>Why Mom & Dad Are Increasingly Footing The Bill For Their Child’s MBA
Remember being an undergrad? Back then, your parents were your guardian angels. They’d cover your textbook and insurance tabs. Chances are, they even donated the family beater for you to drive. If they lived close enough, your laundry would be washed and folded, as if by magic. You probably considered yourself independent. In reality, you had a safety net until you graduated and moved away. Then, you were on your own to foot your own bills.
After spending a few years building their resumes, many professionals are boomeranging back to their parents. No, they aren’t take refuge in their basements to enjoy free cable and stocked fridges. Instead, they are looking for their parents to help pay for their MBAs.
According to the Graduate Management Admission Council (GMAC), 44% of applicants to graduate business programs planned to hit up their parents for funds to pay for their advanced degrees (a 6% climb over the past five years). In fact, 20% expected their parents to pay more toward their degree (also a 6% jump) than in 2009.
No wonder millennials stay so close to their parents!
Then again, it’s not just full-time students with their hands out. GMAC also reports that 9.5% of prospective Executive MBAs, many of whom have been working for a decade or more, plan to make the same solicitation to their parents. So much for an early retirement, huh?
And parents can expect both their daughters and sons to pitch them on sponsoring their education. Across all degree programs, GMAC reveals that 47% of females and 42% of males believed their parents should help pay for graduate school (with women and men expecting parents to foot 23.1% and 16.8% of their education, respectively). While some anticipated paying back their parents over time, others believed it should be a gift.
Talk about an early inheritance!
In fact, only 49% of respondents intended to take out loans for their schooling – and most planned to carry smaller debt. Perhaps they expect their parents to open a reverse mortgage (Thanks, AARP).
So is entitlement driving this trend? Maybe…but there are economic factors at play, too. For example, lower debts free graduates to pursue lower-paying public service or not-for-profit jobs – or even engage in riskier entrepreneurial ventures. It also balances the scales for international students, who often earn less overseas than their American counterparts.
Where is the expectation that most parents will reach into their wallets? China. Specialized master’s programs in finance and accounting are highly popular with Chinese citizens, many of whom want to study abroad. These students have long looked to their parents as a major source of funding, and from 2009 to 2013 the portion they expect parents to pay has risen as they expect grants and scholarships to cover less of the cost. Some 53% of Chinese students, up from 40% in 2009, expect their parents to pony up.
At the University of California-Davis, nearly two-thirds of overseas students received aid from their parents, compared to 37% of American students. For example, Rahul Churiwala, who worked in consulting and his family’s aluminum business before enrolling, struggled to save enough to cover tuition and living expenses in India. To help, his parents are shelling out for 80% of his education, with Churiwala hoping to make it up in tech marketing before transitioning to a startup.
Then again, students should beware. As any VC-funded entrepreneur can attest, investment comes with involvement. There is no such thing as free tuition. Just remember this warning from Marc Zawel, who co-founded the admissions consulting firm AcceptU: “It becomes more of a ‘we’ conversation the more parents are footing the bill.” In other words, students shouldn’t be surprised if they’re questioned and second-guessed when it comes to their educational choices. They are parents, after all.
Average Expected Financing Mix For Graduates Business Students Worldwide
DON’T MISS: HELICOPTER PARENTS HOVER OVER B-SCHOOL TOO
Source: Wall Street Journal