Getting an MBA is not cheap. Annual tuition at top MBA programs can be more than $50,000 per year in addition to living expenses and lost income from being unemployed. However, there are several ways to pay for an MBA with a variety of MBA financial aid options.
- Merit based scholarships: All top MBA programs worldwide have merit based scholarships, which are offered solely based on how much you impress the admissions committee and not necessarily based on financial needs. Often the goal is to prevent you from attending another competing MBA program in the case you were fortunate enough to get more than one admissions offer. Most of the time, applicants are automatically considered for such tuition waivers regardless of need for financial aid.
- Corporate scholarships: Top employers often provide private scholarships. Admits usually have to apply separately through a personal statement or an essay. To receive such financial aid for your MBA, you have to meet certain criteria (e.g. have a certain professional background, be part of a minority, or have the desire to pursue a career goal in a particular industry).
- Federal loans: There are several US federal loans which are eligible for US citizens (and permanent residents) only. The most common one is the Stafford Loan which comes in two versions. The subsidized version allows for a yearly loan amount of up to $8,500 at a fixed interest rate of 6.8% and is available to those demonstrating a need for financial aid for their MBA. In this case, interest accrues only after graduation. The unsubsidized version is available to any eligible graduate student, but interest starts to accrue once the loan is disbursed (however, payments only start 6 months after your MBA graduation). The loan amount of the unsubsidized version can be up to $20,500 (also at a fixed interest rate of 6.8%) minus any subsized loans you may receive. Further federal financial aid for your MBA includes the non-need based Graduate PLUS Loan at a fixed interest rate of 7.9% and the need based Perkins Loan at a fixed interest rate of 5.0%. US citizens are also eligible for federal loans if they attend a non-US MBA program (institution must be degree awarding university). For non-US citizens, there are often government loans or financial aid available in their home countries similar to the federal financial aid schemes offered in the US.
- Bank loans: Some MBA programs have ties with a bank or financial institution to provide student loans at reasonable interest rates regardless of need for financial aid for your MBA. In addition, there are several options for private student loans from other banks. International students considering a US business school may need a US co-signer who becomes liable should you default on your loan.
- Sponsorship: The vast majority of MBA students don’t intend to return to their pre-MBA employer. However, if you are happy where you currently work and wouldn’t mind returning to a more senior position after your MBA, then inquire whether the option exists to sponsor you (typically involves paying your tuition fees). For strategy consultancies like McKinsey or BCG it is standard procedure to sponsor junior employees to get their MBA and return as Associates. Many companies in Industry do so as well. Typically, you have to remain at least 2 years after the MBA with the company sponsoring you. Should you leave before this 2 year period, you will have to repay part or all of the financial aid provided during your MBA.
- State universities: Another way for US citizens to save on tuition is to attend an in-state MBA program. To receive such financial aid in the form of a reduction in MBA tuition fees you need to qualify for state residency (most US citizens and permanent residents do so by their second year if they are not already qualified state residents at the beginning of the MBA). Unfortunately, there are only two noteworthy top MBA programs at state universities, namely Berkeley (Haas) and UCLA (Anderson) of the University of California system, each providing around $8,000 in tuition reduction per year for qualifying California residents.
- Summer internships: While you are forfeiting income during your MBA, you can still make some decent amount of money during your summer internship. Typically, you can expect to earn anywhere from $10,000 - $40,000 during the entire summer, depending on the industry and employer.
- Consulting projects: If time permits (typically during the second year), you can also earn some extra money through external consulting projects offered through career services or by approaching companies on your own. In addition, some MBA programs also allow you to work part-time on campus as teaching / research assistants in the second year of the MBA.
- Post-MBA income: Lastly, don’t forget that a main goal of getting an MBA is to advance your career. The average post-MBA pay at top global business schools is in the range of $100,000 - $125,000 base salary only (add another 10-15% year end bonus on top, more if you work in Finance). Such an income will allow you to pay off any loans in about 5 years given you further increase your salary during this period.
Found a way to finance your MBA? Learn more about MBA admission requirements in order to craft a strong application.