Are you keen on pursuing an MBA? Are you being held back due to financial constraints? Well, worry not! Through the course of this article, we will tell you six ways to finance your MBA program.
In the past few years, the MBA program has gained a lot of recognition. Owing to its high returns of investment and acquisition of managerial positions once you graduate, MBA has been in demand. However, pursuing an MBA degree from any renowned university in India or abroad is likely to be an expensive affair. Hence, it is recommended that students look for every possible source of finance to assist them in paying for their studies. In 2016, the Graduate Management Admission Council (GMAC) generated a survey report based on ways to finance an MBA, the statistics of the report are as follows:
- Around 26% of the students considered a combination of grants, fellowships, and scholarships to fund their MBA.
- Around 20% of the students had chosen study loans to fund their MBA.
- Around 19% of the students preferred parental support.
- Around 12% of the students used their savings to fund the MBA.
- Around 11% of the students used their income to fund the MBA.
Now let us look at the ways to finance your MBA.
Six Ways to Finance Your MBA Program
Once you have successfully finished taking the MBA entrance tests such as GMAT, GRE or CAT, the next step is to scout for the most suitable way to finance your MBA program. We will list six ways to finance your MBA program.
Some people prefer to fund their MBA on their own or with the support of their family. If you take a loan, it comes with interest and legal constraints. Additionally, you will have to repay the amount you owe to banks within a given period. If you are choosing to fund your MBA yourself, there’s of course no worry at all. And, if you are taking the help of your family, you will not be charged interest, nor do you have to pay them back immediately. Hence, it is easier to repay your family than repaying a bank.
However, pursuing an MBA can be rather expensive. It can cost you anywhere between INR 50,00,00 to INR 90,00,000. Some people can afford it while some others cannot. When such a large amount is at stake, depending on your family for financial support is rather difficult too. Hence, make it a point to keep in mind a budget before you decide which university you would like to apply to.
On the other hand, if you don’t mind taking up the responsibility of a bank loan, this could be the easiest way to fund an MBA. Over the past few years, several banks offer attractive educational loan packages with a competitive rate of interest. In India, the average rate of interest is 15% and banks usually retain possession of collateral property or assets as a guarantee.
However, in the US and other countries, taking a bank loan is a much simpler process. In the USA, the average rate of interest is 7% to 8% and you need a cosigner who is a green card holder as a guarantee. With a low interest rate and a high return of investment (ROI) after an MBA, you can easily repay the amount you owe the bank. Additionally, some universities have also collaborated with banks and other financial organisations to offer educational loans to their students. If you are considering taking a bank loan, you can choose any of these options we have mentioned above.
A scholarship is the most sought after way to finance your MBA. Unlike a bank loan, you need not repay the amount you owe after you graduate. There are various kinds of scholarships available for students; they are as follows:
- Need-based Scholarship: The need-based scholarship is for those who need financial assistance to pursue a degree. However, you will need to provide evidence that you require financial assistance and why you need this scholarship. Once you have established the need for assistance, you can claim the same.
- Merit-based Scholarship: A merit-based scholarship is offered to those who have excellent academic performance, leadership and professional experience. If you are applying for a merit-based scholarship, you will be required to provide adequate documents indicating your academic proficiency and the achievements you may have gained in the field. Many B-schools offer merit-based scholarships on a first-come, first-serve basis. Hence, it is advisable to apply for a scholarship as early as possible.
- Company-sponsored Scholarship: Company-sponsored scholarships are quite rare. It is usually offered to students by a particular company with certain terms and conditions. Also known as corporate sponsorships, the companies that offer the scholarship expect you to join their company once you graduate. They usually cover only a partial amount of your tuition — up to 50% of the tuition fee.
- Minority-based Scholarship: Minority-based scholarships are provided to social groups such as women or students from developing countries. In India, these scholarships are offered to people belonging to lower castes such as Scheduled Castes (SC) and Scheduled Tribes (ST). If you are applying for this scholarship, you should be able to provide your minority community certificate, proof of income and more.
- Non-Resident Scholarships: Scholarships are also offered to international students known as “Non-Resident” scholarships. This kind of scholarship allows international students to pay a significantly lower amount of fee as compared to the other students at the university pursuing the same program. This scholarship is only offered to those who do not reside in the country they are pursuing the degree from.
Teaching or Research Assistant (TA/RA)
Another way to finance your MBA is by applying to be a teaching assistant or research assistant. Once you have taken a loan and have started your MBA, you can apply for a TA or RA position where you will be given a stipend. The money that you receive through the TA or RA position will be sufficient to take care of your living expenses. With your living expenses taken care of, you end up saving almost INR 20,00,000 from your entire budgeted amount to pursue an MBA. However, you will have to check with your professors and administration regarding the opportunities available for securing a Teaching Assistant or Research Assistant post.
Yet another way of easing your financial burden is by making use of your internship stipend. You must be aware by now that a 6-month internship is mandatory if you pursue an MBA program. Most internships are paid and the stipend you receive is quite decent. If you manage to save your stipend and choose to spend the stipend wisely, you can easily repay up to 30% of your education loan.
Now that you are aware of six ways to finance your MBA, all you need to do is choose which is the most accessible way to fund your MBA. While making a choice, make it a point to pick ways that will ease your financial burden the most. This is because you don’t want to begin your program being overwhelmed with your finances.