The Blogger Secures Financing & Pays his Deposit for the $107,000 MBA

It’s done. As you can see from the picture, I’ve sent in my first installment payment for my spot in the INSEAD Fontainebleau Class of 2008.  I have now committed myself to moving to France next year for what will probably be the most intensive year of my life.

Obtaining the necessary financing was not easy. Unlike other top schools, INSEAD doesn’t provide any guaranteed loans. The official position is that due to the diversity of the student body, it is not possible to find a lender willing to provide credit to every student. I find this explanation weak because as the world’s best global business school, you would think that INSEAD had a network of well-placed alumni at top commercial banks, who could help organize a universal loan scheme with preferred interest rates and repayment terms. One of my corporate lawyer friends astutely pointed out that this is marketing and acceptance rate issue for the school. If Joe Student receives an offer from INSEAD with no guaranteed financing and an offer from a U.S. school with easy financing terms, Joe Student could be swayed towards the U.S. school.

Originally I applied for a loan from a bank in the Middle Eastern country where I’ve worked for the past 5 years.  Despite the fact that the INSEAD Alumni Association here supposedly made special arrangements with this bank to provide loans at LIBOR + 2.5% interest for the whole tuition amount, the bank insisted that I provide them with collateral for 100% of the loan.  They were unsatisfied with my guarantor and refused to accept my pension funds and stock portfolio as collateral. They demanded a cash deposit!  If they could have possibly infuriated me any more, they took 3 weeks to provide me with this response. To top it off, the loans officer was not very professional. Although she was ostensibly in charge of the INSEAD loan program, she didn’t know anything about the loan term or repayment conditions. I should have known I was headed for trouble the first time I spoke to her. It could be a Middle East cultural thing, but when I asked her the straightforward and perfectly reasonable question during our first meeting, “What do I need to qualify for this loan?” She responded with a look of horror followed by a dismissive answer, “We’ll see”. I quickly learned that objective criteria, credit history, and savings count for nothing. 

So I started looking at Canadian banks, even though I haven’t lived in Canada for several years. Finally I found success… Within 48 hours I received approval to borrow the entire INSEAD tuition amount at 7% interest. Even better was how the bank treated me. Unlike the bank I dealt with in the Middle East, the Canadian bank was so nice to me on the phone. ”Yes, sir”… “Our pleasure”… “Whatever is convenient for you”. Having been treated so poorly by the Middle Eastern bank, I was so taken aback by their kindness that I felt like crying.  What a pleasure to deal with a professional bank.

The Blogger Discusses the INSEAD Miami Rumour

This past weekend, fellow blogger DomoDomo quoted INSEAD’s Yankee Doodle Dean, Mr. J. Frank Brown as mentioning ‘off the record’ that INSEAD planned to open a campus in the United States, specifically in the Sunshine State.  This prospect really excited me.

For many years Miami served as a refuge for winter-weary North-easterners and to the geriatric set, but since NBC’s Miami Vice hit in the 1980s, it has blossomed into a hip international center for fashion, modelling, music, film and increasing commerce. Miami is the American cross-roads to South America and home to a well established finance and banking industry which serves Latin America.

Miami is a smart choice for establishing a new business school, since INSEAD can avoid geographic competition with the Ivy-League schools in the Northeast. The real question is whether American students (or foreigners) will bite at the chance to earn an INSEAD degree on U.S. soil. My sense is that initially it will be easier to convince foreigners to study on the U.S. campus, which would provide them with the incentive of being able to secure a work visa and stay in the U.S. post-graduation. On the other hand, U.S. students who are nowadays seduced by the charm and class cache of studying in Fontainebleau, France, might view the Florida campus as a cheapening of the INSEAD brand.

One word of caution for Dean Brown from none other than Mr. Starbucks, Howard Schultz.  Schultz recently conceded that having a Starbucks on every street corner, combined with operational and process improvements have diluted the brand and taken away the chain’s original mystic. Hell, my mother goes to Starbucks with her Scrabble group once a week– the epitome of not trendy. Many others have fallen victim to brand dilution: The Disney Store, Hard Rock Cafe, BMW, and Mercedes Benz.  Will INSEAD still retain the Fontainebleau mystic when it has branches in 20 cities?