The opinions of MBAs on the BusinessWeek MBA forum are mixed:
“I think I would shoot for taking a few extra loans so that you have plenty of funds, and then just turning around and paying it early if you don't need it”
“I graduated from Rochester early in this decade, and I have no hopes of ever paying back my loans. WORST decision of my life.”
- Simon Dooh
Importantly, according to research by the Graduate Management Admission Council, 86% of MBAs were employed after graduation in 2011, indicating that most find themselves more than able to pay back their loans.
However, that is not to say that banks are being particularly generous, and the situation varies globally.
In the UK
For the UK, the best approach is to follow the recommendations of individual institutions.
NatWest, once the main provider of MBA funding through preferential bank loans, stopped offering a tailored MBA loan in January 2011, leaving the UK market without an equivalent product.
Instead, banks are building relationship with specific institutions.
Prodigy Finance, a community based loan programme, has programmes at several of the top MBA programmes in the UK, including Oxford’s Saïd Business School, Cranfield School of Management, and Manchester Business School. As the company uses a predictive scorecard to assess a student’s future potential it can offer highly competitive interest rates. Additionally, the company’s lending platform is borderless, which gives them the flexibility to lend to over 150 nationalities.
In addition to their strong position in the UK, Prodigy Finance also offers a loan programme for INSEAD students in both Singapore and France.
Banks including RHB and Citibank also offer education loans, with Citibank introducing a new education loan in 2009 for MBA students which factors a student’s grades into loan repayments.
In the US
The US, much like the UK, tends to see business schools setting up relationship with certain banks to ensure their students get a better deal.
Citibank has a very well developed student loan division: the Wharton School at the University of Pennsylvania, for example, offers funding through Citibank, which guarantees most accepted students a 0.5% interest rate, with no co-signers or credit check required. Harvard Business School used to offer a similar scheme through Citibank, but this was cancelled in 2008.
Most US banks either prefer or require a US co-signer, which results in a higher level of loan acceptance and lower APR, and some insist on loan applicant having a Social Security Number; both can cause difficulties for international students. However, GMAC, which administers GMAT, has set up a loan scheme with Deutsche Bank for international MBA students studying in the US.
A lot of European MBA courses can be funded by approaching the main European retail banks, with specific educational bank loans available in Italy (Banca Sella), Luxembourg (BGL BNP Paribas) and Spain (Bankinter, Santander). Other countries, such have Denmark and Germany, have accessible national education funds.
Our top financial product for MBAs is the innovative Prodigy Loan Scheme developed by INSEAD alumni. Prodigy now also offers loans to MBA students at INSEAD, Cranfield School of Management, London Business School, Manchester Business School, Oxford’s Saïd Business School, Cass Business School, and Vlerick. As their COO, Ryan Steele, states, "It's a struggle for many international students to secure the financing they need to attend the world's top business schools. Our programme provides a sustainable solution for incoming students while adding value to the school community." Accessible, affordable, and more sophisticated than standard high-street bank alternatives, Prodigy Finance seems to be leading the way in financially supporting MBAs – especially those who might not be in receipt of scholarships or grants – through their course.