Every year, as part of its ongoing research project, TopMBA surveys nearly 4,000 aspiring MBAs to establish whether the issue of finance was likely to prove a barrier to study. The latest poll found that practically all had already looked seriously into how they would fund their time at business school and a wide variety of methods were cited from scholarships to personal loans. Scholarships, perhaps not surprisingly, were the most popular option around the world, favoured by 74 pc of respondents. Next came the student’s own savings at 68 pc and then some form of external loan at 61 pc. Only 28 pc realistically expected to get financial help from their employer.
The emphasis that students place on funding methods seems to vary considerably from area to area. Help from family and friends appears to be most common in the Asia-Pacific region where it was cited by 48 pc of those questioned, in contrast to only 43 pc in the USA and Western Europe. Personal loans were the preferred source for over 81 pc of US students, but less than 57 pc of those from Latin America. Company sponsorship was expected from 36 pc of respondents in the Middle East and Africa, but only 21 pc of those in Latin America and a student’s own savings were the favoured method of 80 pc of Western European candidates, but only 62 pc of those from the Middle East and Africa.
Whatever a student’s initial preference, the most common source of finance in practice is now the education or career loan. We look at some of the sources of such loans across the globe:
Finance sources around the world
Indian nationals have access to a wide range of education loans geared to fund MBA study. Key suppliers include State Bank of India, Allahabad Bank, State Bank of Mysore, Bank of Baroda and the Industrial Development Bank of India. Loans can be used to cover the cost of fees, travel to an overseas school, the cost of books, computers, etc and living expenses. In most cases candidates will already need to have secured a place at a recognised institution and may need to supply a guarantor, such as a parent or close relative, with sufficient funds to cover the loan. Repayment periods range up to four years after graduation and interest rates are currently around 8.5 to 8.75 pc.
Sources of aid for overseas candidates looking to study in the USA include:
• Citibank – Citibank has a very well-developed student loan division which provides ‘standard’ loans and also partners with individual schools to provide more tailored packages. The Wharton School in Philadelphia, for example, offers funding through Citibank, which guarantees most accepted students a prime plus 0.5 pc interest rate, with a 15-year payback period, and no co-signers or credit check required. www.citibank.com
• IEFC – Students interested in studying at one of nearly 400 institutions around the world may be eligible for loans of up to US $45,000 from the IEFC (International Education Finance Corporation). The IEFC has three loan programs; the Stafford for US citizens or permanent residents, Can HELP for Canadians and ISLP for foreign students. To be eligible for ISLP you must be able to provide a guarantor, who is a US citizen or permanent resident. www.iefc.com .
HSBC bank offers loans to students of a number of British schools, including Cranfield, LBS and Manchester. Unlike many other schemes this facility is open to students from anywhere in the world. Interest is charged at 2 pc over HSBC’s base rate for the duration of the loan. There are no upfront commissions and no early repayment charges.
Several of the key Spanish schools have negotiated loan agreements with Spanish and overseas banks to help students with funding. IESE in Barcelona has a loan scheme offered though Banco Santander Centro Hispano, which is open to students of any nationality accepted by the school. Instituto de Empresa in Madrid has similar arrangements to cover fees and maintenance with repayment periods up to eight years.
Other European countries
Austria – CA-Post-Graduate, Creditanstalt – www.creditanstalt.co.at
France – French residents of any nationality who have worked in the country can apply to FONGECIF (Fonds de Gestion du Conge Individual de Formation) for up to 90 pc funding of tuition fees plus a part of their current salary – www.emse.fr/ASI/AIDES/fongecif.html
The Commonwealth Bank of Australia does not have a specific student loan program but will consider applications on individual merit up to AUD $5000 at branch level and higher via the head office.