In India, pursuing MBA is still considered a very important stepping stone for entering the corporate world. After months of preparation, mocks, anxiety, stress, examinations, group discussions, interviews, etc, aspirants finally see their dream come true in the form of an offer letter from their dream B-School. The only thing remaining between their dream and reality is a hefty sum of money. MBA degrees from most of the premier institutes of India are still expensive as compared to other post-graduate degrees. Even though the future prospects in terms of salaries are very promising with an MBA degree, still, it is not easy for a lot of aspirants to devise ways how to finance their MBA degree.
Most probably, to date, an MBA degree is going to be one of the costliest investments ever. So, it is very important for you to understand and find the proper means to make this investment possible. Thus, through this blog, we present to you the ways through which you can devise how to finance your MBA degree. Hope you find it helpful.
The foremost task before deciding on how to finance your MBA is to evaluate the total monetary requirement. There are several types of expenses that any student incurs during an MBA. Some of them are obvious, but often aspirants overlook some uncommon but crucial expenses, which may haunt you later financially during your B-school days. Some of these expenses are listed below:
They take the lion’s share of your total expense. For most of the B-Schools, it ranges from around 10-15 lakhs to as high as 20-25 lakhs for the entire program. So, research your program’s tuition fees and always add some 10% extra to it, as it may be revised later on.
Books & Supplies
Mostly, books and various study materials are included in the tuition fees. But, still, you should always budget for extra materials like subscriptions to newspapers, magazines, blogs, journals, etc, which are not part of your official course material. Along with these, include expenses for day-to-day stationery items, printing, papers, etc.
Gadgets and Gizmo
One of the very basic requisites of B-School education is a decent laptop and mobile device. Based on your requirements and inclination, you can have a spec-heavy laptop for programming, designing, modeling, etc. But, consider a minimum expense of around 1 lakh for some decent set of gizmos including laptop, mobile, data cards, hard disks, earphones, etc.
Food & Housing
This includes the hostel and mess fees which are mostly a part of overall fees. But always include some extra amount into your budget as you may get bored by the mess food pretty soon. In some cases, students prefer to stay outside the campus and therefore should consider it in the budget.
It is not a major expense but still, it should be accounted for if your college and home are far away. So, traveling from home to college and back along with day-to-day traveling is to be considered here.
Always account for 10% to 15% of the overall budget for sudden contingencies like medical expenses, emergencies at home, requirements for some friend, etc. Also, these contingency expenses can include your vacation and outing expenses.
Foreign Exchange Cost
Several B-Schools offer foreign exchange semesters for students. Sometimes they are a part of the overall tuition fees, but sometimes they are not. Thus, research this if you are interested. Try to find this amount and add this to your budget.
After you have budgeted your expense for your tuition, living, dining, supplies, etc, the difficult work starts. The total required amount may come somewhere near 18-25 lakhs depending upon college and your budget. So, here are some ways by which you can get an idea of how to finance your MBA:
The majority of B-School students go for education loans. Nearly all major banks of India provide easy and hassle-free education loans to students admitted into premier institutes. The loan amount may seem to be huge at first. But in the hindsight, the salaries earned post-MBA make it easy to play for these loans. Most importantly, always look for the following factors while finalizing any loan.
- Home branch vs Campus branch
- Interest Rates
- IIMs vs Non-IIMs
- Loan amount limit
- Insurance requirements
- Amount Disbursement terms
- Moratorium Period
- Pre-closure benefits
- Fines and Penalties
Here is a list of interest rates for education loans from some popular banks. Consequently, the interest rates change based on the loan amount, tenure, and other factors.
|ICICI Bank||From 10.5%|
|HDFC Bank||From 8.15%|
|Bank of India||From 9.4%|
|Tata Capital||From 10.99%|
|Axis Bank||From 8.8%|
|IDBI Bank||From 8.5%|
Many MBA aspirants have work experience and thus, some savings. Some of them may have considerable savings to finance a major portion of their fees. So, have a look at your savings, if you have some, decide the best way to use them. Lastly, don’t utilize your entire savings for paying college fees. Always keep some of it for your future expenses.
You can always ask for loans from your parents, relatives, or friends to finance a portion of your expenses. You can pay them later when you start working. Further, there are chances that you may not even have to pay them interest. So, try to explore this avenue if feasible for you.
Nowadays, there are multiple non-banking financial companies, that offer hassle-free loans with minimum paperwork. Thus, these loans may come in handy to finance some portions of your expense.
Several institutions have scholarships and grants which are meant to help ease the burden of fees. You should always research these scholarships and their criteria. Often, various organizations and government bodies also offer scholarships to students with diverse backgrounds or excellent academic performance. Therefore, stay aware of these opportunities.
Many organizations have policies of sponsoring their employee’s education fees in case they get admission to prestigious institutes. Some organizations even have tie-ups with many colleges. So, if you are from one of those organizations, look after those policies.
Internships & Live Projects
An MBA course is pretty hectic. Assignments and deadlines will tie you up most of the time. But you can be a smart manager and find time for part-time internships and live projects. These side hustles are mostly paid. And they also add value to your CV. These payments may not be significant but can always cover some day-to-day expenditures.
Hope, some of the points mentioned above may help you to devise a proper strategy regarding how to finance your MBA. However, it may not be easy to find the proper sources so easily. But never let your financial conditions suppress your dreams so easily. Lastly, remember, help will always be given to those who are looking for it – Purvesh
All the best for your preparations.
To know more about the nitty-gritty of financing your MBA, have a look at our video explaining how to fund your MBA.
Purvesh is a bibliophile currently pursuing MBA at IIT Madras