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Students aim to borrow less from banks for MBA

September 8, 2014


A big take away from the great recession of 2009 among the students worldwide is to borrow less and count on greater contributions from parents investing in their education. The Indian aspirants of international business degree who traditionally relied on loans to fund more than a third of their cost are now banking of their parents' contribution. Number of students relying on loans and grants has come down, while reliance on parents has gone up from 13% in 2009 to 19% in 2013. Globally 45% are concerned of pursuing a full-time MBA due to the financial debt that comes along with it.

Though the wide spread apprehension of whether to pursue an international management degree in 2009 to 2011 has come down, concerns of cost and potential debt remains on top of the list. As against their 2009 counterparts, in five years’ time leading up to 2013 batch of MBAs, reliance on loans have come down from 36% in 2009 to 35% in 2013, expectation from grants and scholarships to cover the cost of study too have come down from 29% to 25% in this same period. And instead almost 39% of Indian citizens considering international study for a full-time MBA are now either relying on funding from their parents (19%), personal funds (15%), employer (3%), and spouse (2%).

This was revealed by "Paying for Business School" data released by the Graduate Management Admission Council, which conducts the admissions test GMAT for B-schools worldwide in September 2014. The study was done among the batches from 2009 to 2013. Around 60,000 prospective registered students were surveyed across five years.

Globally, less number of aspirants of management education in 2013 had reservations about pursuing business school compared with peers in 2009. Uncertainty over the economy and job prospects among the B-school aspirants have come down from 28% in 2009 to 21% in 2013, and concerns of requirement of large financial debts too has come down from 51% to 45% in this period. In the same period loans as a mode for financing instrument for education too dipped from 26% to 22%, the expectation of parents covering the gap has risen from 14% to 20% in these five years.

Trends in the financing mix on 'How do I pay for Business School?' indicate that while loans as a means decreased by 4%, the biggest contribution to financing ones management degree is by means of personal savings which is 24% in 2013, by far the highest mode of finance.

 

This banking on parents to fund their B-school education is led by China with 53% of the aspirants relying on them, with just 6% wishing to opt for loans. However, majority of the US aspirants are still banking on education loans (31%), though it has come down by 5% in last five years.

Source:T.OI.

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