Wednesday, June 1, 2011

More parents help pay for MBAs

Economic uncertainty, younger students going to business school instead of finding employment and the spiraling cost of tuition all seem to be factors in this change.
From 2003 to 2007, the number of prospective students who said they expect their parents to help them pay for business school doubled, and was approaching 40 percent in 2010, according to a 2011 survey by the Graduate Management Admission Council....

"Any time there is economic uncertainty like there is now, there is a general reluctance to borrow," Chitty says. "Borrowing from Mom and Dad is going to seem a lot safer than borrowing from the government and taking on a loan which likely can't be discharged in bankruptcy and can follow you for the rest of your life."...
Driving the need for parental aid is an uptick in the business school pipeline of younger students, especially those in the 24-years-and-under age bracket, says Michelle Sparkman-Renz, GMAC's director of research communications....
U.S. students are less dependent on parental support than their European and Asian counterparts, but those under 24 still expect to finance about 20 percent of their degree with help from family. Students from ages 24 to 30 intend to have parents pay for about 10 percent of their tuition, GMAC says...

The spiraling cost of tuition is one of the reasons students may be relying more on parents to pay for business school, says Dan Thibeault, president and co-founder of Graduate Leverage, a student loan consolidation and debt management company in Waltham, Mass. Of the MBA students he works with, about 15 percent to 20 percent have $150,000 worth of debt when they graduate, he says.
"That was unheard-of five or six years ago. Maybe a student in a four-year dental program would borrow that much, but for a student to come out of a two-year MBA program with that much debt is almost shocking," he says. "It may lead a sympathetic parent to say, 'Wow, that is a suffocating amount of debt. I have to get involved.' " 
Source:  Bloomberg Businessweek


  1. It was common, however, when I was in grad school, which was during that terrible recession in the early to mid 80's. I knew lots of kids who graduated and could not find jobs, so their parents sent them for an MBA (or a masters in computer science)

  2. It certainly is cyclical, but the fact that inflation-adjusted college costs are so much higher now is new.

  3. Well, you know, gotta have those fancy gyms and landscaping...