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Finance options
by Richard Montauk

Completing an MBA often requires serious financial commitment, but there are sources of funding available.

Financial aid
Are you eligible? Some forms of financial assistance are available to anyone, while others are granted only on merit, financial need or citizenship.

  • Merit-based aid: Determined by the level of achievement or any unique contributions you may make to a school.
  • Needs-based aid: Determined by the level of financial need or the difference between the total cost of your education and the amount you can contribute to it. Each country (for government funds) and school (for private, school-based funds) calculates need differently. The formulas generally take into account your income, savings and assets (and your partner’s, if applicable).
  • Citizenship-based aid: Granted only to citizens of a particular region, country, province or state. Aid from government sources is often citizenship-based. You may want to consider gaining citizenship or residency in order to qualify for such funds.

First steps to financial aid
To prepare for your future MBA and for gaining financial assistance, begin by familiarising yourself with the financial aid application procedures and needs-determination methods at your chosen schools.

Your financial situation should be organised well before you begin an MBA programme – preferably two years in advance. This will give you sufficient time to arrange your finances in the most beneficial way before applying for financial assistance.

This should be arranged at least a year before you begin your MBA – your need will be based on calculations of your financial situation a full calendar year before you begin. When it’s time to apply for aid, read all the materials thoroughly. Make appointments to speak with financial aid officers at your target schools, and be prepared to explain your financial situation in order to find the best funding options at their schools.

Keep track of what forms you need to fill out and the deadlines. Some scholarships have very early deadlines; other financial aid forms and scholarship applications must be submitted with your application; and still other materials may not be due until after a decision about your admission has been made.

When investigating your MBA options, remember that the benefits of a good programme inevitably outweigh its cost: improved job expectations, a network of contacts, greater career mobility and flexibility, and an increased income.

Financial rules of thumb

  • Methods of calculating financial need may vary slightly from school to school, but generally speaking, schools in the same country have similar procedures.
  • The various formulas used to calculate need do not evaluate financial issues in the same way as governments do for tax purposes. An asset that can help you minimise your tax burden can hurt your chances of receiving financial aid, and vice versa.
  • Read all materials carefully before planning a strategy – ideally, several years before you plan to begin a programme.

Bursaries and scholarships
These financial-aid awards do not have to be repaid, so competition for them is fierce. Business schools, national education endowments and a wide variety of organisations offer grants and scholarships to qualified applicants. Visit the MBA Bursaries and Scholarships page to view the available funding opportunities.

Loans
Funds borrowed to finance the cost of your education. Special educational loans offer students lower interest rates and the option of delaying repayment until after their degrees are complete. If you have insufficient funds, you will probably have to rely on loans, whether from the school, the government, a special educational loan programme or a private bank. Most MBA students fund their studies through loans. You’ll need to determine how much debt you can reasonably take on to finance the degree.

Work-study
Some MBA programmes offer students part-time employment opportunities so they can earn money to offset their educational costs. Many of these jobs are low-paid, but others, like graduate assistantships and other career-enhancing activities, may be better paid.

Employer tuition benefits
Some corporations offer special funding to employees to help them acquire graduate education. Most require beneficiaries either to continue working for the company during the programme or to return to the company after the programme is complete. You should always consider whether tuition reimbursement by your employer will be worth any limitations to career mobility.

Self-financing
Many MBA students fund their studies independently. This can be done in one of several ways: following a part-time programme while continuing to work, saving sufficient funds to pursue a full-time programme, working during your second year of a two-year full-time programme, or relying on the support of a partner.

Richard Montauk is MD of Degree of Difference, Inc, a consultancy for those applying to the top business schools. He is the author of How to Get into the Top MBA Programs (Prentice-Hall, 2nd edn, 2002), as well as other publications for college or law school applicants.

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