There are many advantages which a candidate will benefit from on completion of his MBA degree. Some of them include – High Remuneration, Distinct position in the senior management hierarchy, Secured job and many other lucrative perks. In the current competitive corporate world, the demand for MBA professionals will always remain high. This also inspires students since they consider it to be an opportunity to advance their career. Contrarily the obvious truth is, pursuing an MBA degree is an expensive affair. Although one need not fret much since there are many sources for funding the course like – Personal savings, corporate sponsorship, scholarships, bank loans and many others.
An MBA degree from any renowned universities is likely to set you back by a significant amount of money. It is wise for students to look for every possible source of finance to assist in paying for their studies. In this context, Graduate Management Admission Council (GMAC) generated a survey report based on ways to finance the MBA in 2016. The body conducted the survey in the year 2015, the conclusion drawn is summarised below:
(i) 26% of the aspirants considered a combination of grants, fellowships, and scholarships
(ii) 20% of the students chosen loans
(iii) 19% of the aspirants preferred parental support, 12% possess their personal savings and 11% said personal income
(iv) 8% showed faith in employer sponsorship/reimbursement which is followed by the ones relying on spouse/partner earnings and other forms of funding (2% each).
After completing and qualifying in the relevant MBA entrance aptitude tests like – GMAT, GRE & CAT (in India), the next task is to opt for the most suitable form of finance sources to sponsor the MBA course. Here are some recommended ways to bear the MBA cost, these are:
Self Funding– Few people prefer to fund their MBA from their own or by the support of family. If you take a loan, it comes with an interest and legal constraints. So it is better to arrange funding from these resources. Even if you take a loan, you have to repay it back. It is better to compensate your family or yourself rather repaying to the bank. Logically, 7-8 % of 1 crore for 3-4 years is a substantial amount which you can end up saving if you pay for your course rather than taking a loan. Although not everyone is lucky enough to rely on family’s support for self-funding. Therefore you can keep in mind your financial footing before you decide which university you would like to apply to. You must set yourself realistic targets and not aim for very expensive options. You could go ahead and do adequate research regarding university rankings, infrastructure available, the experience of professors etc. before finalizing on your universities list. Self-funding is certainly the least troublesome option since you will not have to bother about interest rates, signing n number of agreements, collaterals etc.
Bank Loans – If you are willing to take complete responsibility, then bank loans are the easiest way out. There are also many options available as well since recently several banks offer attractive educational loan packages with competitive rate of interests. In India, the average interest rate is 15% and the banks usually retain possession of collateral property or assets as a guarantee. However, in the US and other countries, bank loans are a much simpler and straightforward process. In the USA, the average interest rate is 7- 8% and you need a cosigner who is a green card holder as a guarantee. Within 3-4 years you can easily repay off the complete amount. Bank loans have been the most preferred mode of financing studies for students since many of them opt for the same. As mentioned above there are several options available for the candidates to select from. Certain universities also have tie-ups with banks or other financial organizations which offer such loans. You can make use of any of these options if you decide to go for a bank loan.
Scholarships – Many B-schools offer merit-based scholarships based on First-come, first-serve basis. Hence it is advisable to apply for a scholarship as early as possible. Scholarships are also the most sought after mode for financing your MBA. This is because unlike your bank loan you need not repay the fee amount on completion of your degree. There are several types of scholarships available for students. Few of them are listed below –
- Need-based– This type of scholarship needs evidence of financial need for assessment. You will have to establish that you will need assistance economically and you will be required to submit proofs that claim the same.
- Merit-based– Most universities offer merit-based scholarships. This type of scholarship requires excellent academic performance, leadership and professional experience. Such scholarships may sometimes require you to provide adequate documents supporting your academic proficiency and achievements you may have gained in the field.
- Company sponsored– This type of scholarship is provided to students by a particular company with their terms and conditions. It might be in the form of a bond or any other form. These types of scholarships are also called Corporate sponsorships. They usually cover only partial amount of the fees (i.e) 25 to 50% of the tuition fee.
- Minority-based– Minority-based scholarships are provided to a specific group or a certain set of the public like – women or students from developing countries. There are particular scholarships also offered to international students which are referred to as “Non-Resident” Scholarship. This assists students to pay a significantly lower amount of fees when compared to a student who does not have such a scholarship and is entering the university from another state or country.
- Excellent academics– Scholarships are provided to the students with a good academic background. In some cases, the performance of students is also analyzed. Your application form may contain sufficient details about your academic performance and you may not even have to submit any other supporting documents to the university.
- University funding – Once a student is enrolled in university, they are automatically considered for scholarships, very rarely one has to apply for scholarships. These can be merit based or need based and sometimes minority based.
Teaching or Research Assistance (TA / RA)– Once you take the loan and you start your MBA in a B school, you can apply for the TA/RA where you will be given a stipend. The money that you receive through the RA/TA will be sufficient to take care of your living expenses. This can end up saving almost 20 lakhs from your total expenditure. You will have to check with your professors and universities regarding the opportunities available for securing a Teaching Assistant or Research Assistant post.
Internship Stipend– We are all aware that in a 15-18 month program, a 6-month internship is mandatory. In this internship, the stipend which students generally receive is pretty decent. If you spend the stipend wisely, you can easily repay off up to 30% of your education loan. This is another option through which you can reduce your financial burden.
Company’s Bond – Certain companies take care of your education loan once you receive a job offer from them. However, they may have certain clauses or retention factors where you may have to sign a bond of 3 years to work with the company. You may consider this if you are satisfied with the job profile and the company. In most cases, the company will be ready to invest in an experienced and qualified candidate like you than to hire a new candidate with no experience.
Now that you have sorted out how to Finance your MBA, you can prepare yourself for CAT & GMAT with BYJU’s special online study program to save time and learn efficiently. Keep an eye on BYJU’s notifications to keep yourself updated all about GMAT Syllabus and GMAT Exam Pattern.
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