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Pursuing an MBA from one of the top business schools can be a transformative experience, propelling your career to new heights and opening doors to a world of opportunities. According to the yearly GMAC’s Corporate Recruiters Survey, the average starting salary for MBA holders was between 22% and 40% higher than for bachelor’s degree holders. Notably, in 2023, median salaries at top U.S. business schools reached unprecedented levels, ranging from $165,000 to $175,000. It is no surprise that MBA graduates from the top 50 business schools in the U.S. can expect to earn a median cash compensation of $5.7 million over a 35-year career - $2.3 million more than those with just an undergraduate degree.
However, the financial commitment can be daunting. The price of an MBA varies by program type and school but, on average, costs between $55,000 and $170,000, excluding living expenses. Understanding the various options available for financing your MBA can help alleviate the burden. Here’s a comprehensive guide to scholarships, loans, and financial aid available for MBA students.
Merit-Based & Need-Based Scholarships
Scholarships at top business schools are predominantly need-based, but several scholarships and fellowships also include a merit component. For example, Harvard Business School exclusively provides need-based scholarships, awarding an average of $92,000 over two years per recipient, with a total of $51 million awarded in FY23. Similarly, Stanford Graduate School of Business primarily offers need-based scholarships. Importantly, need-based aid is accessible to applicants from developed markets as well; many of our clients from these regions have secured substantial financial aid.
In addition to those need-based scholarships, numerous schools offer merit-based scholarships. Notbaly, Stanford is known for its Knight-Hennessy Scholars Program, a fully-funded merit-based scholarship that supports up to 100 students enrolling in graduate degree programs across any of Stanford’s seven schools.
Wharton also provides various merit-based funding options, including additional opportunities available to second-year students. Prominent examples are the Ford Fellowship, awarded to the top first-year student, and the Inselbag Fellowship, available to students in the top 5% of their first-year class.
MIT Sloan provides fellowship opportunities to first- and second-year students in the MBA program and admitted applicants will be considered for these fellowship awards automatically, depending on their eligibility.
Columbia Business School primarily operates on a need-based scholarship system but offers merit-based fellowships such as the Meyer Feldberg Distinguished Fellowship Program and the R. C. Kopf Global Fellowships, which recognize outstanding academic and professional achievements.
Chicago Booth offers a variety of merit-based MBA scholarships to talented students. These awards do not require a separate application; all candidates are automatically considered based on the information provided in their initial application. Selections are made solely based on the strength of the application details. Similarly, Kellogg offers numerous merit-based MBA scholarships. Admitted students are automatically considered for all scholarships for which they are eligible, except for the Finance Fellows, which requires a supplemental essay included within the Kellogg application.
External Scholarships
Many institutions offer scholarships to promote diversity and inclusion within their programs. These scholarships support underrepresented groups, including women, minorities, and international students. Examples include the Forte Foundation that provides fellowships to women pursuing an MBA at partner schools (all M7 schools are part of the initiative), the Consortium for Graduate Study in Management that offers fellowships to underrepresented minorities in business schools or Reaching Out LGBTQ MBA Fellowship that awards merit-based fellowships of up to $28,000 to LGBTQ students admitted to leading MBA programs.
Corporate Sponsorships
One of the best ways to reduce the financial burden of your MBA is to secure corporate sponsorship. While sponsorship is most commonly associated with top consulting firms like McKinsey, Bain, BCG, Kearney, and Oliver Wyman, we have successfully assisted numerous applicants in securing at least partial sponsorship from their employers at the time of their application. These binding agreements are an excellent way to lower the cost of your MBA while also enhancing your post-MBA career prospects. Securing corporate sponsorship not only helps mitigate educational expenses but also demonstrates a strong commitment from your employer to your professional growth. In the US firms like Deloitte, Wells Fargo, Intel, Chevron Corporation, Apple, Bank of America or Boston Scientific are known to sponsor some of their employees’ MBA. Similarly, in Asia, numerous companies offer comparable sponsorships. These range from large Japanese and Korean corporations to leading Indonesian banks like Bank Mandiri.
Government Scholarships
From the renowned Fulbright Program sponsored by the Bureau of Educational and Cultural Affairs under the United States Department of State to country-specific scholarships like the Indonesian LPDP Endowment Fund, numerous government scholarships are available. These programs offer substantial financial support to students pursuing higher education. It is crucial to check your eligibility for such scholarships early in your application process to take full advantage of these opportunities.
Loans
For U.S. citizens and permanent residents, federal student loans are a primary source of funding for MBA programs due to their favorable terms compared to private loans. Federal loans typically offer lower interest rates and more flexible repayment options. Two key programs include Direct Unsubsidized Loans, which are available to graduate students regardless of financial need, and Grad PLUS Loans, which cover the full cost of attendance minus any other financial aid received.
In addition, student loans are offered by banks, credit unions, and other financial institutions. These loans can cover the gap between the cost of the MBA program and the amount covered by scholarships and federal loans. It’s important to compare terms, interest rates, and repayment options from different lenders.
For international students, securing loans can be more challenging, but there are still viable options available. Many local banks in various markets offer student loans at preferred interest rates. Additionally, some specialized lenders cater specifically to non-U.S. citizens. Organizations like Prodigy Finance and MPower Financing provide loans without requiring a U.S. co-signer, making it easier for international students to access the necessary funds for their education.
Income Share Agreements (ISAs)
In recent years, a new financing model known as Income Share Agreements (ISAs) has gained popularity. This innovative investment vehicle allows students to pay a percentage of their future income for a set number of years in exchange for funding their education. ISAs provide a flexible and risk-sharing approach to financing higher education, aligning the interests of both students and investors.
Companies like Brain Capital and Lendorse are leading the way in utilizing ISAs to address financial and academic exclusion. These social impact fintech/edtech companies focus on helping talented students from developing countries access the funds they need to pursue their education. By reducing the financial barriers to entry, ISAs contribute to greater educational equity and empower students to achieve their full potential.
Financing an MBA requires careful planning and exploration of various funding sources. Scholarships, loans, and financial aid can significantly reduce the financial burden and make your MBA journey more manageable. By understanding and leveraging these options, you can focus on your studies and career growth, ensuring that your investment in an MBA pays off in the long run.
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