After a house and a car, an MBA is one of the biggest single outlays you're ever likely to make. A well-ranked UK school typically charges around £20,000 for a full-time, one-year degree. This rises to about £50,000 at the London Business School, where courses take 15 to 21 months. For most graduates it's a good investment; career prospects and commensurate earnings increase significantly. But how will you fund it?
All schools urge candidates to think carefully. "We advise our candidates that a variety of sources of funding are available. They should spend time looking at options as well as choosing the right school," says Stephen Chadwick, the MBA programme director at London Business School. The school's website lists more than 150 sources of financial assistance, many of which are available to applicants of any UK school.
There are four main sources of funding: yourself, your employer, bank loans and scholarships. Recent research by the Association of MBAs (AMBA), one of the leading bodies that accredit business schools, says that about half of MBA students fund themselves; 32 per cent are sponsored by a company; about 10 per cent are financed mainly by bank loans; 7 per cent chiefly by scholarships; and 1 per cent by redundancy payments.
Despite the recession, this breakdown hasn't changed. "We've always found full-time students generally self-fund. I wouldn't say there's much of a change," says Elaine Kay, MBA programmes manager for Nottingham University Business School. Self-funding, though, is an umbrella term. Apart from a student's savings, it includes family help.
This is especially true of students from outside the EU. "There are some parts of the world, like the Gulf, where funding doesn't seem to be an issue," says Mary Landen, director of MBA admissions at Leeds University Business School. Indian families also have a tradition of paying for members to study abroad to further their fortunes.
Employers have long been an important source of fees for business schools, mainly financing employees to study part-time for executive MBAs. Applications for these degrees have held up well given the economy and a tendency for employers to demand employees contribute more towards their studies. "Some employers see help with an MBA as a substitute for a pay rise," says Lindsay Duke, postgraduate student recruitment manager at Durham Business School. "Up to 18 months ago, most executive MBAs were getting part-funding at least. Now some employers are being harsh, offering no funding or time off and requiring employees to study in their annual leave."
Nonetheless, some companies are generous as ever. Vodafone and Santander sponsor students from anywhere in their companies to study for the full-time MBA at London Business School. Companies are showing more interest in sponsored MBAs, degrees tailored with a business school specifically for a company's employees.
"We've seen more demand for in-company MBAs," says Melissa McCrindle, head of marketing for Strathclyde Business School. She thinks companies may see these as a more economic way of training managers that standard MBAs; they also reduce the risk of employees leaving for greener pastures with their new degrees.
Loans can rescue those unfortunate enough to lack deep pockets or a generous boss. Some schools have their own arrangements with banks, as London Business School has with HSBC. Prospective MBA students may also be eligible for help under the government's career development loan scheme, provided through Barclays, the Clydesdale Bank, the Co-operative Bank and the Royal Bank of Scotland.
All these forms of funding can be topped up with scholarships. This part of the funding mix has become more popular. "We do see an increase in the number of scholarships and bursaries," says Landen. Most schools offer scholarships, typically for up to half of the fees. Some are earmarked for particular candidates, such as women, foreign students and former armed services personnel. Several, including one for full tuition and living costs, are available for students taking the MBA at Nottingham's International Centre for Corporate Social Responsibility.
Increasingly, scholarships are a competitive weapon between schools. "Don't say you're looking for a 100 per cent scholarship," warns Duke. Schools try to award scholarships only on merit, defined as a combination of academic excellence, work experience, leadership skills and the ability to be an ambassador for the school. Hardship is not generally a criterion, although schools generally help students who run into financial difficulties during their course.
Many schools offer discounts to graduates of their university; some also offer discounts for candidates who accept an offer by a given date. In other cases, you can use a pay-as-you-go basis. Many earn while studying: at London Business School, students last year made £965 a week on average. That should make a decent dent even in London Business School's fees.