Financing your Executive MBA

Changes are afoot in the world of EMBA financing even as EMBA programs continue to develop to meet the demands of a rapidly changing global landscape. Ann Graham investigates the causes and concerns.

The secret is out – and has been for some time. An Executive MBA requires significant financial investment. Around US$50,000 should do the trick… for starters. In addition to your tuition fees, there are the often forgotten costs of your application, flights and transfers, visas and travel insurance, textbooks, not to mention networking and social events. Fortunately, you can be guaranteed some bang for your buck as the ROI on an EMBA is one of, if not the highest in higher education. Firstly, though, you need to secure the financial means to fund your way through an Executive MBA.

Personal finance

Paying your own way through business school will likely make the experience all the more rewarding, but as with any financial investment you need to be aware of the risks. Ashley Arnold, Director of MBA/DBA Recruitment at Henley Business School in the UK, recommends candidates create a personal balance sheet to ensure they can support themselves financially while studying. “Look at everything as you would a home budget,” Arnold advises. “All the outgoings and anything you may need to renegotiate. By building a spreadsheet and saying ‘this is what it’s going to cost me; these are the possible ways I can raise capital’, candidates are almost starting their EMBA before they’ve even begun the program.”

If paying your own way through business school requires taking out a loan or remortgaging the house, there are additional factors to consider. Both private and public loans are available, but they typically carry a higher interest rate than education loans for undergraduate programs.

Candidates are also advised to check their credit report before applying for a loan. “It needs to be spotless to get the best rates and you’ll need proof of income,” says Dominik Lipnicki, Director of Your Mortgage Decisions Ltd. “Anything less and you’ll be expected to pay more, or even declined altogether.”

Despite the risks involved, business schools are reporting that self-funding is on the rise as executives choose to pursue an EMBA for individual gain. Others are doing so because company sponsorship simply isn’t available. That said, don’t give up on financial support from your employer just yet.

Company sponsorship

Although it has waned in recent years, company sponsorship is still a popular form of EMBA financing and the option many schools encourage. If a candidate is supported financially by their employer, this also reflects the organization’s willingness to allow their employee to attend classes and seminars. Upon completion of the program, the new knowledge and skills acquired by the recent EMBA graduate benefit both the individual and the organization. Win-win all round.

At Rotterdam School of Management (RSM) in the Netherlands, it is traditional for 60-70 per cent of participants to be funded via company sponsorship. “We advise candidates to engage in their application process and fundseeking process simultaneously to ensure they receive an offer early in the cycle,” says Maryke Luijendijk-Steenkamp, Director Marketing & Admissions, RSM, Erasmus University. “Often it adds to the ‘negotiation power’ of an employee when discussing funding if he/she can already prove an admit to a program,” she explains. “We also provide candidates with a business case they can use when approaching their employers, citing testimonials from previous sponsored candidates and sponsoring employers.”

This support from business schools for candidates during the funding application process can be found the world over. Francis Petit, Associate Dean for Executive MBA programs at Fordham University in the US, tells prospective students to first find out what the overall policy is within their company regarding EMBA programs. “Once you know the general policy I then advise students to speak with their line manager to see if he/she is willing to go above and beyond the policy. If they are, then Human Resources usually backs off and allows this to occur.”

It’s an approach Rachel Killian, MBA Marketing and Recruitment Manager for Warwick Business School in the UK supports. “Talk to your employer to get their buy-in and their involvement,” she says. “Even if they only make a partial financial contribution, it’s worth having them involved in your journey – you’ll both benefit more from it.”

Another employer-sponsored financial option is available at IESE Business School in Spain. The Partner Company Initiative has been designed to help firms develop their global managerial talent in the medium and long-term. “Through participant sponsorship, partner companies receive key benefits, while developing, retaining and recruiting high-potential professionals within their organizations,” Claudia Peña Eversberg, Global Executive MBA Marketing Manager for IESE Business School explains. “This could be a great way to become sponsored by your company.”

Financial flexibility

Business schools are aware that company sponsorship isn’t available to all executives. To this extent, schools are increasingly offering flexible finance options to ensure neither they, nor their top EMBA candidates, miss out on time in the classroom. “Five years ago, about one third of participants on our MBA programs were selfsponsored; the rest were funded by their companies,” Professor Bodo Schlegelmilch, Dean of WU Executive Academy in Austria says. “Today, this ratio is vice versa as companies are less willing to support their employees to do a [E]MBA. To this end, we offer our students numerous possibilities that help them finance their degree.”

WU’s installment plans take into account a student’s individual financial situation. These installments can be regarded as interestfree loans that the school grants to students. “We also grant various merit-based scholarships throughout the year,” says Professor Schlegelmilch. “To reduce one’s tuition fees substantially, we always recommend potential students apply for them.”

While not all schools offer scholarships, they will have flexible payment plans in place. The University of Zurich is one such school where specific scholarships aren’t available but financial support for candidates is. “We are flexible when it comes to defer red payments,” explains Mario Ramò, Managing Director of the Executive MBA at University of Zurich. “So far we have always found a solution with our candidates that suit them and us.”

Search for scholarships

Money may not yet grow on trees, but one source of EMBA funding is certainly flourishing. Recognising the need for financial support, the number of scholarships available from business schools is certainly increasing.

Ashridge Business School in the UK offers a number of scholarships to self-financed participants on the school’s Executive MBA. To be eligible, candidates must first apply and be accepted on one of the MBA programs, and be able to state the grounds on which they are applying. Steve Seymour, Director of MBA programs at Ashridge says scholarship applicants are asked to complete an essay in application for the award. “Essays are judged on a competitive basis and awarded to candidates who demonstrate the greatest potential or would benefit most from doing an [E]MBA,” he says. “A limited number of scholarships are also available to candidates based in the countries covered by the Santander Universities scheme,” adds Seymour.

Elsewhere in Europe, many business schools offer scholarships to different groups such as women, entrepreneurs and social entrepreneurs, candidates from emerging markets and non-profit managers, just to cite a few. This trend is definitely on the rise though it seems that scholarships aren’t yet as plentiful in the US. “Given the original purpose of EMBA programs, scholarships have always been ‘taboo’ to the corporate student, but sometimes were awarded to the student working in the non-profit field,” says Fordham’s Francis Petit. “However due to the changes in the marketplace, schools even with top brands and premium price points, have been offering scholarships to round out their classes. At Fordham, scholarships aren’t offered but there are some graduate assistantships,” he says.

Long-term investment

The best financial advice Anne Nemer, Assistant Dean for Executive Programs, EMBA Worldwide, Katz Graduate School of Business, University of Pittsburgh in the US, gives is to encourage candidates to explore opportunities. “Look at company sponsorship, scholarships, and loans,” Nemer says.

“In terms of people approaching their supervisors, I recommend focusing on our program’s history of results. Our students obtain knowledge they can immediately apply to their jobs. They also make networking connections both inside and outside their field.

“It’s also important supervisors realize this program isn’t your typical MBA,” she adds. “Participants in our program return to their companies with the knowledge and tools to make business decisions which bring immediate results to their organization. It is designed to help executives compete on the global stage and to thrive in a world defined by volatility and complexity.”

Wherever your source of EMBA financing may come from, be it personal savings, company sponsorship, bank loan or school scholarships, put forward a business case outlining why you are a worthy investment. “EMBA candidates must recognize they are making an investment in themselves,” says Nemer. “The transformation that our graduates undergo—not to mention the fast return on investment that is realized from job promotions—make obtaining the EMBA degree a wise choice. Absolutely, there are short-term costs associated with the EMBA degree, but in the long-term our graduates enjoy increased earnings and longevity.”