Going to business school may be one of the best investments you'll ever make – but it may also be one of the most costly. Yearly tuition at top business schools like Harvard, Stanford, and Wharton is in the $60,000 range, and that's before including any travel or living expenses.
It's no wonder that many business school applicants worry about funding their MBA program almost as much as they worry about getting into the right school.
However, if you've put in the hard work to make yourself a strong candidate for a top business school, cost should absolutely not be the deciding factor in getting an MBA. There are many ways to fund a b-school education, and the rewards will almost certainly far outweigh the costs.
Business school financing typically comes from company sponsorship, scholarships and fellowships, government loans, private loans and/or personal savings.
While the return on investment for business school is typically strong, it's incredibly important for students to evaluate which funding option makes the most sense for their life and career goals. Here’s four questions to ask yourself when thinking about funding your MBA:
1. Is company sponsorship right for me?
If you can make it work, company sponsorship is one of the best ways to finance an MBA. Not only does it free you from having to worry about where to come up with the money for business school, it also eliminates the worries of a post-graduation job search and sends a huge signal that your organization values the work you do and is willing to invest in your future.
Of course, you need to weigh up the pros and cons of sponsorship carefully. You may be required to sign a retention contract that leaves you on the hook for tuition if you leave within a given timeframe after earning your degree. And company sponsorship is rarely an option for students who are looking to use an MBA to switch careers.
2. Can I self-fund my MBA?
It's relatively rare for students to be able to pay for a business school education out of pocket. However, there may be more self-funding options available than you initially thought.
Self-funding is the way to go for many entrepreneurs who are getting an MBA as a tool to help grow an existing business. They view it as an investment in a growing company, and are committed to doing what it takes to expand.
Other b-school applicants may decide to live very frugally in the run-up to an MBA program, in order to save as much money as possible to put towards their schooling. Finally, some applicants are able to tap into funds within their family, either by asking relatives for a loan or having an inheritance paid out early.
3. How will I pay back my loans?
Private and governmental loans are the most common forms of MBA funding. Despite rising interest and tuition rates, student loans remain a good bet when they are entered into with significant forethought. However, it is vital to do your due diligence in advance.
Before taking out a loan, be sure you understand the interest rate, repayment schedule, and monthly payment. Some loans do not begin accruing interest until after your graduation date, but there are some that begin charging interest from day one.
Your school may or may not offer guidance for finding loans to cover MBA tuition and expenses. For US citizens, some students start their research with Federal Direct Unsubsidized Loans and Federal Graduate PLUS Loans. In addition, there are many private loan options from lenders like SoFi Finance and Discover Student Loans.
Non-US citizens typically have fewer loan options, but financing may be available with a co-signer who is a US citizen, or through institutions like Prodigy Finance which caters specifically to international students.
Looking for the lowest possible interest rate will save you significant money over the lifetime of the loan. However, it's also important to consider your monthly payment in the context of your post-graduation career outlook. Student loan payments can range from several hundred to a couple of thousand dollars every month, so it's vital that you think about how you will handle that payment once you're done with school.
4. What funding options does my school offer?
When it comes to MBA funding, you don't always have to go it alone. Many schools offer generous scholarships for business school students in the form of partial and full tuition awards. Investigating these options fully could result in thousands or even tens of thousands of dollars towards your tuition, without the stress of having to repay the funds.
She's also a former Harvard Business School admissions officer and the author of the Best Business Schools' Admissions Secrets.
Chioma publishes on the topics of personal branding, leadership development and business school admissions for college students, young professionals, entrepreneurs and executives.