This is increasing with time. This will not cover the entire MBA cost, but will certainly help!
Some companies also sponsor semester long internships for second year MBA students which require a 20hours/ week commitment and can pay upto $50/hour. These internships can also be a great source of finance and learning during your MBA.
5. Scholarships
This is one of the most common means of financing your MBA, or at least some part of it. Apart from helping you financially, it also helps students focus on their course given that there is a decreased necessity to work outside the course. It is always smart to start looking at scholarships a year in advance.
Most scholarships come with some specific requirements, like college/school grades, a maximum time to completion, and other performance-related conditions. Most applicants prefer to apply for scholarships at their chosen university. In many cases, candidates are considered for financial aid as soon as they submit their applications to an MBA program. In many cases, however, you might be required to submit an additional essay.
A large number of merit-based scholarships are based on a first-come, first-served process, so it is recommended that you apply for an MBA as early as possible. Many of the top business schools offer scholarship assistance to its students. For example, the University of Virginia’s Darden School of Business provides financial help to about 70% of its current MBA students. Harvard Business School offers financial support to only 65% of its MBA students.
There are many avenues available for scholarships/financial aid. The trick is to find out which one is best suited for your convenience.
If you are an individual interested in applying to an international business school for an MBA programme, hiring an MBA consultant in India will be an ideal decision.
