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Admission finance

The cost of an MBA

The cost of an MBA course at a really good business school is actually more than the average wage in the UK or USA.

However, when you think about the cost of the MBA you must simultaneously think about the benefit from it – because these amounts are inseparable from each other, and cutting down on the cost could produce a disproportionately high drop in the benefits of the MBA.

Financing the MBA can become one of the biggest investments in your life and involves a major financial commitment.

How much does an MBA costs?

The cost of an MBA course at a really good business school is actually more than the average wage in the UK or USA.
However, when you think about the cost of the MBA you must simultaneously think about the benefit from it – because these amounts are inseparable from each other, and cutting down on the cost could produce a disproportionately high drop in the benefits of the MBA.

You can take an MBA for $8,000, but you can’t expect that to be a good one. The average cost is $40,000 for a year (or $80,000 for two years). Some MBAs are $60,000 a year, and with MBAs the more you pay the more you get. It’s not just the instruction, it’s the brand.

The tuition cost of an MBA is more often than not an indication of its quality and regard among employers. But it’s also worth finding out whether or not that figure offers value for money. Do the tuition fees cover textbooks and study materials? What is the student per tutor ratio? What are the support services like (eg. dedicated careers services)? Is there a good alumni network for you to draw upon? Are you given preference in choice of accommodation?

Futhermore, the cost of an MBA isn’t about how much you will have to pay to the business school where you are taking your MBA. There are numerous other costs as well.
First and foremost, if you are taking a full-time course, is the opportunity cost of not working for a year or two years depending how long your course is. You are unlikely to be able to have a job whilst taking a full-time MBA course so you have the cost of taking the course plus the foregone salary.
Even if you are taking a part-time course you may only be working 4 days a week, in which case a cost is the one day’s pay that gets foregone.

Other costs could be travel costs to the business school. Depending on where it is, you may need to pay for the underground, the train, a bus or petrol and parking if you would be driving to campus. If you are coming from abroad you may get lodgings near to the business school, and that is a cost too. Should you be coming from abroad you will also want to go home and see your family and friends from time to time and you would have to pay for flights to and from the location of your business school.

Other costs of doing an MBA are related to studying. You can make your life a great deal easier by buying yourself a laptop so you are not relying on your business school’s computer system and also so you can work on your assignments in your own time and in a place of your choosing. You also will have to buy text books, and you may need at least one for each course. If you are clever you will be able to get the books cheaper by approaching alumni or buying them second hand, but the latest text book will contain the latest thinking so be careful with that.

Funding an MBA

Financing your business education needs serious budgeting and planning because you have to put up the money first. Let’s look at the costs you will need to bear. Tuition costs make up a massive part of all MBA expenses. You can find yourself paying anything from £8-9 up to over £50000. Resident students will sometimes be subsidized by the school and conversely some foreign students may find themselves having to pay higher tuition fees.

Other academic costs: these can frequently be under-estimated. You need to pay for a large amount of study materials. These can include your textbooks, which are more expensive than you would think, software – which is needed for the more quantitative subjects, your trips to companies, the costs of extracurricular academic activities and participation fees for professional student organizations.

Living Costs:  These will depend on your individual spending habits along with the location of your school. Most business schools, in order to retain links with business, will be located in proximity to the major business centers in their respective country. This means that the cost of living can be very high. Should you be planning to take your MBA course in a foreign country it can be a lot more expensive. You need to pay for transportation expenses, employment restrictions and medical insurance.

In order to finance your MBA course, you need to look at many sources. There are bank loans, many of which can be low-interest student loans. You can also use your own personal funds, although we would suggest you make sure you keep some funds aside as a savings safety net. You may also be able to apply for scholarships which can be received from governments, universities as well as foundations – these are given to students who have outstanding professional and academic backgrounds. Should you be from a developing country, you can expect to find getting a scholarship slightly easier.

Deciding whether and how to take an MBA program is - for many people - also a financial issue. MBA programs are not cheap. The fee is ofter substantial - but to this must be added the living costs, cost of materials, travel, and for full time programs - the loss of income for the period of the program. For many people therefore this is one of their largest financial decisions.

In some countries are there are some tax benefits - e.g the fees for certain types of program attract tax relief. Some people may be fortunate and get support from their employer - but many must pay for themselves, and many therefore seek out some form of financial aid to relieve some of the burdon.

Support from the Business Schools

Many Schools offer their own Scholarship or Bursary Schemes. In some cases their support is available on a competitive basis - i.e individuals apply, and are judged in some way. In some cases funds are made available to applicants from particular groups - that the School wishes to attract to their programs- e.g. people from particular countries, professions, ethnic groups etc. Some Schools provide earning opportunities - eg Reaearch Assistantships, to help offset fees. The best way of getting information is to check out the Schools to which you might apply e.g look at their Prospectus, Web pages etc - and/or ask them. Some Schools also offer loans on beneficial conditions.

Support from other sources

Financial support may be available from Governments, Charities, Companies, Financial Institutions etc. There are two types - Grants/Scholarships and Bursaries, and Loans. The former may be awarded to you to cover some or all of your costs - and you will not be required to repay the funds, although there may be other conditions attached - e.g. that you return to your own country after completing your MBA. The latter will require repayment, but the interest rates will usually be lower - or the conditions of the loan beneficial in some other way - e.g. the repayment period.

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Last updated: 17 May 2010

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