Type of financial aid available

In the United States, Perkins and Stafford loans are the most common forms of student financing for an MBA.  Perkins and Stafford loans are unsecured, low-interest loans backed by the United States Federal government.  Collateral is not required.  But students are only eligible for a maximum of $18,500 USD in federal funding per year. 

Stafford loans, with the lowest interest rates of any Federal loan, comprise the bulk of loans taken out by American MBA candidates.  International students (non-U.S. nationals) are not eligible for U.S. Federal financial aid. 

With business school tuition and associated costs escalating all the time, most MBA-hopefuls find Federal loans insufficient to meet their entire student financing needs.  Contact your b-school’s Financial Aid office to find out more about financing your MBA, and to request a Free Application for Federal Student Aid form (FAFSA).  Or try the FAFSA website: www.fafsa.ed.gov.

Private lenders like banks or credit unions offer forms of student loans too, though their interest rates are typically higher than those for loans backed by the U.S. Federal government.  Also, private lenders usually require some form of security from the borrower for their student loans. 

American private lenders, such as Access Group, CitiAssist, and SallieMae, offer a variety of student loan options and packages, with pricing tiers based on the applicant’s credit history.  Collaboration between GMAC and SallieMae, called the MBA Loans program, consolidates Federal and private money into one loan package.  The main advantage of this kind of loan package is easier debt management, since all loan information shows up on one combined monthly statement.

Most major European banks like Banca di Roma, Barclays, BBL, Credit Lyonnais, Credit Suisse, Deutsche Bank, LaCaixa, and Societe Generale, offer loan packages for European MBA candidates.  For Eastern European MBA-hopefuls, ABN AMRO offers loan packages requiring no collateral for students admitted to London Business School, IESE, or Rotterdam. 

United Kingdom students accepted at AMBA (Association for the Master’s Degree in Business Administration) accredited programs (see: www.mba.org.uk) are eligible for loan packages underwritten by the AMBA in conjunction with NatWest Bank.  UK nationals studying in the UK also have the option of securing MBA financing via a Career Development Loan (CDL).  CDLs are deferred repayment bank loans that help pay for continuing education or vocational training. 

The scholarship financing option is often overlooked.  Researching scholarships suitable for you and the b-school you will attend is well worth your effort and time, though qualifying requirements are often highly idiosyncratic, and though most scholarships are highly competitive.  Scholarships, most often taking the form of fellowships, grants, or teaching assistant (TA) positions, or combinations of all three, are offered by all North American business schools. 

Schools award scholarships based on need or merit.  Often, scholarship funds are earmarked for top students coming from less-privileged backgrounds.  Scholarship-award committees review financial information submitted by each applicant to make their determination.  Business school scholarship awards can range from $1,500 to full tuition and expenses.

For merit-based scholarships, schools consider such factors as an applicant’s academic accomplishments, evidence of leadership abilities, and of course, their GMAT scores.  In the U.S., merit-based scholarships are open to international as well as national students.

A student’s ethnicity, financial situation, gender, and nationality are taken into account when schools award need-based scholarships.  Business schools also offer scholarships for minorities, which often take the form of teaching assistant (TA) positions.  TAs in U.S. programs earn a stipend for assisting a professor in an undergraduate class. 

Some top-ranked programs attract the best and brightest from around the world by offering scholarships based solely on merit.  Other programs in the top 10 or 25 award only need-based scholarships.  For these, financial need is determined by taking the total costs of the program (tuition plus materials and expenses) and subtracting from that amount the student’s available financial resources (personal savings or assets, contributions from employers or parents). 

Top programs like Cornell, New York University, Stanford, University of Michigan, and Wharton all provide scholarships, some sponsored by alumni organizations and/or corporations, that are available to international students.  Competition is fierce for these however, and the number of such scholarships available is small.

Second-year MBA students have options for financial assistance as well.  Though many business schools prefer students not to work, the U.S. Federal Work Study program makes undergraduate or graduate TA positions available to second-year students.  Pay for TA positions varies, but can be as much as $4,000 per semester, depending on how much assistance the TA provides their instructor or professor. 

Many corporations, large, small, and in between, offer tuition assistance.  Company-sponsored tuition assistance is aimed particularly at employees wishing to earn an advanced degree, like the MBA.  Tuition assistance is in the form of forgivable loans that the employer exchanges for a future work commitment (usually from 3 to 5 years) from the employee/MBA-candidate.  In the event an employee chooses not to return to their sponsoring company, a repayment schedule is arranged between the two parties.

Useful links

Rotary Foundation
 

http://www.IEFA.com

International Education Financial Aid
 

http://www.IEFA.com

AMBA/Hobsons Publishing
offers scholarships for study at an AMBA Accredited School in Europe
 

MBA Center, admission tests, TOEFL, GMAT, GRE