Paying for an American MBA: Issues for International Students

Business school finance expert Michael Katz looks at the finance options available for international students doing MBAs in the United States. 

Citizens and permanent residents of the US can access federal student loan programs that will mostly satisfy the total cost of an MBA at federally eligible participating schools.

However, international students in need of loan funds will have to consider application to private education loan programs as they are ineligible for federal funds through the US Department of Education.

Prior to the recent financial crisis there were a number of student loan providers that had programs designed for international students studying in the US.

However, the impact of global financial issues and particularly those in the US, where the credit markets have tightened significantly, has resulted in many of these programs terminating. Unfortunately, most of these programs now insist on international students applying with credit-worthy US co-signers.

Talk to the business school

The first and most important source of information for all students regarding the options for financing their MBA is the business school itself.

The process of researching information on available sources of financial assistance usually starts during the admissions process, when student financial assistance programs offered by the school are described.

After that, the student financial aid office will be key in discussing the fine details of program options and the process.

A recent article in Business Week mentioned The Affiliated Loan Program for Students (ALPS), a new student loan program which is financed by Deutsche Bank.

Business schools must be deemed eligible to participate in the ALPS program by the financial institutions supporting the program and schools must agree to certain responsibilities.

This appears to be a unique option for international MBA students since they are not required to have an eligible US co-signer. First signs are that schools and students, who are participating in ALPS, hail the program as being extremely efficient and user-friendly.

When considering loan options, there are a number of factors that should be assessed. These include, but are not limited to, interest rates, the frequency of capitalization, interest rate ceilings and repayment provisions such as forbearance and deferment.

Student financial aid staff at business schools as well as those partners involved in the individual loan programs are well equipped to guide and counsel you on your terms, conditions, rights and responsibilities in all programs.

Other avenues – MBA scholarships and grants

So far I haven’t mentioned other avenues of funding, primarily because students who require external funding usually secure that funding with student loans. Although scholarship and grant assistance are available, they make up for a very small percentage of funds used to pay for MBA programs by both domestic and international students.

However, it is worthwhile exploring scholarship and grant programs, initially by asking admissions staff and then continuing your effort with the student financial aid office.

Given the power of the Internet, it certainly is worth looking at the availability of scholarship and grant sources using computer generated searches.
Focus attention on programs available through your home country, local community, religious organizations, social organizations or current or prospective employers. No stone should be left unturned.

However, be wary when considering any organization that charges a fee or mentions guarantees regarding securing scholarships or grants.  The best sources are those that are free to the consumer, such as fastweb.com.

Remember, if an offer looks too good to be true, it probably is.