Business Schools

Financing an MBA Abroad: A How-To Guide


So you're thinking of going abroad to get your MBA. You'd like to broaden your horizons and experience a truly multicultural graduate program. These are all noble pursuits. But remember, financing a graduate degree from an institution outside your native country can pose certain challenges.

Realistically, these challenges are nothing next to the rigors of business school, so you should just think of this particular endeavor as a prelude. You'll have to do a whole lot of research, calculate going conversion rates, and be as proactive as possible. In short, it's nothing a business-savvy applicant can't handle with a good calculator and Internet access.

PORT OF CALL. Indeed, many international institutions use their Web sites as the first "port of call" for prospective students. This is undoubtedly true for the admissions process, but it's important to keep in mind for financial aid opportunities as well.

Procedures, availability, and types of funding for foreign students at most B-schools vary tremendously. Foreign students usually are not eligible to receive most government loans and can have a hard time with private lenders unless they have a resident guarantor or co-signer.

Canadian B-schools, though cheap by comparison to those in the U.S. and Europe, have limited loan programs and funds to disperse to non-Canadians. Thus it's necessary to look beyond the norm when securing funding at a school away from home.

In most cases, the financial-aid process begins after you've been accepted. But you should start your research (and when possible, fill out forms) as soon as you decide to apply. Some of the larger, well-established programs have more funding available, or at least more programs in place, to help students finance their MBAs.

GLOBAL LOAN PROGRAM. One truly international institution, INSEAD, was founded in 1959 in Fountainebleau, France, and just last year opened a campus in Singapore. Its roughly 700 students represent more than 60 countries and are free to study in either France or Singapore under the institute's "one school, two campuses" philosophy.

Once accepted, students are invited to apply for financing through the INSEAD/ABN Amro Global Loan Program, designed to give candidates from all over the globe access to an INSEAD business degree.

The loan scheme -- available to every applicant, regardless of nationality -- is offered in association with ABN Amro Bank and covers all tuition fees (27,900 Euros for the 2000 program, or about $29,850). It does not require a security or guarantee from the student, and it offers a low, fixed interest rate.

There are, however, a few things to consider. INSEAD's loan doesn't cover living or personal expenses, yet applicants are required to provide a certified copy of an INSEAD acceptance letter, a separate loan application, two letters of recommendation, a copy of a resume, as well as a passport. Loan applicants then have to interview personally at one of ABN Amro's branches.

Students still have to have a solid financial history (start paying down that consumer debt now!), as the final disbursement of loans rests solely with ABN Amro. Keep in mind that funding is not always a done deal at any B-school with inviting, all-inclusive loan programs. The buck stops at the bank.

SMALL PRICE TO PAY. London Business School has inked a similar loan agreement with HSBC Bank, one of the largest banking and financial organizations in the world.

This loan, is open to all students of all nationalities, provides funding to cover the cost of tuition (18,000 British pounds for the 2001 academic year, or about $27,000) as well as the cost of living, a considerable benefit in fashionable, pricey London.

There are very few restrictions to this program. However, it does require that students maintain their principal bank account with HSBC Bank for the duration of the loan. (A small price to pay, considering that some lenders stipulate that borrowers must repay a loan in full if they don't take a job back home immediately following graduation.)

It's likely that HSBC hopes to retain the business of MBAs who will potentially be "high net worth" individuals and quality customers when they return to their native countries -- where, chances are, there will be a local HSBC branch.

FOREIGN-FRIENDLY FINANCING. Lest you assume that all business schools have such foreign-friendly financing arrangements, consider Oxford's Said School of Business. The school lacks a financial aid office. To be fair, the program is smaller (96, compared to INSEAD'S nearly 700 and LBS's 536 full-time students) and only in its fifth year of operation, but the school openly adopts a laissez-faire attitude toward financial assistance.

As Louise Hutchinson, Said's marketing manager, explains, "A lot is up to [the student], to be honest, to try to identify appropriate scholarships in their home country." If you're not one of those candidates researching grants on the home front, there's a good chance you're a part of the 67% majority who is able to foot the ?18,500 ($27,750) bill for the 2001 program without assistance.

That said, Said's Web site offers a wealth of information about funding and is a great jumping-off point for researching scholarships. During any search, beware of specific requirements like "commitment to working in Poland" or "essay-fluent in Arabic" that might disqualify you as an applicant. It could save a lot of aggravation later.

WORLDLY CONSTITUENCY. A school with a decidedly unique approach to funding is the International Institute for Management Development, or IMD, in Lausanne, Switzerland. With tuition for the one-year program coming to 45,000 Swiss francs (about $30,000) in 2001, and the total budget estimated at twice that, IMD is no bargain.

The price tag could explain why the average age of an IMD student is 31 and the school, in Switzerland's beautiful Lake Geneva region, attracts an affluent, worldly constituency (75% have worked outside of their own countries prior to matriculation). Still, of the 85 students enrolled, 25% to 30% require some kind of financial assistance.

The school -- a tightly knit community where even the director of the MBA program knows everyone's name -- has a kitty of about $1.5 million that is allocated for scholarships and loans. These funds are administered by an alumni board made up of one delegate from every graduating class. This classmate/financier system has worked exceptionally well for IMD: they've yet to have a single student default on a loan.

REWARDING SCHOLARSHIP.At the end of the year, there are prizes for excellence and class contribution. Sometimes they even "turn loans into scholarships." A lot of schools will bestow scholarships based on achievement during the previous year. It's worth inquiring about such awards during your search.

A good place to begin your research is the International Education Financial Aid Web site. IEFA has a searchable database of scholarships for study in the U.S. and abroad and is an invaluable resource for international grant-seekers. As far as loans go, the International Education Finance Corp. has developed a number of loans for students through their International Student Loan Program.

The program provides financing for the total cost of education, flexible repayment options, and up to a 25-year repayment period. All MBA candidates are eligible, but students from outside the U.S. must have a U.S. citizen or permanent resident as a cosigner.

The site also offers a variety of information -- books, informational organizations, links to relevant Web sites -- on their resources page. Lucia Quartararo


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