Once you have been accepted to your target MBA program, things start to move very quickly, and you will need to begin planning for your transition to business school right away. Understanding the financial realities of your MBA education is an important first step, and we have created this comprehensive, five-part “Mastering Your MBA Finances” series to help you do so. In this second installment of the series, we examine unexpected revenue sources that can reshape your student budget.
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In the first part of our series on mastering your MBA finances, we explored the typical revenue sources for a business school student—namely, income from one’s summer internship and signing bonus. In doing so, we estimated that a typical MBA student could expect to earn income of approximately $43,000 during his or her two-year program. Because we are trying to construct a conservative student budget, we will leave the revenue side at that: $43,000. However, because we want to help you create your individualized MBA budget and tailor it to your specific circumstances, we need to make you aware of other possible income opportunities. You can then incorporate them into the income side of your budget, if applicable. For example, maybe you are hopeful that you can attract scholarships and should therefore include a scholarship line in your budget. Perhaps your firm sponsors employees who pursue an MBA, so you know you will have your tuition costs reimbursed. Maybe you intend to take on a few part-time consulting assignments while you are in school to earn some extra dollars. These may all be relevant budget lines for you, so let us discuss how they play into your MBA finances.
At the MBA level, scholarships are not a guarantee—and we mean that literally. Even at Rice University, which in 2014 gave scholarships averaging $33,320 to 94% of its MBA students, a less fortunate 6% of the program’s students did not receive any scholarship money at all. And Rice is the very generous exception among business schools. Few MBA programs offer as much scholarship funding as Rice does, and none comes close to matching the percentage of students who receive such support. If you are counting on using scholarship money to fund your business degree, consult the following abbreviated table to make a somewhat educated guess as to whether you can count on your target school to come through (see the full chart here on Poets & Quants). If you feel good about your chances of being accepted at Olin Business School at Washington University in St. Louis, for example, you may be safe incorporating an average scholarship into your calculation, because two-thirds of the school’s applicants receive awards. On the other hand, if you are anticipating being accepted at Duke University’s Fuqua School of Business, you may not want to rush to include a scholarship in your budget, because only one-third of Fuqua students receive such funding. You will have to determine the amount of scholarship income you are comfortable assuming for yourself in this hypothetical scenario…
In addition, some MBA candidates receive educational funding from their current employer, with the stipulation that if they later accept a full-time, post-MBA position with a different firm, the funds must be repaid. Many consulting firms will cover tuition for their employees-turned-MBA-students or even reimburse their new hires for all or part of their tuition—and some Fortune 500 firms even cover all tuition and living expenses. This kind of corporate financial support can of course vary quite a bit, so generalizing is difficult, but if you anticipate being sponsored by your firm, take the time to learn and understand the details, and then incorporate your company’s average financial contribution into your budget. And if your firm does not currently offer such support, but you plan to return the company after graduation, you have nothing to lose by asking the firm to consider starting an MBA sponsorship program for you. We have seen some companies do this for their MBA candidate employees—the worst that could happen is that they say no.
Although most MBA students plan to focus on their studies rather than taking on part-time jobs, with the rise of such sites as HourlyNerd, Skillbridge, and MBA & Company—marketplaces that facilitate short-term consulting assignments—students who decide to work while studying can earn several hundred dollars or more during their years at business school. Imagine you are lucky enough to be chosen for two $500 “gigs” during each of your academic years, plus one slightly longer project each Christmas/holiday break for $1,000. This means you could earn as much as $4,000 over the course of your MBA studies. We will not add such a revenue estimate to the sample budget we are building for this series, but you should consider this additional opportunity to enhance your personal budget and decide whether to include this kind of income in your estimates.
You can see that if you take our sample MBA budget and amend it to include an average scholarship (arbitrarily assuming this student will be attending UCLA Anderson) and income from a few small consulting projects, the revenue picture starts looking even better.
Again, we will continue to be conservative in our estimates as we construct a sample MBA budget, but we suggest that you make amendments as needed to your own projected budget to more closely fit your particular situation. Now that we have addressed the revenue side of things, we will take a look at an aspiring MBA’s potential expenses in the next part of our series.
Check back next week, when we examine the real cost of an MBA. And if you are looking for even more strategies for funding your degree and minimizing your debt burden, download the free M7 Financial Student Loan (Reduction) Primer or sign up for a free, 30-minute, one-on-one budget planning session!