Get Your M.B.A. Part-Time Part 6

5. Failing to Respond to the Questions Asked Admissions officials pose certain essay questions in order to obtain answers to questions they have about you as a candidate. If you don't answer the questions asked, you will not be providing them with the answers they need, and it will appear that you can't follow instructions.

SAMPLE ESSAYS.

In order to give you a better idea of the different kinds of things that a B-school admissions officer might be looking for in as essay, we asked the two admissions officers quoted above to read and critique three actual B-school application essays. Each sample essay is followed by two critiques.

Essay A Question: What are your career goals? How will an M.B.A. help you achieve these goals? Why are you applying to ****? (Limit: 1,000 words) What are your career goals? How will an M.B.A. help you achieve these goals? Why are you applying to ****? (Limit: 1,000 words) During my senior year in college, while other students were making definitive decisions about their career paths, I decided to implement a five-year plan of development for myself. The plan was designed to allow me to examine any career path during that period that I thought might interest me. I chose to focus primarily on three different fields: marketing, education, and the law. Although I am currently only in year four of my plan, I have made my decision regarding which career path to follow. After sampling each of the three areas, I have discovered that the field of marketing provides the most enjoyment for me and best complements my skills and personality. During my senior year in college, while other students were making definitive decisions about their career paths, I decided to implement a five-year plan of development for myself. The plan was designed to allow me to examine any career path during that period that I thought might interest me. I chose to focus primarily on three different fields: marketing, education, and the law. Although I am currently only in year four of my plan, I have made my decision regarding which career path to follow. After sampling each of the three areas, I have discovered that the field of marketing provides the most enjoyment for me and best complements my skills and personality.I am now embarking on another five-year plan, during which I hope to achieve a few specific career goals. First, I would like to be a part of the team that establishes an accurate metric for measuring Internet advertising effectiveness. As computers play a more important role in people's everyday lives, corporations have begun to look for a method to a.n.a.lyze the effectiveness of their interactive advertising dollars. To date, no one has been able to accurately measure the impact that interactive marketing has on consumers. Although there are a few systems of measurement currently in use, they are rarely comparable and therefore provide little information in terms of the effectiveness of an online advertis.e.m.e.nt. The development of a standardized metric, similar to the Nielsen Rating for television viewers, is likely to revolutionize the way corporations advertise on the Internet. I hope to help develop this new metric and to consult with corporations about the metric's results. The advice that I will be able to offer clients through the use of this system will be as important as the system itself. After all, the system will only be as effective as the results that it drives.Beyond the five-year scope, I plan to establish my own market research firm that will focus on the burgeoning technology sector. I believe that we have only seen the beginning of the growth that the technology industry will experience in the future. Personal computers have penetrated approximately 40 percent of American households, and only approximately half of those personal computers have the capacity to connect to the Internet. We have only scratched the surface of the advancements possible through the usage of technology, and I believe that this field will continue to grow with greater acceleration as we progress through the twenty-first century. My market research firm will provide support and information to companies who are affected by the increased use of technology. This market has tremendous potential and I hope to provide a necessary resource that will enhance my clients' success as well as my own.I believe that an M.B.A. is the cornerstone to achieving my goals. First, an M.B.A. will give me the academic background necessary to successfully return to the field of marketing. Through cla.s.sroom instruction and interaction with marketing professionals, I will be better suited to partic.i.p.ate in the ever-changing global marketing environment. Additionally, I believe that an M.B.A. will provide me with the management skills necessary to effectively run a business on all levels. Whether my position is as a member of a large corporation or as an entrepreneur, I believe that the skills garnered from an M.B.A. are essential to becoming a successful manager. In addition, I believe that an M.B.A. will provide me with an enhanced thought process or a better business sense. I feel that as a student, I will be continually challenged to "think outside the box" and to a.n.a.lyze all available options before making an informed business decision. I believe that this process of thinking, learning, and challenging preconceived notions is an important aspect of earning an M.B.A.I am applying to ***** for a number of reasons. I believe that **** is the best environment for me to achieve my goals while gaining exposure to, and experience with, a diverse student body and faculty. It is my belief that everyone continues to learn throughout their lives, and one of the most effective methods of learning is through interaction with others. ****'s diversity offers an environment for learning both inside and outside the cla.s.sroom. I hope to share my diverse knowledge with cla.s.smates and to take from them a new understanding of topics that are currently foreign to me. I believe that no other business school provides students with the opportunity to share and learn in an environment similar to that which is fostered by ****.

Academically, **** offers a comprehensive curriculum that will allow me to focus on my Marketing concentration through cla.s.ses like Marketing Research, Marketing Planning and Product Management, and Strategic Marketing Planning. In addition, through core courses such as Managerial Studies and Managing Human Behavior in Organizations, I will be able to learn about business from a broader perspective. I believe that the outstanding academic reputation of **** combined with its diverse environment and thriving **** location create an opportunity that is second to none.

I have many ambitions for myself as I embark on the next stage in my life. I believe that an education from **** will provide invaluable experiences and skills that will allow me to grow into a successful business leader for the next century.

Critiques of Essay A Admissions Official #1: Essay A asks the candidate to address career goals, the importance of an M.B.A. towards those goals, and the specific relevance of the particular program in attaining those goals. A successful response should address these points in order, and culminate in an explanation of why the program in question is an eminently suitable choice. The essay should also provide evidence of a focused career objective and examples of ways in which the candidate might stand out from other candidates. The accompanying example succeeds in setting forth clearly organized and well-ordered points. However, the candidate is less successful in setting herself apart from other applicants. Let's look at organization first, and then examine the content of this essay.

This candidate presents her points in a very well-organized manner. The first paragraph identifies marketing as a general career interest. The following paragraphs define short- and long-term goals respectively, in this case describing ambitions in Internet-related marketing research with the ultimate goal of setting up a new marketing research company. The candidate then indicates that an M.B.A. is useful in the pursuit of these objectives because coursework will provide a deeper understanding of marketing. The applicant then concludes by enumerating the reasons why the program in question is the right choice. It is easy for the reader to follow these points, and the supporting information clearly addresses the major points.

Unfortunately, the points themselves vary in terms of their effectiveness. In the topic paragraph, for example, the candidate a.s.serts that she embarked on a five-year plan of unbridled exploration. This rings hollow-and suggests that some abortive forays into careers were in fact part of an intentional strategy. That's not much of a plan. It would be more credible simply to state that after some career exploration, the candidate discovered that marketing was a good fit, and that the Internet provided an interesting opportunity to explore.

In addition, the reasons the candidate provides for choosing the school are very generic, and could apply equally to most reputable M.B.A. programs. To a.s.sert that no other program offers a similar experience is not only patronizing, but probably untrue. Admissions officers expect that smart candidates will apply to multiple schools. In this particular case, the candidate missed an opportunity to incorporate the Internet-related or entrepreneurial goals in the reason for selecting the school in question. This might have helped set her apart from other applicants.

On a similar note, candidates are well advised to avoid cliches and buzzwords and to not parrot brochure copy. No admissions committee member will miss talk of "five-year plans" (fine for Stalin or Star Trek Star Trek), being a "manager for the next century," or the "ever-changing global environment." Using the most ubiquitous phraseology possible won't set a candidate apart from anyone.

Admissions Official #2: There is no one answer to the issue of addressing career goals. A variety of partic.i.p.ants with a range of personalities and skill sets are required to ensure a functioning world. M.B.A. cla.s.ses are no different. And beyond the crafting of a cla.s.s, an inst.i.tution is choosing a set of alumni to enhance and/or maintain its reputation. Thus regardless of what the applicant writes about her career goals, it must be real and logical.

This essay intelligently divides a complicated issue into short- and long-range goals. However, the respondent conveys a naive and superficial understanding of her chosen field. The goals of being involved in an initiative that breaks new ground, of meeting a need, and of being part of a team are admirable. But it is essential, in all cases, to identify the skills, expertise, and/or abilities that would enable you to accomplish those goals. Unfortunately, in this case, I see plans without strategies.

This point is also applicable as we move to the question, "Why an M.B.A.?" What is it about an M.B.A. that will enable the author to accomplish her goals? The sections should be linked in a logical manner. Just because questions are asked sequentially, the responses do not have to be given sequentially.

There are subtexts to these questions. It is important to provide a sense of who you are, what you will bring, and why we should feel confident that you will contribute to your fellow students and cla.s.s interaction. The author does understand that the cla.s.s is composed of people with different strengths and that learning does come from diversity. However, I have gained no sense of who the author is as a person from this essay. Thus an opportunity has been lost.

And finally, as to the question of why the author has selected the specific inst.i.tution in question, I don't see that she has taken the argument to the next level. A citing of courses doesn't do anything for me. Are the cited courses distinctive? In this case, they aren't. What is "diverse" about this program's "environment"? Why is being in a thriving city important? The components of this section aren't bad; they just don't provide insight into why they are important to this person. Why this program?

In summary, this essay needs more integration, logic, and focus. Make it easy to understand; don't force complicated leaps and a.s.sumptions. The author didn't capitalize on the opportunity to make a case for admission and to differentiate herself from other applicants.

Essay B Question: In reviewing the last five years, describe one or two accomplishments of which you are most proud. (Limit: 500 words) In reviewing the last five years, describe one or two accomplishments of which you are most proud. (Limit: 500 words) I have always had a sense of organization and order. As a child, every toy had its place and every book had its nook. I have consistently worked towards certain goals and implemented the appropriate plan to achieve them. Therefore, it was no surprise when I decided to develop a plan for my postcollegiate success in which I would sample a variety of different fields before deciding on which to focus. The manner in which I would execute this plan, however, was a challenge. I have always had a sense of organization and order. As a child, every toy had its place and every book had its nook. I have consistently worked towards certain goals and implemented the appropriate plan to achieve them. Therefore, it was no surprise when I decided to develop a plan for my postcollegiate success in which I would sample a variety of different fields before deciding on which to focus. The manner in which I would execute this plan, however, was a challenge.In order for it to be a success, my plan necessitated that I switch companies and fields several times. Being a creature of habit, this was at first a very difficult notion for me to accept. At the time, I would have preferred to have taken a job with one company and worked there for my entire career. However, that plan of action would never result in the full realization of my goal. In order for me to be successful, it was necessary for me to break out of my comfort zone and to explore a variety of fields.As my plan progressed, I began to realize that I had created an opportunity for myself to gain a wealth of experience while also gaining new insights into my capabilities. As I faced each new experience, I was no longer daunted by its unfamiliar nature but rather enthused by its challenge. I began to relish the unknown as a chance to learn more about myself and my goals. As a result, I now understand that my plan was more than a quest for a career but also a journey of discovery and growth.I consider the completion of my plan to be a major accomplishment. The pursuit of new positions and opportunities required a great deal of hard work and dedication. I am proud of myself for accepting my self-initiated challenge and for seeing my plan to its fruition. More importantly, I am proud that I encouraged myself to leave my comfort zone in order to achieve my goal.In a different light, but also important to me, is my chili. I know that this sounds bizarre, but I am a dreadful cook. When I got engaged two years ago I decided that it was time to improve. I bought a cookbook and started at the beginning with the "Appetizers." I decided, however, to refocus my efforts when I unsuccessfully a.s.sembled a crudite platter. Instead, I planned to master one recipe. I chose chili because it is not overly complicated and I enjoy it. Throughout the entire winter, I toiled over my chili, perfecting the spices and the exact quant.i.ty of vegetables. Finally, when spring had arrived, I had done it: I had created the perfect chili. Although my chili has yet to win any accolades, I am proud nonetheless because I worked hard, achieved my goal, and I married a man who can cook!

Critiques of Essay B Admissions Official #1: Essay B asks the candidate to provide succinct accounts of one or two personal accomplishments. The candidate should begin by briefly describing the accomplishments in the topic paragraph. The body of the essay should then describe each of the accomplishments in more detail, providing insight into their significance. A concluding paragraph is probably not necessary, unless there is some common thread in the examples that the candidate wishes to underscore. The response should ideally provide the admissions committee with some insight into the candidate's values.

In this example, the candidate did not lay out the format of the essay in the topic paragraph. She instead commenced with a description of her first accomplishment. It was difficult to discern what she was describing because she didn't indicate that her "plan for postcollegiate success" was indeed one of her accomplishments until she wrapped up the description in the fourth paragraph. She spent the balance of the description saying little more than that she held jobs in a few different fields. This was not an effective tactic for differentiating herself from other applicants, since many candidates have held jobs that challenged them to grow professionally. Another problem with this accomplishment is that she provided no specific information or examples drawn from her experience.

The second "accomplishment" was also flawed. If the point of discussing her foray into cooking was to show her ability to rise above adversity, she did so by trivializing the process.

Beyond the issues of content, this essay used p.r.o.nouns with unclear antecedents and preferred the pa.s.sive over the active voice (i.e., "in order for it to be a success, my plan . . . ," instead of "In order for my plan to succeed . . . ").

The admissions committee was asked to consider a candidate whose greatest accomplishments were exploring several career paths and perfecting a chili recipe. If this essay does set the candidate apart, it does so at the expense of her candidacy relative to other candidates, who will have undoubtedly accomplished much more.

Admissions Official #2: An essay can't address everything. The author made a choice as to topics and, in the process, she provided me with an insight into who she is. Willingness to break out of a comfort zone is a trait that I value because the business world is constantly changing and change necessitates the learning of new skills. The author recognizes that this is an uncomfortable process. I could see how she developed. I recognized that she can handle change, and even respond in positive, growth-producing ways.

Both this respondent and the previous one had a plan and experimented with different paths. But in this case, the author shared her internal conflicts, those created by personal preference and reality, and what she learned from the experience. The choice of this topic provided an answer to an unasked question. If I have a limited number of places in the cla.s.s, and the world is constantly in flux, my best students and most successful alumni will typically be able to manage change and grow from it. The author provided evidence that she can do both. I also know that she can handle uncertainty, and that attention to detail and order are important to her. Since teams have become the predominant organizational structures in business school and business, the aforementioned abilities and values are ones that at least some team members must possess to bring a project to successful fruition.

The author's second accomplishment provided humor and addressed other dimensions. I now know that she is married and that, in her choice of a partner, she found someone who has skills that she doesn't have. That is the benefit of a team. I also know that she is organized and methodical as she a.s.sumes new tasks and responsibilities.

This was, to me, a relatively solid essay. It was informative and insightful. As a bonus, it was amusing which, while not essential, can be different. I do have one caution. This essay does not explain what experiences she had, how/why she chose them, how long she stayed, and what she learned from them. And it doesn't rea.s.sure me that the author doesn't a.s.sume that jobs and people are expendable-that once they serve their purpose you move on. The purpose of this essay was not to probe such issues. However, these questions arise as one reads the essay, and thus the answers to them should be integrated into the essay or created as an addendum if they don't appear elsewhere in the credentials.

Essay C Question: Describe an ethical dilemma you have faced in the workplace. How did you resolve it? (Limit: 500 words) Describe an ethical dilemma you have faced in the workplace. How did you resolve it? (Limit: 500 words) One of the students I counseled while working for the Jewish Public School Youth Movement (JPSY) was a 16-year-old student named ****. **** had joined our club as a freshman and partic.i.p.ated in almost all our events. When I first met him, **** seemed to be a well-adjusted teenager in good academic standing and with many friends. During his soph.o.m.ore year, I noticed that **** seemed increasingly disturbed, and I was informed that his grades were suffering. Repeated attempts to question **** about his problems were rejected. I debated approaching some of his friends but decided that his desire for privacy was more important. One of the students I counseled while working for the Jewish Public School Youth Movement (JPSY) was a 16-year-old student named ****. **** had joined our club as a freshman and partic.i.p.ated in almost all our events. When I first met him, **** seemed to be a well-adjusted teenager in good academic standing and with many friends. During his soph.o.m.ore year, I noticed that **** seemed increasingly disturbed, and I was informed that his grades were suffering. Repeated attempts to question **** about his problems were rejected. I debated approaching some of his friends but decided that his desire for privacy was more important.At 11 o'clock one night I received a call for help from ****. He was calling from a pay phone after wandering around town for hours. His parents had been fighting with each other consistently and had become directly hostile towards him. When he brought home a failing grade, his mother locked him out of the house. My first reaction was disbelief. Aren't a mother's instincts always correct-especially a mother who is trained as a child psychologist? Don't parents always do what they believe is best for their child? Was it right for me in my role as a friend to interfere with the way the parents were raising their son? But their son had confided in me and was asking for help. I could not bear to let him wander the streets all night. I picked up **** and took him to another advisor's apartment for the night. Meanwhile, I decided that I would speak to his mother the next day. I would approach her as an adviser of ****'s school club and offer to help him with his schoolwork. I was hoping to somehow learn the reasons for her behavior without seeming too inquisitive or intrusive.When I contacted her the next day, she politely thanked me for the offer and informed me that it was no longer necessary since **** was being sent to reform school. Inquiries made at the public high school and of various JPSY officials confirmed that my involvement had to end. During the subsequent year I heard reports of ****'s deteriorating behavior. In the end, he ran away from the school, and has yet to be found. Unfortunately, I could not control the outcome of the situation, but it taught me two lessons: how naive certain childhood a.s.sumptions may be, and to be more confident in following my instincts.

Critiques of Essay C Admissions Official #1: This question poses two unusual problems. The first is that it's badly worded: A dilemma isn't just any difficult problem. By definition, a dilemma is a problem that requires a person to choose between equally undesirable alternatives. A dilemma cannot, therefore, be resolved. One school that uses an "ethical dilemma" question asks how the candidate managed and resolved the attending situation, and not the dilemma itself. That was probably the intent of this question as well.

The second problem is that the question a.s.sumes that all applicants have faced ethical dilemmas in the workplace. That may not be true unless the dilemma is sought out intentionally. Author Robert Reid, who recounted his first year in a top M.B.A. program in a recent book, noted that "have you had your ethical dilemma yet?" is something of a standard workplace joke among the M.B.A.-bound. Unfortunately, candidates don't have control of the questions, just their answers.

With these problems noted, a concise (approximately 500-word) response should describe the dilemma in an introductory paragraph or two, explain each of the alternatives and their consequences, and conclude with a paragraph describing the choice the author has made and why that choice, while imperfect, was nevertheless preferable to other choices.

Here's an example. Imagine that you are an M.B.A. applicant who has never encountered an ethical dilemma in your workplace. What are your choices in answering this question? You can deliberately stretch or misrepresent events to conform to the question (i.e., lie-unethical), or indicate that you haven't had such an experience, potentially hurting your chances for admission. Both alternatives are bad-hence, a dilemma.

To his credit, the candidate in the example chose a third alternative, to do the best he could with an actual situation, even though it wasn't truly a dilemma. In this essay, the candidate is counseling a high school student who is having problems at home. The candidate adheres to his advisee's right to confidentiality until the situation turns more serious, and then attempts to intervene with the parents when the advisee's welfare might be at stake. While the situation the candidate describes is certainly unfortunate and obviously difficult, it isn't a dilemma, since there isn't a forced choice between flawed alternatives. Instead, the candidate has followed the highly ethical practice in counseling of honoring confidentiality until the advisee's welfare may be compromised by continuing to do so.

While this response isn't perfect, it is certainly preferable to lying or dismissing the question. With any luck, the admissions committee will understand the limitations of its question.

Admissions Official #2: Unfortunately, there is little that I liked about this essay. I would caution the reader, however, that an admissions committee is composed of a group of people with various values and orientations, and each member reacts, more or less strongly, to different issues.

The author never really, or at least not clearly at the beginning of the essay, outlined what the ethical dilemma was. What ethics were involved in this case? The recounting of the circ.u.mstances appeared to have no overarching point. This was unfortunate, because there were real tensions inherent in this story that could have been addressed. Among them are: * Can we ever truly understand a situation to which we are outsiders, and what role do we play when we see problems?* What happens when the world as you experience it is inconsistent with the world as you come to see it?* What options exist to respond to the situation, and why was this particular option chosen?

It is appropriate to set the stage or lay out the situation (one-quarter of the essay) and then proceed to a.n.a.lysis (three-quarters of the essay). Since the author neglected to do this, I am unsure as to why certain items were included and why they were included in the ways that they were. There has to be logic. Why, for example, did the author say that he "picked **** up and took him to another adviser's house"? What really mattered is that the student was in need and the author found him a place to stay. It is a bad idea to provide opportunities for the reader to get side-tracked with other issues. In this case, the question arises as to why the author didn't just take the student home with him.

The essay's conclusion could have been interesting. Even when not in control, you can learn things. In the author's case, he learned that childhood a.s.sumptions could be naive and that sometimes you need to be more confident in following your instincts. Unfortunately, I don't know what his a.s.sumptions or instincts were.

This was a missed opportunity. I see someone who didn't know how to use resources that were there, i.e., a school-connected agency, and insisted on "going it alone" instead of being a member of a team. While independence is important, at times, it is essential to know when to use the resources of a system. I don't see clarity of thought; I don't see someone who knows what is important. I have no real sense of who this person is and what he values, and that is, in my opinion, part of the purpose for which this question was designed.

I am not saying that this student wasn't admitted to the schools to which he applied. But for me the admission would have occurred in spite of the essay, not because of it, and in a compet.i.tive environment where test scores, grades, and work experience were equal and s.p.a.ces limited, this student would have suffered in comparison.

PART FOUR.

Financing Your M.B.A.

CHAPTER 12.

Planning Your Investment.

The first step in financing your degree is to identify all the costs. Whether or not your company offers to reimburse your tuition, you should have a clear idea of the expenses that will be incurred over the next few years. Before accepting admission to one school over another, carefully consider whether the costs are the same, and whether you can really afford to attend the school of your choice.

The following page contains a sample chart of what you can expect to pay for your M.B.A., and, if you're partic.i.p.ating in an employer-sponsored program, whether the expense is usually considered reimbursable. The charges certainly rack up!

What About the Books?As you may recall from your undergraduate career, books are an essential-and expensive-part of a student's diet. Unfortunately, most companies do not pick up the bookstore tab as part of a reimburs.e.m.e.nt policy.

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As noted above, many of the "smaller" charges are not generally covered in a company's reimbursable policy. These fees can add up significantly, though, so be sure to consider them when estimating whether you can afford the degree.

Setting BoundariesIn many cases, the limit for tuition reimburs.e.m.e.nt reflects the former federal tax law in which the first $5,250 in company tuition reimburs.e.m.e.nt was exempt from taxes. This law has expired, although colleges and universities are still trying to have it reinstated.

Read the Fine Print If you are fortunate enough to be employed at an organization that implements a tuition reimburs.e.m.e.nt policy, make sure you carefully investigate the terms.

* Is the tuition reimburs.e.m.e.nt limited to areas of study approved by your company? Is the tuition reimburs.e.m.e.nt limited to areas of study approved by your company? When restrictions on area of study exist, the primary criterion for approval is usually the direct applicability of the program to the requirements of your job. When restrictions on area of study exist, the primary criterion for approval is usually the direct applicability of the program to the requirements of your job. * * Have you been employed at your firm long enough? Have you been employed at your firm long enough? Tuition reimburs.e.m.e.nt benefits for a degree program may only be available to you after several years' service with your company. These requirements are usually spelled out in your employee handbook. Tuition reimburs.e.m.e.nt benefits for a degree program may only be available to you after several years' service with your company. These requirements are usually spelled out in your employee handbook. * * Are 100 percent of tuition expenses covered? Are 100 percent of tuition expenses covered? Some firms will reimburse you based on your grade (for example, 100 percent reimburs.e.m.e.nt for an "A," 80 percent for a "B," 70 percent for a "C," etc.). Remember that companies often only reimburse you after you've completed your courses and your grades are official. You may have completed your first term and started your second-and had to pay for it-before you receive any reimburs.e.m.e.nt. Some firms will reimburse you based on your grade (for example, 100 percent reimburs.e.m.e.nt for an "A," 80 percent for a "B," 70 percent for a "C," etc.). Remember that companies often only reimburse you after you've completed your courses and your grades are official. You may have completed your first term and started your second-and had to pay for it-before you receive any reimburs.e.m.e.nt. * * Is there a limit as to the amount you will be reimbursed? Is there a limit as to the amount you will be reimbursed? Some employers may allocate a capped amount of tuition reimburs.e.m.e.nt offered or set a maximum reimburs.e.m.e.nt per year. Make sure that by taking two courses per term you do not exceed your annual maximum. Some employers may allocate a capped amount of tuition reimburs.e.m.e.nt offered or set a maximum reimburs.e.m.e.nt per year. Make sure that by taking two courses per term you do not exceed your annual maximum.

That's Irrelevant!

"When I was looking into M.B.A. programs, I requested permission from my employers to pursue the M.B.A./J.D. program at Fordham University. Part of my job responsibilities in the bank where I was employed included the review of legal contracts for financial products. Although I saw the relevance of the M.B.A./J.D. program to my course of work, my employers didn't, and they refused to finance the degree." "When I was looking into M.B.A. programs, I requested permission from my employers to pursue the M.B.A./J.D. program at Fordham University. Part of my job responsibilities in the bank where I was employed included the review of legal contracts for financial products. Although I saw the relevance of the M.B.A./J.D. program to my course of work, my employers didn't, and they refused to finance the degree."- M.B.A., Fordham University If, however, your company does not have a tuition reimburs.e.m.e.nt policy in place, and you still wish to get your M.B.A., there are a few financial aid options you can consider, such as financial aid, loans, scholars.h.i.+ps, and your own savings. We will cover these alternatives in greater detail in the next chapter.

CHAPTER 13.

Financial Aid, Scholars.h.i.+ps,

and Loans Financial aid can be broken down into two general categories: funds that are lent to the student and require repayment, and "free funds" such as grants and scholars.h.i.+ps. This chapter will give you an overview of the general application requirements, including the doc.u.mentation, that's usually necessary. Even if you are not sure that you qualify for financial aid, it can't hurt to apply.

Forms Financial aid application procedures can vary from school to school. The first step is to get the admissions materials from the school(s) and read them thoroughly. Usually, general financial aid information appears in the admissions application, including the financial aid deadline(s). These deadlines drive the rest of the process for you.

Key Materials The Free Application for Federal Student Aid (FAFSA) form is always required to request any federal financial aid. This form is used for need a.n.a.lysis, the calculation that determines your financial need. The detailed financial information you provide on the FAFSA form is run through a federal formula to arrive at an expected family contribution (EFC) figure.

As its name indicates, the FAFSA form is free of charge and allows you to send your financial information to a maximum of six inst.i.tutions. If you're applying to more than six schools, you need to list your top six choices. If you subsequently want to add a school to this list, you'll have to drop one from your list. Make your life easier-try to limit your financial aid application to just your six top choices.

Other required forms may include (but are not limited to): * A separate school financial aid application* Private need a.n.a.lysis form, such as the PROFILE from the College Scholars.h.i.+p Service or the NeedAccess disk* Your prior year's IRS 1040 form* Financial aid transcripts from every postsecondary school that you attended (this requirement has been replaced at many schools by the National Student Loan Database System (NSLDS); check with your school to see if it partic.i.p.ates) Once you've submitted all the required forms, you'll have to wait about a month before anything else happens regarding your financial aid. You might hear from admissions offices during this time.

Meanwhile, the federal processor, a number-crunching center for the government currently based in Iowa, is working on the information you provided on your FAFSA. They rub your numbers through a formula called Federal Methodology that is revamped every six years (although the numbers are changed yearly). Their calculations result in a Student Aid Report (SAR). You'll get a copy of it in the mail. Your SAR contains both the financial information that you provided on your FAFSA plus the results of the federal need a.n.a.lysis calculation. The schools that you listed on the FAFSA will receive the data electronically, but they may need you to sign an additional form to activate the financial aid process (especially if the school does not have its own financial aid application).

Remember to keep track of your financial aid applications in the same way that you're keeping track of your admissions application material. If you need money to attend school, this process is just as important as the process of getting admitted.

Your Financial Aid Package Once the financial aid office has all the forms and data that they need, they'll wait for the admissions decision before they review your application. During this waiting period, it's a good idea to check with the schools to make sure that everything is complete and ready for processing once the admissions decision has been made.

When the financial aid office finds out that you've been admitted, they'll review your application and offer you an award package. This financial aid package can include funds you are required to pay back, such as: Federal Perkins Loans, Federal Stafford or Federal Direct Loans, and suggested private loans, as well as "free funds" such as scholars.h.i.+ps and grants.

Before You Decide . . .Get the answers to these questions about your financial aid package:* What is your contribution expected to be?* How much money will you be expected to borrow?* What kinds of loans are offered, and do they have attractive rates?

FUNDS YOU ARE REQUIRED TO PAY BACK.

As a student, you may be eligible for federal or state student loans or private loans. Some student loans are need-based and some are not. So, as mentioned previously, you should apply even if you do not think you qualify.

It can take up to 8 to 12 weeks from the date you apply to receive any loan proceeds, so planning is essential. Also, since the rules and regulations for borrowing through each of these programs differ, you should read each section carefully.

The good news is that educational loans typically have more favorable terms than consumer loans, particularly unsecured loans, and they're usually easier to obtain. However, you can't a.s.sume that you'll be able to get a student loan whatever your financial circ.u.mstances. Remember, federal student loan programs have eligibility requirements. Many private loan programs have some type of credit criteria that you must meet before you can borrow, and virtually all programs establish some borrowing limits.

The trick is to make sure that you don't borrow so much that you reduce the return on your investment once you graduate. With planning, you can avoid that problem.

Credit and Credit Reporting A poor credit history could be a large stumbling block to financing your M.B.A. degree. While the U.S. federal loan programs for graduate students don't really check your credit history, many of the private loan programs do. If your credit record is weak, your previous actions may come back to haunt you and make attending B-school a financial impossibility.

Federal Loans In order to qualify for federal student loans (Federal Stafford or Federal Direct loans), you cannot be in default of any previous federal loans. If you are, you can't take out another federal student loan until you make six consecutive payments on the loan you're in default on, or completely pay it off. If you're only delinquent rather than in default on your loan payments, you must pay off any past-due balance before you can borrow again.

Private Loans and Credit Reports Private loan programs are much stricter about their lending guidelines than the federal government. When a private loan program checks your credit history, it requests a credit report from one of the three major credit bureaus in the United States.

Your credit history shows a record of all your prior debts and your history of repayments. This list will include your credit cards, mortgage, and any other consumer loans you might have. Your repayment history on any previous student loans will be listed, too. Private loan programs look for a record of on-time, consistent repayment of any financial obligations. If your track record as a borrower is not up to its standards, a lender will deny your loan application.

Key Credit Terms Most private loan programs require that you have no adverse credit and that you be at least credit-ready, if not credit-worthy. Credit-ready simply means that your credit record is clean, that there are no indications of credit problems. You can be credit-ready even if you have no credit history at all, because you have nothing adverse in your credit record. Some private loan programs may require that you get a co-signer if you have no previous credit history. Credit-worthy means that you have both a clean credit history and that you currently have the means to make payments on the loan. A mortgage is an example of a loan that requires you to be credit-worthy.

Check Your Credit ReportCredit reports can be incorrect! Obtain a copy of your credit report well before you apply for any loans and ensure that there are no errors. We've all heard horror stories about someone's bad credit history getting mixed up with someone else's good one. A word of caution: If you (or someone else on your behalf, such as a mortgage broker or bank) request a credit check too frequently, this can jeopardize your credit rating. How? It may raise a red flag to inst.i.tutions considering lending you money-they may want to know why your credit has been checked so frequently.

Federal Loan Programs The two U.S. federal loan programs available to graduate business school students are generally considered the core loan programs, since they carry certain attractive features defined by law. These features include a low interest rate, low fees, and defined deferment provisions. The two programs are: * Federal Stafford Student Loan Program (part of the Federal Family Education Loan Program)* William D. Ford Federal Direct Student Loan Program The terms of these loan programs are similar. The eligibility criteria, interest rates, fees, grace period, deferment and cancelation provisions, and other terms are all basically the same. There are, however, minor differences in the application process and certain repayment options.

The key differences lies in who provides the loan funds. The Federal Stafford Student Loan is part of the Federal Family Education Loan Program (FFELP), through which loans are made by a private lender (such as a bank, a savings and loan a.s.sociation, a credit union, or an insurance company) and are insured by a state or private guarantee agency sponsored by the U.S. federal government. Under the William D. Ford Federal Direct Student Loan Program, the U.S. federal government is the lender.

Many schools partic.i.p.ate in the Stafford program, but some partic.i.p.ate in the Ford Direct program. The school you attend will determine which of these two loans you can apply for.

In order to be eligible for these programs, you must: * Be a citizen, a permanent resident, or eligible noncitizen of the United States* Be enrolled at least half time (usually six credits)* Be in good academic standing, and be making satisfactory progress towards the degree (as defined by the school)* Not be in default of any previous loans without being in an approved repayment program* Have progressed a cla.s.s year since receiving your last Federal Stafford Loan (for example, fourth-year undergrad to first-year grad student)* Never have been convicted under federal or state law of sale or possession of drugs (This new law was implemented on July 1, 2000; however, a conviction prior to 7/1/00 could still affect your eligibility.)* Show financial need based on the information provided on your FAFSA in order to qualify for the interest subsidyFederal Stafford Student Loans The Federal Stafford Student Loan Program provides two types of loans: subsidized and unsubsidized. The subsidized loans are a better deal, but you have to meet the government's financial need criteria. For either type of loan, you may defer payments of princ.i.p.al and interest until you graduate or drop below half-time enrollment. Depending on when you first borrowed, there's a grace period of six or nine months before you'll have to start repayment.

The Federal Stafford Loan Program evolved from the Guaranteed Student Loan Program (GSL) that you may have borrowed under in college. The concept of a federal loan program originated in 1965 as the Federally Insured Student Loan Program (FISL). The Federal Stafford Loan Program has the same purpose as these previous programs-to make loan funds available for students to attend post-secondary school-but the amounts available, interest rates, and deferment provisions have been modified.

Federal Subsidized Stafford Loans are available to all students who meet the financial need criteria. A federally mandated needs a.n.a.lysis, based on information provided on the FAFSA, determines a student's Federal Subsidized Stafford Loan eligibility. Students who don't qualify for the subsidized loan or need to borrow beyond the limit can take out an Unsubsidized Federal Stafford Loan.

Borrowing Limits Graduate students may borrow up to their demonstrated need with a maximum $8,500 per year in the Federal Subsidized Stafford Loan Program, with a total borrowing limit (including undergraduate Federal Stafford Loans) of $65,500. The Federal Unsubsidized Stafford Loan Program allows an eligible student to borrow up to $18,500 per year, minus any Federal Subsidized Stafford Loan approved. The total c.u.mulative maximum is $138,500 (including the Federal Subsidized Stafford Loans).

Interest Rate As the program's name indicates, the federal government subsidizes the interest on the Federal Subsidized Stafford Loan. You're not required to pay interest on these loans until after you leave school. If you have a Federal Unsubsidized Stafford Loan, you're responsible for the interest while you're in school, but most lenders will allow you to capitalize the interest, and not pay it until you leave school. Capitalization means that the interest accrues while you're still in school and is added to the princ.i.p.al at a predetermined time (often at the point of repayment). Applications and information about current interest rates and repayment schedules are available at partic.i.p.ating lending inst.i.tutions.

Fees There's a loan origination fee that is equal to 3 percent of the loan. If you borrow $5,000, for example, the loan origination fee will be $150. The fee, required by law, is sent to the U.S. federal government to offset a portion of the federal interest subsidy. In addition, the guarantee agency may charge you an insurance fee of up to 1 percent of the loan. Both of these fees would be deducted from the loan proceeds when the check is issued. All lenders are required to deduct the federal government's 3 percent loan origination fee, but they're allowed to reduce or eliminate their own 1 percent guarantee fee. Some lenders reduce this fee as an incentive for borrowers. Shop around for the best deal.

Sources of Federal Stafford Student Loans Federal Stafford Student Loans are made through partic.i.p.ating banks, savings and loan a.s.sociations, credit unions, pension funds, and insurance companies.

Application Procedures To apply for a Federal Stafford Student Loan, you should complete the FAFSA and mail it to the federal processor, and fill out a Common Loan Application and submit it to the school you plan to attend. The B-school will certify your application and either mail it to the bank or electronically send them the certification information. The bank will electronically forward that information on to the guarantee agency who will approve or deny the loan and send that info back to the bank. The bank will either cut a check made payable to you and the school, or will transmit the funds to the school via Electronic Funds Transfer (EFT). Once the funds are available at the B-school, the funds are credited against any unpaid balance you have and the difference is refunded to you. This whole process can take up to three months, so plan for the time lag.

Repayment The amount of your monthly payment will depend on the total amount you borrowed, the number of months in the repayment schedule, and whether or not you elected to pay interest on the unsubsidized portion of the loan while in school. The maximum repayment period is usually ten years, with repayment generally in equal monthly installments. You'll have a shorter repayment term if you borrow a small amount, since there's a minimum monthly installment of $50.

If you don't meet the repayment terms of the loan, you go into default and the entire balance of the loan becomes due. If your loan goes into default, your lender may refuse to allow you to borrow again until the entire debt is satisfied.