Steve Coomber says many students do not take up offers of help PROSPECTIVE students will know that an MBA can unlock the door to a better career and usually a better salary. But benefits like these do not come cheap. In Europe, where one-year courses are the norm, a full-time MBA can cost £30,000. For a two-year course at a prestigious US school, the figure can be much higher.
Paula Glason, director of communications at the Association of MBAs (AMBA), says: “At present the average cost of fees is between £16,000 and £25,000 and living expenses for a single student are estimated at between £11,000 and £16,400. So both full-time and part-time courses are big financial investments requiring a loan, large savings, or both.”
Add in the cost of lost salary during the study period and it comes to a considerable sum. While some will pay from savings, many more have to borrow to fund their studies.
Soft loans can be obtained to fund studies at a range of UK and European schools. Through an AMBA loan scheme, operated in conjunction with NatWest Bank, full-time students can borrow up to two-thirds of pre-course gross salary plus tuition fees, less grants, for each study year. The rate on this loan is 2 per cent above base rate. Applicants must be permanent UK residents and have a place on an AMBA-accredited course.
The Department for Education and Skills operates the Career Development Loan via three banks: Barclays, Co-operative and Royal Bank of Scotland. The maximum loan is £8,000, or 80 per cent of course fees and expenses. Applicants must live in the UK, intend to study in Britain, and to work in Europe after graduating.
Several business schools have their own loan schemes. London Business School operates a loan scheme with HSBC Bank to cover tuition fees and living costs. Unlike other soft loans, it is open to students outside the UK, providing they have accepted an offer to study at LBS on an eligible course such as the full-time MBA.
Scholarships are a good way to defray total costs. Most business schools offer bursaries or scholarships. These tend to be either merit or needs-based and all students should consider applying for one. In many cases the school will actively help to match applicants with scholarships.
Dr Simon Learmount, deputy director of MBA admissions at the Judge Institute of Management, Cambridge, says: “Over the past couple of years it has become increasingly important that we make sourcing scholarships, and encouraging applicants to apply for them, a priority. The increasingly competitive MBA market means that we recognise our responsibility to ensure that the best students find the funding they require to do an MBA.”
London Business School students can apply for the Sir Christopher Gent Award, a Vodafone Group Foundation Scholarship. The scholarship covers full first year fees and is designed to enable talented students to study at LBS who could not otherwise do so.
Many students would be surprised to discover how many scholarships are available at some schools. At Tuck School of Business, Dartmouth College, New Hampshire, there are more than 140 scholarships for the full-time MBA, available to applicants from married couples who are studying at Tuck, to students with a farming background.
Corporate sponsorship is another way to finance an MBA, though companies are often unwilling to part with a large sum of money while losing an employee for at least a year. If sponsorship is possible, it is wise to obtain first written agreement on the situation once the course is completed. This avoids issues of benefits packages and length of commitment to the company.
There are many ways to finance an MBA but the fundamental question remains: Is it worth it? “A full-time MBA may be costly and require some sacrifices but in the long run it is worthwhile,” says Professor Ian Turner, director of graduate business studies at Henley Management College. “Because you will gain a tool kit of management tools, a way of looking at business and the role of management and a network of like-minded individuals on whom you can draw in your career.”
Information on the average salaries of MBAs is also encouraging. According to AMBA’s most recent salary and careers survey, 44 per cent of all MBA graduates earn between £40,000 and £59,000 within five years of graduation, and at least 22 per cent of all full-time students more than £60,000. The average salary of a member of the association is £64,000, which suggests it should not take too long to recoup the costs of taking the MBA after restarting full-time employment.
When James Peckham needed to fund his MBA he took drastic action. In the summer of 2003 he sold the family house in London and, with his partner and two children, moved to Lancaster. To buy a property there he used an offset mortgage to help to finance his full-time MBA at Lancaster University Management School. It was a risk, but one he thought worth taking. Despite the sacrifices involved, he says the MBA is a worthwhile investment. “I walked out of the MBA and straight into a new job and a pay rise.”
Source: 20/01/05 Steve Coomber www.timesonline.co.uk