A Worthwhile Investment!
How to Finance Your Master’s Degree?
April 1st, 2014
Further education after undergrad school has become a key prerequisite for those with career ambitions and professional development plans. The Master’s degree has become a must-have for those striving for a good, well-paid and highly-qualified job. The degree distinguishes its holders from the pack in times when increasing numbers of job seekers have college degrees. When it comes to enrolling in a Master’s programme, the question is not “Is it worth it?” it but instead “How to Finance it?”
The Master’s degree is not as expensive as the MBA degree. Nevertheless, only few are lucky enough to have the necessary capital to fund their studies from their current account or to rely on their parents’ support. For the majority who need to look for finance, the good news is that there are several options ahead: bank loans, special funds, scholarships, fellowships, bursaries and other forms of soft-term lending.
No one would argue that the Master’s is a worthy investment that pays back in a short time. That’s why, as with any investment, planning the one’s funding is very important. This investment begins at the point where the Master’s candidate identifies the school or schools where he/she wants to apply to. Just as the candidate investigates which schools have the best academic programmes on offer, he/she must gather information about how best to finance the course. Some would even advise that candidates start to prepare earlier.
A thorough check of the resources of the targeted school, government or non-governmental organisations or other institutions is obligatory. This process may take months. “Of course if you try to do things in one month, it’s going to be very difficult. Ideally, we would like one year. Sadly a candidate normally comes to us four months before the start of their programme,” says Valentin Cortes, financial aid director at IE Business School in Madrid, in an Financial Times article.
Develop a budget
Having a budget which takes into account the total expected and unexpected costs is very helpful when defining how much the degree will cost in total. Some of the total costs such as tuition and application fees are relatively fixed. Additional costs are up to the student. That’s why other factors like housing, transportation costs, health insurance, food, books and supplies, other equipment, costs for entertainment, sports and other unplanned expenses for incidental needs should also be considered.
Once the candidate has established a budget, he or she must decide if there is a need for financial assistance. Identifying funding options then becomes easier.
Unlike part-time programmes which allow students to work while studying, Master’s programmes are full-time and students need to be completely dedicated to their studies during the programme. That’s why the candidate has is little opportunity to work and secure funding for the studies by himself/herself. This can be very difficult and means that the only jobs the candidate can get - because of the need for flexibility - are minimum-wage positions. Hence, the student would be advised to rely on a scholarship or a loan rather than on his/her own earnings or getting a sponsorship from his or her employer.
The most common funding option is the student loan. Government-backed loans and grants are widespread and there is a bulk of programmes sponsored by governments that help students finance their studies. Many private non-governmental organisations provide similar funding schemes as well. Student loans are available at reasonable rates. They are short-term loans provided to students to cover tuition fees. Repayment of the loans usually begins within a few months of school graduation or when the student starts work. Some institutions give its “borrowers” a certain period of time, perhaps six months, to find a job before they must start paying back the loan.
There are subsidised loans, whereby the government pays the interest rate on the loan while students are at school, and non-subsidised loans, which means that the government doesn’t cover the cost of the interest rate but the student is charged interest from the time the loan is disbursed.
This is the least attractive option, as bank loans are the most expensive alternative. However, it’s possible that in the home country of the candidate there could be some banks that have special funding options for students. When approached by students for assistance, business schools usually advise students to apply to banks in their home countries as banks are sometimes reluctant to extend lending to overseas students due to concerns about default.
Funding by the school
Apart from lending organisations such as banks and special funds, business schools have developed their own loan schemes offered in cooperation with financial organisations. The Prodigy Loan programme is one such schemes. It is a programme offered by London-based Prodigy Finance and provides a platform for alumni and other community stakeholders to offer funding to students while earning a commercial rate of return. For instance, this is an option for London Business School Master’s students.
Scholarship and bursaries
Candidates can also get help to finance their Master’s Degree by securing a scholarship or a bursary. They do not necessarily finance the whole programme, but can help significantly. Many schools offer scholarships that are available depending on the candidate’s financial situation, but most schools appear to reserve scholarships to assist candidates whom they particularly want to attract. Most business schools have scholarship policies in which they set out particular criteria for awarding scholarships. In general, scholarships are extended to exceptionally able, talented and high-potential candidates. The schools’ criteria range is very wide – merit, experience, nationality, entrepreneurship, gender, etc.
Usually, applications for bursaries and scholarships should be made one year before the start date of the Master’s course. This is a non-negotiable deadline and students should pay significant attention to this.
Another option for Master’s candidates is to qualify for a fellowship and become a research or teaching assistant. As a research assistant the student will be required to help someone on the staff of the university with their research or any other project that they need assistance with. A teaching assistant will mark papers and sometimes teach classes.
There are also external scholarships extended by governmental or non-governmental organisations. One such option is the IDB-Japan scholarship programme that is funded by the Inter-American Development Bank. It is open to students from any of the bank’s borrowing member countries, which include Argentina, Brazil, Chile, Mexico, Peru, among others. Awards vary, but include full tuition, university medical and accident insurance, an installation allowance, a monthly subsistence allowance, a book allowance, and economy class travel.
Funding the Master’s degree is not easy and it could be a serious drawback for some students. The good news is that there are many funding options available. The opportunities are there and candidates needs to find and grab the best ones for them. Once they have a sound plan, finding the finance for the degree may not be as difficult as imagined. It is a worthwhile investment - one of the best investments one can make in your thirties.