How International Students Can Fund an MBA in the USA
Paying for an MBA as an international student can seem daunting. The average cost of a top 25 program over two years reaches $195,416 in 2020. Funding sources differ by country of origin and many traditional loan options available to US citizens are not available to non-citizens.
However, there are resources available for international students, including scholarships, and there are many avenues to fund your studies.
If you’ve already exhausted your savings, employee sponsorship and family resources or loans, read on for a roadmap of the different options for paying for your MBA. These range from Fulbright scholarships to no-cosigner loans offered by your school’s credit union.
Bursaries are grants that you do not have to repay. Start here when trying to fund your MBA.
An example of a scholarship available for internationals is the Fulbright Foreign Student Program. The US government funds this program for internationals pursuing higher education in the United States. The amount of the scholarship varies according to your country of origin. For example, the website Readiness Advisor shared that while there is no cap on what an Indonesian Fulbright recipient can receive, a Bulgarian citizen can receive a maximum of $30,000 to cover tuition, fees and living expenses .
In addition to external scholarships, some MBA programs offer scholarships to students from a specific country or region. Kellogg offers scholarships for students from African countries. Wharton provides scholarships for students from emerging markets and provides two full rides for Israeli students who have completed their military service. Berkeley-Haas partners with Mexican non-profit organization FUNED to provide an annual grant of $10,000 to two Mexican students and offers scholarships to African students through The MasterCard Foundation.
If you have received acceptances from multiple schools, don’t be afraid to ask for additional financial aid or additional scholarships available for people in your area.
LOANS IN YOUR HOME COUNTRY
Before exploring financing options in the United States, understand the financing options in your home country. Some countries offer low-cost funding options for studying abroad.
the Bank of Mexico offers loans of up to ~USD10,000/year to Mexican students pursuing higher education. interest rate is currently only 2.87% on these loans, making them considerably cheaper than comparable financing options in the United States. It is important to note that these loans have a grace period of one year before repayment and that they do not require repayment in the second year if you borrow in the first year.
Another home country financing option is the bank of china. They will lend up to 90% of the total tuition and miscellaneous fees. The loan can be made in USD or RMB with the possibility of borrowing in dollars reducing the exchange risk. Interest-only payments are due while the student is in school. Full loan repayments begin two months after graduation.
Most financial aid offices recommend that you exhaust loan options in your home country before seeking loans in the United States. Before borrowing, make sure you understand the loan repayment terms, currency risk, and how the interest rate compares to other options. If you borrow in your home currency and work in the United States after school, the terms of your loan could change if the value of your home currency appreciates against the dollar.
LOANS WITH A US CO-SIGNER
There are several banks in the United States that provide loans with an American co-signer. A co-signer is someone – usually a family member, relative, or friend – who guarantees to repay the loan if you can’t. US banks assess the risk of lending to an individual based on their credit rating. This is a number based on repayment history for credit cards, home mortgages, or car loans. Although credit scores can range from 300 to 850, a good credit score is considered anything over a 700.
If you have the option of choosing between co-signers, try to find a co-signer with a higher credit score. A family member who has recently purchased a home or is co-signing loans for college-age children may not be willing or able to co-sign an additional loan. If you have someone in the United States ready to co-sign your loan, several banks will lend you. These include Citizens Bank, Discover MBA Loan, SoFi, Sallie Mae, and Union Federal Private Student Loans. This list comes from NYU stern website, but these companies will lend to students pursuing an MBA program across the United States
For example, a 2017 Vanderbilt MBA was able to get a 7% interest rate on Discover MBA loans with an American co-signer. He compared this loan to options at a rate of 10-12% in his home country of India. The loan in his home country did not offer a grace period while he was in school, which was another factor in choosing a US loan.
While the interest rate on loans for internationals is quite high, refinancing at a lower rate after school may not be an option, unfortunately. nerdwallet lists four loan providers that can help you refinance a work visa. However, many MBA students who have F1 or L1 visas are denied refinancing attempts. If you plan to stay in the United States, you should start building a US credit scoreand plan to repay your loans more aggressively if you can’t refinance at a lower interest rate.
LOANS WITHOUT AMERICAN CO-SIGNER
If you don’t have a US co-signer, there are other options you can pursue.
Some schools will co-sign loans on behalf of their international students. For example, Harvard Business School and MIT Sloan School of Management offer this service through their respective credit unions. the Harvard University Employees Credit Union includes a table with loan rates for international students without a co-signer on their website. Students who opted for this option said it was easy and convenient. Similarly, a 2020 MIT graduate received an 8% interest rate loan through the MIT Federal Credit Union, which simplified her loan process.
If your school does NOT offer co-signing, Prodigy and Power are the two companies that will provide student loans without an American co-signer. Prodigy recently expanded the list of countries that aren’t eligible for loans, so don’t assume you’ll be able to receive a loan without a co-signer. Be sure to consider funding when comparing different admission and financial aid packages.
Several options exist for funding a US MBA as an international student. Start with scholarships and bursaries, as these are grants that you do not need to repay. But if you need to borrow additional funds, you have several options. Subsidized government loans from your home country are usually the best option, but read the fine print, especially repayment terms and any currency or interest rate risk.
If you need to borrow in the United States, shop around and compare interest rates and loan terms. Above all, prepare for the incredible educational and personal experience that is an American MBA program.
Eryn Schultz is the founder of His personal financesan online financial education platform that helps recent MBA graduates and other high earners take control of their finances. She graduated from Harvard Business School in 2015 and has been featured on NPR, CNBC and the Houston Chronicle, and is passionate about making it easier for internationals and first generation wealth builders to understand the US financial system. . Discover his finances over 10 weeks training campand follow instagram for daily personal finance advice.