Magazine article Management Today

MBA & Business Education Guide 2005: Funding Your Studies

Magazine article Management Today

MBA & Business Education Guide 2005: Funding Your Studies

Article excerpt

MBAs don't come cheap, especially if you are an executive with a mortgage and family. Financing a business education requires serious planning, but there are ways of realising your dream.

Take out a personal loan. Remortgage your house. Apply for a scholarship.

Blow your savings. Whichever way you decide to pay for your course, MBAs don't come cheap. Tuition fees alone will set you back anything from pounds 12,000 to pounds 40,000-plus, depending on which business school you attend. On top of that, there are living expenses, which will be particularly steep if you study in London or the south-east of England, and even higher in certain parts of Europe. Add to this expenditure on travel, course materials and, for full-time programmes, the 'opportunity cost' of being out of a job, and you're looking at a hefty bill.

Take 34-year-old Stephanie France, for example, who is due to complete her full-time MBA at Bradford School of Management this year. She has already forked out pounds 16,950 for tuition fees, but estimates that the total price tag will be closer to pounds 55,000, once she's taken into account living costs, books, stationery and, crucially, the loss of earnings from her previous job as a design and project sales manager.

'We've gone from a two-income family to a one-income family - and it's taking the strain,' says France, a mother of one who is financing the course through personal savings and remortgaging the family home (see case study). 'However, I consider my MBA to be a real investment. I expect to recoup the costs within three years, so it's worth every penny.'

Financing your business education clearly requires some serious budgeting and planning. Most business schools will encourage you to tighten your purse-strings, adjust your spending patterns and minimise debt well in advance of arriving on campus, so that you can increase your borrowing capacity if required.

'Being clear about the costs is vital in preparing for an MBA,' says John Glen, director of Cranfield School of Management's MBA programme.

'Be aware of the bottom line.'

Most students on full-time MBA courses fund their studies themselves, sometimes with savings or redundancy payments, and sometimes with help from parents or a supportive spouse. If you're a homeowner, you may consider releasing equity in your house and thus paying for your MBA over the term of your mortgage.

If you need a loan to bridge any funding gap, there is a dazzling array of payment schemes to chose from; you just need to know where to look.

Start by contacting your admission's office. Most business schools run loan schemes in partnership with local banks, offering low-interest deals and the option of delaying repayment until your course is complete.

Henley Management College, for instance, has linked up with HSBC to help students cover the cost of tuition fees and up to pounds 5,000 of living expenses a year; IESE in Barcelona runs a loan scheme through Banco Sabadell; the Wharton School in Philadelphia runs a scheme through Citi- bank, and so on.

Next, check out the student loan programme at the Association of MBAs (AMBA), which it operates on behalf of NatWest Bank. To be eligible, you must have been offered a place at an accredited school, be a permanent UK resident and have the right amount of work experience (two years for graduates and at least five years for non-graduates). If you plan to study full-time, you can borrow up to two-thirds of your pre-course salary plus tuition fees; part-time students can get tuition fees, study equipment and course expenses; distance-learning students in full-time employment can borrow up to pounds 10,000.

You should also look into the government-sponsored Career Development Loan (CDL), which is available to all EU nationals and allows you to borrow up to pounds 8,000. CDLs are available via four banks: Clydesdale Bank, Barclays Bank, the Royal Bank of Scotland and the Co-operative Bank. …

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