Financial Planning for an Overseas MBA

 | August 13,2010 06:04 pm IST

An MBA is a big investment, and in order to make the best return from it, you may need to invest a large sum initially. Going to a big school in a big city could make all the difference to your career, and all for a difference of $ 20,000 when compared to a cheaper school in a smaller city.

Therefore, it is often worth rejecting a relatively lower-ranked school that offers you a full scholarship for a top-notch school that offers you nothing gratis. Obviously, this creates a huge funding gap in many cases. Let's consider how to deal with such a situation.


There are several sources out there, from loans to scholarships, as well as teaching assistance to earning opportunities (projects and internships) while you are at school. There are sources within your home country as well as in the country of your business school. There are small as well as large quantum sources. Evaluate each one of them. Nothing is small when you are embarking on the MBA expedition.


Explore, explore, explore! Here are some tips to go about financing your MBA: -

Begin Early

For many candidates, the application deadline for funding sources (read grants and scholarships) has often already passed by the time they find out about it. The earlier you start, the more options you will have available. I would recommend that you start the process of identifying potential resources 18 to 24 months in advance, if possible.


Start Locally

Having decided the countries which suit you best, start off by exploring financing options available through embassies / governments / institutions of those countries where you would prefer to go as well as the likes of British Council, USIS, Max Mueller Bhavan, etc. Explore opportunities in the public domains like corporate scholarships, trust funds (e.g., Lions Club or Rotary Club).


Often these require to be made well in advance or require you to satisfy some criteria, i.e., membership, etc. So, make sure you get a feel of these well in advance. Talk to your local bank to find out how much you can get. The amount is likely to depend on the security offered. Foreign / private banks are likely to offer much more than what legacy banks typically offer provided that you or your family has the net-worth to support it.


Check Out the Schools

Find out which schools offer financial assistance to students. Of course, you need to have a rough idea about your target schools. Check for scholarships, loans, earning opportunities as well as options that allow you to bring down the cost of your MBA. Some scholarships only become available when you've enrolled yourself with a program or are already at the school. Don't leave any stone unturned. Check out everything!


Some schools offer loans repayable in shorter durations of 5-6 years after the MBA while others will allow you to repay them in 15. Look at your circumstances and figure out what fits you best.


Some will even offer a scholarship to worthy students who express difficulties in finding financial support. Scholarships are typically dished out to about 1/3rd of all students at most business schools although the amounts will wary. Approach alumni in your country to best understand the financing and scholarship opportunities available. Do not hesitate to tell the school that you need financial support. Some of us shy away from it while applying, in the fear that it may result in the school rejecting the application. Schools are looking for merit and diversity and will go far to hold on to those who are bright but may not be financially able. They realize that such students will opt for schools that offer them the best financial deal and they will use this to tie them in.


Getting yourself a recommendation from an alumnus of the school is highly likely to raise your chances of getting a scholarship. The MBA world is highly incestuous what with over a third of all students typically recommended by alumni. This is not to say that you can get away by simply getting an alumnus to recommend your application. Instead, use the opportunity to get support from a school's alumni and communicate your needs to him or her.


Explore Other Global Options

Seek out help from your near and dear ones. Sometimes, friends and family overseas are willing to oblige with much-needed funds to help you fulfill your dreams. Remember, they earn in dollars / pounds, etc., and not in rupees. And sometimes all you need is for them to stand as guarantors without them having to make a financial commitment upfront. All you need is a commitment to repay and a track record of keeping to your word, and of course, a willingness to prove it. For many kith and kin, it is a great privilege to be able to claim that a relative or a friend studied at a big business school, and by helping you, they can claim their share of pride.


There are also some private financiers at home who focus purely on overseas education loans. These are often affiliates of overseas lenders, and although tend to be expensive, are often good interim sources of funds. If you hold dual citizenship, explore the possibility of availing loans and grants from local institutions which are often at extremely generous terms and also offer you tax breaks.