"The journey of a thousand miles begins with one step" - Lao Tzu
This old proverb still holds true for every venture we take upon in our life whether the venture is a daily chore or something as important as planning for an MBA. Taking a step in the right direction takes us a step closer to the realization of our dream.
Congratulations! If you are reading this article, then there is a good probability that you have either managed to secure a seat in a B-School or you are very much sure that you will make get one in future. Whatever the case, this post is for you.
As we all know that doing an MBA either from India as well as from abroad is a costly business. An MBA will probably be one of the costliest assets you will acquire in the next five to ten years. Hence, it is very important to do some prior homework and get things straight.
Making An MBA Budget
The first and foremost task is to list out the things which comprise the major portion of the MBA expenses. Below is the list of things to consider while making an MBA budget:
- Tuition fee: Tuition fee of a two-year regular MBA program comprises the biggest portion of the MBA budget and it differs from college to college. For most of the colleges, it is somewhere around 10-15 lakhs and if you are attending some top private management schools, it can exceed to 18-20 lakhs. Obviously, the number will be higher, if you attend top business schools at foreign universities.
- Books and Supplies: Generally, expenses of books and course materials cover under tuition fees. Even then you have to spend on a laptop (configurations mentioned by B-Schools) and stationary.
- Food & Housing: In India, most of the management programs are residential ones, therefore the cost of food and housing covered under overall fees of the MBA. But if that is not the case, then you have to consider it separately while budgeting.
- Transportation: Transportation costs don’t affect the budget until the B-school is not a residential one, in that case, the expenses of daily transportation has to be included. Almost every B-school provide an opportunity to travel overseas for some international exposure, so if you are interested in that opportunity, then you should consider the costs of the same in the transportation expenses.
- Contingency Costs: It is always wise to budget at least 15- 20% of the overall budget for daily expenses, entertainment and some unexpected costs.
The second task is to find ways of reducing costs. Below is the list of the same:
- Scholarships: Many B-Schools in India give scholarships based on need and merit. Generally, the central government, as well as the state, provides varied scholarships whose information is available on the website of the college. Some monetary scholarships are also offered for the academic achievers by the B-schools. Therefore it is advisable to check out the scholarships offered by that particular B-school and your eligibility to avail the same.
- Company Scholarship: Not many companies offer this incentive but yes there are some especially Fortune 100 which offer a scholarship which either assumes the partial or full expense of an MBA program. This is definitely an ideal option for the working professionals, but one has to work in the same corporation for a stipulated amount of time after the completion of the MBA. So, if you are ready to work in the same company post MBA, then try to get your organization sponsor your MBA.
Common Ways To Finance An MBA
One of the major questions that bother aspirants even before they start preparing for the management entrance exams is How am I going to finance my MBA? Below are some common ways by which you can finance your MBA:
- Student Loans: In the present scenario, most of the management students financed the bulk of their MBA costs through student loans. Some of the parameters to consider while evaluating bank loans are:
- Interest Rates: Interest rates for student loans vary bank to bank. Most B-schools have tie-ups with many banks, which usually offer loan at a cheaper interest rate. Even among all affiliated banks, go through the prospectus of each and every bank before making the final decision.
- Collateral Required: If you are going to join a B-school which has prestigious brand value in the market, then there are huge chances that you don’t have to provide any collateral but that might not be the case for other B-schools
- Repayment Schedule: Generally, the repayment of the loan comes into the picture one year or six months after the competition of MBA. It is repaid mostly in the form of Equated Monthly Instalments (EMIs) and tenure of which varies from bank to bank.
- Self-Finance or Soft Loans: Self Financing is also a very common way to finance your costs of MBA. So, if you have some deposits, fund etc then you can use them to pay your fees. On the other hand, soft loans from friends and family can also be a feasible option. You can always pay them later once you start working and even there are huge chances that you don’t have to pay much interest.
It is advisable to connect the current students and even alumni of the respective B-School to get a clear picture of the financing of the MBA. Although the cost of doing an MBA seems staggering, it is an asset which will serve you well in your professional life. Last but not least, don’t forget to consider Return on Investment (ROI) before finalizing a B-School.
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