The main concern of the majority of MBA candidates is the cost of their education. Along with the high return on investment, the degree goes hand-in-hand with a considerable expense, which especially during difficult times requires careful calculations and planning.

There are two times in life when one spends large sums of money: when buying an apartment and when buying a car. (The third divorce but let’s hope that doesn’t happen.) Depending on the time of the purchase a property might or might not be a good investment. A car, on the other hand, except if it is limited series or antique, is going to gradually lose its value and one that requires additional expenses for maintenance. A good education, however, is an investment that usually yields a steady return overtime. It may be delayed but generally the money spent is returned . One of the best degrees for increasing your income is the MBA. Of course, it depends where you study. Alumni of the 39 out of the first 50 business schools in the Financial Times rankings have reported that they more than doubled their salaries after finishing their MBA (the smallest increase in the top 50 is 74%). There still are good schools that aren’t too expensive, so it is  possible to attend a top school for a small price.

Which bill hurts the most?

Before deciding which business schools to apply to candidates should have a clear idea about the approximate amount they will need for their study. Usually the tuition fee will form the largest chunk of the bill. Living expenses – food, rent, travel, insurance, etc. are also a serious part of the cost of the degree. At Wharton every MBA student spent 58,244 US dollars on tuition and fees during the 2011-2012 academic year and on top of that had additional expenses amounting to roughly 30,000 US dollars, according to estimates by the school. But that’s  not all - the opportunity cost also jacks up the final bill – this is the income you could have earned during the period of your study but have voluntarily given up.

The three main ways to finance your MBA is through personal savings, a loan or by earning a scholarship. Since most of the programmes require professional experience from MBA candidates, it is a sound choice to start saving some money once a decision has been made about going back to school. Even if what people can afford to put in the bank is not enough to cover the tuition, or the living expenses, it is always preferable to have some cash on the side, as it makes you more secure.

Part-time vs. full-time

If you are a full-time student, working is not an option. However, if a part-time MBA is  with working and makes the financial situation easier to handle. The downside is that takes longer to finish the degree. Moreover, if you work while studying, you may not be eligible for some of the needs-based financial assistance. Usually the amount of the income you earn is deducted from the sum of the awarded scholarship or grant.

However, a part-time MBA costs less that the full-time degree and not just because of the lower tuition fees. Giving up your career, in order to commit to full-time study involves  a considerable opportunity cost, which not all professionals are willing to pay. Tuiton and fees at New York University (Stern) for the full-time MBA are 51,942 US dollars per academic year for a two-year programme). On the other hand the part-time  programme which could take two to six years, costs  21,140 US dollars for the same period costs. This is made up of six credits in the autumn and six in spring. It should be noted, however, that the part-time option is not always cheaper. For example at HEC Paris the cost is the same as the full-time - 48, 000 Euros - for the entire two-year period.

Loans, scholarships and other forms of financing

Financing an MBA through a loan is an option for students. The money may come from a bank or from the government. If you are enrolled in a reputable top school, inform the credit officer about its rankings and the statistics of the salary increase after graduation. Depending on the assessment of the financial institution, this may lead to more favourable conditions. Before applying for a loan, try to pay off some of your old debts. This will affect your credit record and make you look more attractive in the eyes of lenders. Don’t borrow too much and make sure that you can sleep well at night with the size of what you owe.

In the USA government programmes such as Direct Loan and Direct Grad Plus Loan can be used to finance a business degree. The 2011 Graduate Management Admission Council survey of 331 business schools states that 38% of all incoming students to American programmes will be offered loans from schools. In comparison 52% of candidates for non-US programmes would have this option.

14 % of the programs worldwide offer on-campus work-study opportunities  and 9% have school-to-student loans.

Of course, the best way to pay for your education is to win a scholarship. The quality of your preparation is of crucial importance. In US b-schools, 42% of the students will be offered a scholarship, while in non-US parts of the world this figure is 25%.

Some schools have contracts with companies that offer paid internships to students as part of their degrees. Although this might be helpful in landing a job in the future, is not something to rely on financially, since the time you spend working is usually quite limited. Some business schools, especially in the USA, offer students paid assistantships which can provide for a substantial part of the student expenses. In Europe this practice is less popular.

Make a sound financial plan

Candidates need to find out when the fees are due. For 2011-2012 the first payment at IMD is 15,000 CHF and is due upon acceptance of admission by the student. The second and third installments are payable respectively on 31 October 2011 (25, 000 CHF) and 28 February 2012 (45 000 CHF).

Make a sound financial plan for the period of your studies and the years afterwards. If paying for your MBA makes you anxious, don’t worry.  Unless you are a millionaire it would be worrisome if it didn’t. Such an investment entails certain risks and calls for wise decisions. Getting into debt also requires a very clear idea about your career path and what your perspectives are, so that you can minimize the role of unknown factors.