MBA – Financing an MBA Abroad: Where to Go, What to Know, and How to Borrow
Higher tuition and living expenses can make pursuing an MBA abroad a financial nightmare. Here’s how to obtain the funds so you can sleep easy
by Erica Pelzek
http://www.businessweek.com
You’ve spent a few years in the domestic workforce, hip to the ever-globalizing economy, and now your culture-savvy professional interests (inclinations?) make the idea of pursuing an MBA abroad particularly enticing.
Well, start researching schools and try not to let high tuition prices and poor currency conversion rates give you pause. With a few calculations and hearty, equal doses of research and realism, you too can join the discerning 2% of U.S. MBA students pursuing their degrees internationally (see BusinessWeek.com, 03/02/06, "Going Global for an MBA"). Think of your financial aid hunt—and the ensuing computations—as a refresher course in decision science.
Virtual Beginnings
Start with the Internet. International schools’ Web sites often have a wealth of information applicants can frequent for valuable financial aid opportunities unique to their institutions. These sites usually have information about scholarships, fellowships, and grants available to foreign students, as well as loan information for international students.
Though it can be difficult for international students to secure loans at some institutions, this financial obstacle seems to be dissolving. In an attempt to provide more-flexible aid options to MBA students, MBA programs now make concerted efforts to enlist domestic banks and other international institutions as partners to provide U.S. students with internationally available loan schemes.
Begin your funding research immediately. As soon as possible, fill out the Free Application for Federal Student Aid (FAFSA)—so you can apply for Stafford and alternative loans, which some lenders now allow domestic students to borrow while studying internationally—and your chosen institution’s forms as well, especially if they’re available before you even apply to the B-school.
Best-Case Scenario
International loan programs aside, every student wants money that does not have to be paid back following a costly MBA program. No matter how much you’re making as a newly minted chief executive officer, you’ll sigh with relief at the absence of monthly student loan payments.
The International Education Financial Aid Web site features a comprehensive database chock-full of domestic and international scholarship opportunities and detailed grant listings.
Individual institutions also offer scholarships for entering and current students. INSEAD, with the original campus located in Fontainebleau, France, and a newer campus in Singapore, provides scholarships for diverse, qualified applicants who fit criteria such as Italian, Jewish, Iraqi, female, Sub-Saharan African, the best and the brightest, and fluency in Arabic.
Similarly, Oxford’s Said School of Business, an 11-year old school with 225 full-time MBA students (as opposed to INSEAD’s 882), provides extensive, internal scholarship information on its Web site. Additionally the site provides links to external scholarship information, in particular to the renowned, British government-sponsored Marshall Scholarship, designated for U.S. students studying in Britain.
Furthermore, though the 152-student International Institute for Management Development , or IMD, in Lausanne, Switzerland carried a price tag of $60,700 for the 2006 academic year and the majority (70%) of its students did not receive financial aid in 2006, the worldly school still provides unique financial aid opportunities. An affluent alumni board doles out scholarship and loan monies from a fund; the pool, backed and run entirely by IMD grads, dished out $900,000 for needy students in the 2006 academic year alone.
Working Harder for the Money
Another way to keep your best financial interests in mind—and your credit score above 700—is to seek out fellowships and assistantships at your international institution. Though they may not pay a sizeable chunk of your possibly upwards-of-$50,000 tuition, paid fellowships and assistantships are an excellent way to gain academic and professional experience while offsetting some of the costs of living abroad.
However most B-schools, international ones included, do not offer fellowships or assistantships until the second year of their MBA programs, intending instead for students to focus exclusively on their studies for their first year.
As always, however, being proactive is never negative—it cannot hurt to inquire about their availability.
If You Must
Not one of the private sponsors to whom you submitted grant proposals wanted to financially support your thesis on the entrepreneurial spirit of subway beggars, and the scholarship well seems to have run dry this year, leaving you with a hefty tuition, high rent, and an Internet Explorer history of "get rich quick" Google searches.
Fortunately, some U.S. lenders have loans for students studying internationally. Most convenient is Sallie Mae (SLM), which offers federally backed Stafford Loans with an interest rate of 6.8% beginning July 1, 2007, and private MBA Loans to U.S. citizens or permanent residents enrolled in approved MBA programs. A student can borrow up to $8,500 (subsidized) or $12,000 (unsubsidized) in Stafford Loans, and up to the whole cost of tuition and living expenses with the private MBA Loan. With good credit, you can pay an interest rate as low as 1% for the private MBA Loan when you and a co-signer are credit-approved and at least one has excellent credit (see BusinessWeek.com, 4/11/07, "Is Your Financial Aid Foolproof?").
The International Education Finance Corp. was founded to help the growing number of U.S. students studying internationally find financial aid resources. IEFC has a Stafford Loan Program, a PLUS Loan Program, and a private loan. The private loan, however, still requires a credit-worthy co-signer with stable credit and employment histories.
Some of the top international B-Schools have loan programs available to foreign students. For instance, London Business School’s collaboration with HSBC Bank (HBC). Students can borrow a maximum of €50,000, or approximately $67,000. However, in an attempt to create even more lifelong customers, HSBC requires students to maintain the bank as their principal account for the duration of the loan.
Whether you ultimately choose to borrow loans or burrow for scholarships, the aforementioned starting points are mapped for you. Happy hunting!
Pelzek is a BusinessWeek.com intern.
