You beavered away at your Graduate Management Admissions Test papers, completed the application questions, wrote your essays and briefed your referees. You win that coveted place at business school. Then comes the really big question: how to pay for it?
It is no trivial matter. Apart from the course fees and living expenses, there is the cost of the foregone salary. For a one-year programme, participants can easily write off $100,000. For a two-year programme at one of the top US business schools, the cost can be as high as $200,000. So, for anyone other than the seriously wealthy, outside funding is a must.
The first port of call has traditionally been the banks, but the recent credit squeeze has meant many students have had problems raising funds and had to agree to exorbitant interest rates when they did.
The good news is that loans are now available again. One advantage of the credit squeeze has been that many business schools have proved themselves particularly creative in acquiring funding for their students, which means a range of new products are available.
For American students studying in the US, state and government loans schemes are widely available. But the students who had the most difficulty raising loans over the past couple of years were international students, studying outside their home country. The situation was particularly acute in the US, where funding organisations were reluctant to lend money to students who would return to their home country on graduation, making it difficult to enforce the agreement.
Many international students enrolling at a dozen top US schools this year – including Chicago Booth, the Kellogg School of Management at Northwestern University and the Simon Graduate School of Business at the University of Rochester can take advantage of a loan scheme devised between the business schools and Deutsche Bank, and brokered by GMAC, which administers the GMAT. The scheme, administered by Moehn Management, gives business schools direct access to capital markets to get funds.
Insead already has an innovative loan scheme, developed by three 2006 alumni. Prodigy Finance, as the company is called, issued a €50m ($68m) community bond, targeted at Insead alumni and business partners, to raise the money to fund students through the one-year programme.
Scholarships and financial aid
It is the boast of many top US business schools that the admissions process is “needs blind” – that no admitted students are turned away because they cannot afford to attend the programme. At top US schools, for example, nearly 50 per cent of the class can receive need-based fellowships. Though popular in the US, financial aid is more difficult to come by in Europe and Asia. However, schools such as HEC Paris are developing this kind of fund.
Scholarships are also far more prevalent in the US. Harvard Business School’s website lists more than 30 different scholarships, funded either through the university or outside institutions. These include scholarships for women, veterans, minority and international students.
The latter category includes the Fulbright scholarships, for British citizens studying in the US, and Mohammed bin Rashid Al Maktoum Foundation fellowships, available to students from the Middle East at more than 20 top business schools around the world. These include Stanford, Duke, Chicago Booth and Michigan in the US; London Business School, Iese and IMD in Europe; and Melbourne Business School, Monash University and the National University of Singapore in the Asia-Pacific region.
Several European business schools are also working hard to increase the number of scholarships available. However, the average sum is small compared to US standards, at about €6,000.
The burden of course costs need not necessarily be met entirely by the student. Data from the FT rankings over the years show that up to 10 per cent of alumni receive assistance from employers.
You are unlikely to leave business school without debts hanging over you. Even Harvard, arguably the most generous business school of them all, points out that the average outstanding debt for the class that graduated in 2009 was $76,958.