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How do I get an MBA scholarship?

Response 1

I got a scholarship from some programs. There's no separate form submitted for the scholarship purposes. You just need to submit your application and the B-schools will inform the scholarship they offer in your acceptance letter.

Response 2

For most of the programs, you don't have to do anything. However, some schools, such as NYU and Wharton, request you to submit a separate application for fellowship/scholarship. They will give you more info once you're accepted to the programs. So, for scholarship from the schools, you should contact the school directly. From what I've observed, if you applied to a school with small % number of female, you'll have a better chance of getting one (I assume you're a female?). Don't quote me on this, though.

How do I get a loan?

Response 1 (Aug 2002)

Loan varies. There is Federal loan for Americans (& green card holder). And there is commercial (non subsidized) loan such as Citibank, etc. International students can only apply for commercial loan. However, mostly you need co-signer who is American.
Some schools (usually top ones) give you privilege to apply for the loan without co-signer. In addition to that, the amount of the loan varies on each school. Some schools have limit on the loan, some can take as much as the cost to attend the school (living+tuition+laptop, etc).

Here are some schools who have the non-cosigner loan progam: Harvard, Kellogg, UMBS,Virginia, Duke, etc. Certainly in my school (UMBS), we can apply the loan up to the cost of attendance. This includes tuition, living cost, laptop, etc.

So if you need loan, my suggestion is that you have to aim for the top schools (big endowment money to back your loan).

Response 2

Every school has a financial aid website that tells you of the cost of tuition and loans/financial aid availability. The website for MIT Sloan is:

http://mitsloan.mit.edu/mba/admissions/tuitionfinancialaid.php#lfm

This site will tell you how much the program costs, and what financial aid is available. The Sloan CitiAssist Loan, which is also available at many of the top schools, can offer international students up to $110K without a co-signer. There's also the Sloan LFM
Program that is highly selective (I actually wished I'd known about it prior to applying to Sloan). You get an Engineering degree from MIT and an MBA from Sloan is 24 months!! And if you get in, tuition is free.

Just some examples. My suggestion, determine the schools you want and can realistically get into, find the different financial packages available for that school, and see if you can realistically meet you goals.

Response 3

In my experience, it really depends on the school and bank policy. There are schools which provide guaranteed loan to admitted applicant (no guarantor needed). For such schools, there is no additional requirement to get the loan. The interest rate, however, is pretty high. At Wharton, Citiassist charges prime+2% while at HBS it is slightly less than prime and at Ross it is at prime. If you have guarantor, you may be able to get loan with lower interest rate, such as from Access Group.

FYI, here are some schools that have loan program for International students (without cosigners nor collateral).

- Duke
http://www.fuqua.duke.edu/admin/stuserv/fin_aid/international.htm

- Stanford
http://www.gsb.stanford.edu/mba/apply/finaid/types.html

- MIT
http://mitsloan.mit.edu/mba/admissions/loans.php

- Tuck
http://www.tuck.dartmouth.edu/admissions/aid/loans.html

- Darden
http://www.darden.virginia.edu/financialaid/loans.htm

- Chicago
http://gsb.uchicago.edu/fulltime/admissions/financial.aspx#internationalstudents

- Wharton
http://mba.wharton.upenn.edu/mba/admissions/aid/loans.php

- Michigan
http://www.bus.umich.edu/Admissions/Mba/FinancialAid/CitiAssistLoan.htm

Response 4

To give you realistic picture, here is the loan repayment example presented during Wharton Welcome.

MONTHLY REPAYMENT RESPONSIBILITIES:
Loan amount $100,000
Annual interest rate 9.75%
Loan period in years 15
Monthly payment $1,283
Number of payments 180
Total interest $130,968
Total cost of loan$ 230,968

MONTHLY REPAYMENT RESPONSIBILITIES:
Loan amount $120,000
Annual interest rate 9.75%
Loan period in years 15
Monthly payment $1,540
Number of payments 180
Total interest $157,161
Total cost of loan $277,161

In 2003, Business Week conducted a survey on median compensation of class 1992. Here's the result:

http://www.businessweek.com/magazine/toc/03_38/B38500338alumni.htm

Please keep in mind that the figure is a median figure, but we do not know what the lower end of the range is.

Response 5

HBS offers private loans for international students with no co-signer required. This student loan is provided by CitiAssist with interest rate at prime minus 0.125% and 15 years repayment period.

On top of that, there is also a need-based fellowship from the HBS Financial Office which takes into account your prior salary level before school, your personal
assets, etc. Although the amount is not that much, but it definitely still helps!

Response 6

If you look into the average annual salary of graduates from top B-school, you can immediately know that you can payback your loan within 3-7 years.

I guess, if we are talking about education and what an MBA degree from top-schools can offer you, I would say it's priceless, I can't quantify the benefit from the network, the learning as well as the experience.

Response 7

Loans can a double-edge sword. At one end, it can leverage you (or your capital/asset). At the other edge, it also means burden to you. Just like an organization or company, one as an entity may need a loan to become more productive or to reach the goal of his/her career.

For example, a company now with asset X can only make profit for Y Dollar, and it is estimated that the company can produce and market more products if the company can have more money as working capital and to buy more machinery. There are two ways to approach this issue: ask more money from share holders or ask the bank for loan (or bonds, etc).

Same thing to a person. If currently a person is making let say $ 500 per month ( 6 K per year), and he/she believes that he/she can go to better place or job that pays her/him better. He/she might think some ways to get there. One way for some people is to pursue an MBA. So think about it, an MBA is a tool to get better job. And unfortunately, MBA doesn’t come cheap. And you know that at the end of the MBA you can expect to triple or quadruple or in many cases ten times than you earn prior to MBA. If you think an MBA is worth your investment, what do you do? You have to get yourself funded, leverage yourself. The choice is simple: if you have money (or family) self-funded, if not loan; although loan for certain degree is still cheaper opportunity cost given that the average interest is around 4-6% a year (compare to Interest rate in Indonesia 15-25% for bank loan).

Of course, the cost for attending the MBA may vary for each person. If one already makes 100K per year and the goal for MBA is to make more money, I think the opportunity cost is very huge. Making an MBA is expensive investment. But for most people having an MBA is like a magic carpet for better job and pay; although I believe MBA is not just about money (but in here we are talking about investment so it circles around money).

So the choice is yours, will u go for an MBA? If you think with an MBA you can get your dream career, shoot it. But if not, stay at your job; you may get promoted one day. But for me, in term of investment, MBA is worth spending; the money, the loan, the salary forgo during the schools are worthy.

But we never know, just like any other investment, you may lose or win. You may end up winning by obtaining your dream job with thick salary at the end of your MBA. But on the other hand, you end up jobless with huge debt (that’s scary).

Anyway, co-signer is actually acting like collateral. Your co-signer will be responsible if you default your debt. And just like collateral, your co-signer must have good standing of credit. Most loans require co-signer especially for international students. Actually the schools act as our co-signer when we apply for the school pre-arrangement loan program (Citiassist, etc). So in case of our default, the school will be some kind of responsible. However, sometimes I wonder why a school wanna do that ? (they barely know us J)

So at the end, if you are thinking for an MBA to accelerate your career, and not fortunate enough to have 100K money to spend, A school with pre-arranged loan will be a good choice.

Is it true that the top 100 business schools offer loans?

Response 1

Loans typically differ for each school. You probably need to narrow the number of schools that offer loan to somewhere around 25. These 25 sometimes ask you for co-signer (someone who will be responsible in case you default the loan). Some of them don’t need cosigner. Some schools offer full cover (living + tuition), some offer limited loan (has a cap value such as 30K / yr. etc).

You need to find out whether your intended schools offer pre-approved loans (no cosigner) and what the limit on the loan. For the schools with pre-approved loan, getting a loan is quite straight forward. The hardest part is getting into the program. Once you’re in, the system will take care of you.

Response 2 (May 2006)

My understanding is that Kellogg, Wharton and HBS (might be the case for other US schools as well) provide private loan. I'm not sure whether they use their own funds or partner with some financial institutions, but students do not have to deal with outside party. (CMIIW)

For Kellogg, the rate is determined by whether you have cosigners that live in the US or not. Last year's interest for int’l students with no US cosigners was 4.5%.

Students can still apply for Citiassist financing, but the loan from school should be enough.

Response 3 (May 2006)

I don't know about other schools, but all top five schools (h/s/w/k/m) guarantee a loan when you get accepted. If you have a good credit history in the US or have a US cosigner, the interest rate is lower than it is for typical international students. In any case, even for international students, the rate's much lower than any collateralized loan you can find in indo. True that it's higher than the rate charged to us citizens, but given the risk-return of a top 5 MBA degree, this is a no-brainer decision. I’d say, if you get in, the last thing you have to worry about is money. Just look at the average/median salary of an MBA grad (e.g. the Wharton employment report I uploaded a few weeks ago) and calculate your average payback time, ROIC, IRR, NPV, etc.

Response 4 (Aug 2002)

Duke MBA (Fuqua School of Business) provides loan up to $60,000 for international students. Non-consigner. Simple process. Students only need to fill a form. As long as it is below $60,000, the loan will be granted.

Here is the details:
http://www.fuqua.duke.edu/admin/stuserv/fin_aid/international.htm

Response 5 (Aug 2002)

My school, Cornell, has a non-cosigner loan deal with CitiAssist capped at 23k USD (Interest is prime + 0.25%). The only requirement is to show that you have a certifiable asset of at least 23k. However, like in other Top 10 schools, you will need to provide funds of about 100k or so for two years. Tuition fees themselves are about 55% - 60% of the total.

As for the cosigner thing, the cosigner, who normally has to be a US citizen, has to bear the liability should you default. It will also show on his credit history, so if he wants to take up a loan himself he will have to pay a higher interest premium. So it is not that easy to have someone cosign for you, not for that much money.

However, if you do have at least 3 years of US credit history, you can apply without cosigner with Access Group. The interest rate comes out to be about the same (they use LIBOR instead of the normal US Prime Rate) however there is a loan generation fee (4.9%).

Response 6 (Aug 2002)

Haas (Berkeley) also provides no-cosigner loan, albeit with a cap of $10,000 per year (at least for this year).

Unfortunately not every good b-school offers such loan, especially considering the bleak US economy. Nonetheless, there are many ways to secure funding that you may also want to explore. For e.g., since last semester I've been the teaching assistant for a couple of classes, and get some tuition remission (in other word, paying less). I also get a monthly stipend which is not small. At Berkeley, you can also apply for some grant-in from the university for your second year, which can also be applied to your tuition.

In any case, if doing b-school is really your dream, start setting aside a big portion of your salary. As painful as it sounds, achieving your goals is never easy. Remember, a loan is a loan and in the end you have to pay it back. I'd say use it as your last resort. Ending up with no job and $120K debt is the last thing you want :)