Business Schools Must Help Students Finance Their MBAs—Here’s How
Cost is the most likely factor to turn candidates away from applying to business school. According to the Graduate Management Admission Council (GMAC), 26 percent of candidates globally say the prospect of taking on large debts may prevent them from pursuing an MBA or master’s degree; 23 percent fear that they just can’t afford it.
The significant cost of MBA programs doesn’t help the issue of underrepresentation of minorities at business school, particularly in the U.S. Students who belong to underrepresented populations—like African Americans and Hispanic Americans—are more likely to express financial reservations about going to business school than students in widely represented groups. They depend more on financial aid and less on personal savings and parental support.
Business schools have a societal duty to help high-potential candidates from less fortunate backgrounds finance their studies. As applications to some MBA programs decline, business schools are also faced with an economic need: to widen access to MBA programs to stay in business.
In this climate, business schools must take innovative steps to help students finance their MBAs.
Widen Access to Scholarships
Scholarships—merit-based, needs-based, targeted, full-tuition, and full-ride—are commonly used by schools to help students finance their MBAs. High-profile business schools like Harvard and INSEAD boast multimillion USD scholarship budgets.
But there are ways that even less high-profile schools can use scholarships to attract new students.
Arizona State University’s W.P. Carey School of Business ran a scholarship initiative offering full-tuition scholarships to all of its admitted students in 2016, who then gave back to the school by working on research and infrastructure projects.
As a result, applications to the MBA program more than doubled, and W.P. Carey saw the diversity of its candidates increase, with the number of women in its MBA population growing from 30 percent to 43 percent in 2016.
While the school has now scaled back the initiative—it offers scholarships to every accepted student, although not all are full-tuition scholarships—it achieved its initial goals of expanding its applicant pool and attracting non-traditional candidates to the MBA. Today, 65 percent of MBA students at W.P. Carey come from non-business undergraduate degrees.
Scholarships provide an opportunity for business schools to try new things and appeal to specific demographics. U.K.-based Cranfield School of Management, for example, offers a 50,000 USD MBA scholarship specific to British farmers.
Business schools can also partner with organizations like the National Black MBA Association in the U.S., supporting historically underrepresented learners, and the Forté Foundation, promoting women in business, which offer diversity-boosting scholarship and fellowship programs.
Likewise, some government and public programs partner with universities to help develop leaders globally; the U.K. government program Chevening and the Swedish Institute Scholarships for Global Professionals both promote master’s study to applicants from other countries who exhibit exceptional leadership abilities.
Support MBA Loans
While many MBA students fund their studies through loans, getting a loan can be tricky. Business schools should make an effort to help educate students about the loan options available and their potential pitfalls.
One issue many candidates face is access to funding. International candidates based in growth markets, like India, find that national banks are often reluctant to lend money for them to study abroad.
To address this issue, hundreds of business schools have partnered with Prodigy Finance, a company that provides postgraduate loans for international students, which was founded by three MBA alumni from INSEAD. Eighty percent of Prodigy Finance borrowers come from emerging market countries, the company says.
To support students in paying off their loans, loan forgiveness programs allow students who go on to work in certain industries—lower-paid roles in nonprofits and the public sector, for example—to discontinue their loan payments. Yale School of Management’s Loan Forgiveness Program has awarded 9 million USD to more than 400 graduates since its inception.
Nurture Professional Goals
Financial support at business school should extend beyond admission into the program, supporting students’ career aspirations whatever they may be.
Harvard, for example, offers a Summer Fellows Program, with selected learners receiving up to 650 USD per week to support them while they pursue their individual career goals between their first and second MBA year. Among the Summer Fellows are budding entrepreneurs, government and nonprofit professionals, and students who want to work in areas like arts and culture, education, and the environment.
The pioneering Global Opportunity Fellowship (GO:Africa) program at Harvard supplements the income of graduates who work in Africa with a total compensation of less than 100,000 USD per year, supporting MBA students who want to pursue careers in Africa.
Business schools can of course help candidates fund their MBAs by making the MBA programs themselves more flexible, by offering executive, part-time, and online MBA programs that allow students to study and continue working at the same time.
In the U.K., business schools are partnering with corporations through the government’s degree apprenticeship scheme. The U.K.’s Apprenticeship Levy encourages employers with an annual payroll of over 3 million GBP (around 3.9 million USD) pay 0.5 percent of the total on training their employees. Either they spend the money on training or it is lost as tax.
Through this scheme, business schools can offer MBA programs to candidates that are free for them and free or low cost for their employers. The amount of government funding one candidate can receive for an advanced degree apprenticeship course is capped at 18,000 GBP (roughly 23,600 USD). Aston Business School has priced its new Executive Apprenticeship MBA to match that tariff.
Business schools have a responsibility to meet learners’ needs, professional and financial. Whatever avenues are available to help MBA candidates finance their studies, business schools should explore them—to widen access, drive diversity, and create more opportunities for society’s underrepresented groups.