ADVICE

Should you finance your master’s education with a private loan?

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While the MBA is an example of a qualification that offers a good starting salary in addition to high employability, students should refrain from taking private loans to finance their education to avoid the common pitfalls of student debt.


By U2B Staff 

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Tuition and fees for graduate and professional studies have risen rapidly over time and the cost of master’s degree programmes vary depending on the subject area, mode of delivery as well as the university that offers the programme. The length of the programme also impacts the cost and on average, the cost of a master’s education in the UK can set you back by £10,000 and £12,000 per year.

However, in the UK, universities set their own fee structure for master’s programmes and without a fee cap, an MBA programme at a top-tier business school can cost up to £60,000.

Prospective students also need to take living costs into account and this number varies by city. In the UK, studying in London will certainly come with higher living costs compared to studying in a city like Cardiff.

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Should you consider a government or private loan to finance your master’s education?

Students who plan to undertake postgraduate studies in the UK can apply for postgraduate study loans offered by the UK government. Students who qualify for the government loan can get as much as £10,609 worth of funding that can be used to cover programme fees and even help with living costs.

Prospective students will have to fulfill eligibility requirements to qualify, depending on course, student age and nationality. The loan is only applicable to students who are enrolled in their first master’s degree, however, those with postgraduate diplomas and certifications are also eligible.

However realistically the loan amount will not be enough to cover tuition fees and living expenses, without eating into the student’s savings or requiring supplementary funds. Students may find themselves gravitating to other forms of funding including private loans.

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How advisable is it to take private student loans to finance your master’s education?

Prospective students can also opt for private loans, and there are many companies that offer funds to finance a master’s education. However, these loans can be more expensive and come with more stringent and demanding repayment schemes.

While it is advisable to keep this as the last option, it also largely depends on the master’s degree itself and the return of investment it can offer to the graduate.

The MBA is a good example of a qualification that offers a good starting salary. Even so, MBA starting salaries differ by field and by specialisation but the good news is, there are many specialisations to choose from.

For example, an MBA that specialises in consulting prepares experts ready to offer an outside opinion for challenges faced by companies and in the US, experts in these sectors and are very well paid.

MBAs hires in the consulting sector can expect to earn annual salaries of up to US$135,000 (£108,000) across industries.

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According to Monster, a global online employment solution for job seekers and employers, MBAs specialising in strategic functions are best in terms of return of value. This specialisation equips graduates with the ability to carry out management-level decisions that influence a company’s success. Management consultants, senior product managers and finance managers, in charge of strategic direction can earn as much as US$127,000 (£102,000) a year.

MBA graduates who specialise in technology management and work as leaders in the technology sector can make up to US$113,000 (£91,000) a year, with information technology directors earning up to US$147,000 (£118,000) a year.

MBA graduates specialising in finance also have a lot to gain with finance managers making up to US$112,000 (£90,000) a year and chief financial officers making a whopping US$183,000 (£147,000) a year.

It is essential to understand the value of the master’s programme and the potential remuneration when deciding to take on a private loan to finance the programme. However, certain fields that may not promise impressive return of investment may benefit from the talent and can be rewarding in other ways.

Students also need to consider other alternatives to avoid falling into the student-debt trap as UK government figures show that the interest charged on student loans is forecast to rise by £4.2bn to £8.6bn a year by 2024.

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Consider these options instead of a private student loan

When considering funding options, it is advisable to opt for scholarships, grants, bursaries are financial awards as these financing schemes will not push you into debt, and will allow you to finance your education for free.

Chevening scholarships is a prestigious UK Government postgraduate funding scheme specifically for international students in the UK. Chevening scholarships are designed to cover the full cost of studying a master’s degree in the UK, including additional expenses that may be incurred by an international student with a funding of around £30,000 over the course of a one-year.

Chevening scholarship recipients will be awarded full tuition fees amounting to £18,000. Additionally, the scholarship will cover travel expenses to and from the UK, the student’s visa application fees as well as accommodation and living expenses.

Various organisations offer financing in terms of scholarships, grants, bursaries are financial awards to graduate students. The Commonwealth Scholarship Commission in the UK (CSC) provides the main UK government scholarship scheme led by international development objectives.

The CSC offers over 800 awards for postgraduate study and professional development each year. Scholarships offered by this body are applicable for master’s courses in the UK, including distance learning programmes including academic, professional and medical fellowships.

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Scotland’s Saltire Scholarships is a scholarship programme offered by the Scottish Government to citizens of Canada, China (including Hong Kong), India, Japan, Pakistan, and  the US.

This scholarship scheme is a collaboration with Scottish universities in the areas of science, technology, creative industries, healthcare, and medical sciences, and renewable and clean energy.

The programme offers up to 50 awards, each worth £8000, towards tuition fees for any one year of full-time study on a postgraduate master’s programme at any of Scotland’s higher education institutions.

Postgraduate students who reside in the UK can also opt to apply for financing through study grants.  Charities and trusts sometimes provide grants, often for students from poorer backgrounds or those who have achieved academic excellence. For example, the Sir Richard Stapley Education Trust offers grants of up to £1,500, to UK residents studying any subject at postgraduate level.

Postgraduate hopefuls may also choose to fund their postgraduate education through employment funding schemes that may come with some sort of employment bonding scheme. While this scheme may not be offered by all employers and may not be applicable across various fields of study, many employers choose to upskill their employees by funding their MBA studies.

However, before deciding on financing options, it is important to discuss with your university’s student support services to explore financing options available, including specific grants, scholarships, and bursaries that you can apply for.