Funding an MBA: Stocks, shares and blind luck

From winning a TV quiz show jackpot to playing the stock market, there are many ways to finance an MBA, says Harriet Swain

One way to finance an MBA is to win the 10 million-rupee jackpot in India's version of Who Wants to be a Millionaire, like Harshvardhan Nawathe, a recent graduate of Napier University. Even without appearing on a prime-time quiz show, most students find themselves at some point "phoning a friend" to help raise cash. The cost of an MBA qualification – calculated by the Association of MBAs as around £80,000, including living expenses and loss of salary – means that all but the thriftiest have to persuade someone else to give or lend them at least part of the money. The key pitch of their career is often the one for their own chance to study.

This pitch is easiest for part-time or executive students. AMBA's latest careers survey showed that around 40 per cent of those studying distance learning or part-time MBAs received full sponsorship, and most of the rest can expect employers to give them at least time off to study in return for the new skills they will bring to the business.

But anyone wanting this kind of support from employers needs to sell themselves, says Carl Tams, AMBA's membership services manager.

"You have to create a proper business plan, talk to people who have done it in the past, talk to other MBA students, make a business case rather than going cap in hand," he says.

Like many MBA managers, Rachael Killian, MBA marketing and recruitment manager at Warwick Business School, has noticed a shift in recent years towards partnership funding whereby employers expect employees to contribute to the cost of their study, often only agreeing to go halves on the investment. This seems to be partly to force students to take their studies seriously but also out of fear that when the course is over they will use their new qualification to find work elsewhere.

This tendency for graduates to use the MBA as a springboard into a different workplace means few managers are willing to risk sponsoring full-time study at all. For this, some students rely on savings or the odd stockmarket flutter – one Warwick student has financed his course entirely by investing earnings from teaching English to Chinese schoolchildren on the Hong Kong stock exchange. But most need to turn to family and friends, and the banks.

Sean Rickard, director of MBA admissions and of the full-time MBA programme at Cranfield University School of Management, estimates that average borrowings by his students from banks and relatives amounts to between £25,000 and £30,000, generally paid back within two years after the end of the course.

Career Development Loans, available through Barclays, the Co-operative Bank and Royal Bank of Scotland, are one option. These allow you to borrow up to £8,000 at a fixed rate of interest to help towards course costs and living expenses, and you will not have to begin repayments until a month after you have stopped training.

AMBA also administers a loan scheme with NatWest that allows full-time students to borrow up to two thirds their gross annual pre-course salary, plus tuition fees and expenses, less income from sponsors and grants. HSBC runs similar schemes, and the American company SallieMae has just introduced a loans scheme for UK residents that allows students to borrow up to £20,000 each academic year.

All this, of course, will have to be paid back. For those unwilling to graduate saddled with debt or with obligations to employers and relatives, a scholarship may offer a solution. These may not be entirely obligation free. London Business School has recently started offering a scholarship of £50,000 in fees and living costs to one student a year from sub-Saharan Africa who is able to demonstrate both merit and need. Mo Ibrahim, founder of mobile communications company Celtel International, sits on the interview panel and the winner must agree to contribute to the business school's marketing efforts in the region.

The school also has a new scholarship that aims to promote social responsibility. Worth £20,000, it is awarded to a full-time MBA student able to demonstrate their commitment to the environment.

Warwick offers a varying number of scholarships to try to increase diversity. "We don't judge financial background because that's a minefield," says Killian. "We look for people we feel are going to be strong academically and from areas in the world where we know they are going to find it difficult."

This desire for diversity has prompted a number of business schools to offer scholarships to students from particular countries. It is also a motive behind the Chevening programme, administered by the British Council, which offers scholarships to postgraduate students from more than 150 countries, and behind a number of special scholarships offered to women.

This year saw the first Aurora-Cranfield scholarships awarded, covering the full tuition fees of one executive and one full-time student at Cranfield university. The new ESMT school in Berlin is offering two full-tuition MBA scholarships to women.

Finally, if you can't persuade anyone to award you a scholarship, sponsor you, or lend you the money; if you're hopeless at both saving, and quiz questions, and your job's rubbish, all is not lost. An MBA is a great way of spending a redundancy package.

Amit made enough in share-dealing to plug the hole in his finances

The booming Indian stock market has helped finance Amit Kumar Shukla through a full-time MBA at Cranfield School of Management.

Shukla, 27, gave up an £11,000 post-tax salary as a marine engineer in India, and had to find more than £33,000 in fees and living expenses when he decided that an MBA offered a way out of a life spent at sea.

Cranfield agreed to pay £13,000 of his £26,500 fees through its Feeshare scholarship scheme. He also borrowed £2,000, without interest, from friends, and secured a £12,500 education loan from HSBC bank, which he has since extended by another £2,500.

But this would still have left him a few thousand pounds short had he not struck lucky in his share dealing. When he began the course he bought 6,000 shares at 12 rupees (around 14 pence each) in a trading house owned by the Indian government. He appointed a friend in India to keep an eye on things and kept in touch with his stock broker. Over the year, the national stock exchange of India, the Nifty, appreciated by around 40 per cent, and Shukla saw his shares leap in value to 89p. By the end of the year, and after selling about 1,000 shares to pay for his course, he'd made over £3,000. He now wants a job related to equity trading.