Despite holding a belief that the economy is improving, prospective MBA applicants across the world are dragging their feet on making their minds up about studying an MBA. Prospective applicants of 2011 have taken on an average six more months than they did in 2009 before considering graduate business education as a possible option in their lives, according to a survey of 16,000 prospective MBA students who registered on the Graduate Management Admission Council’s (GMAC) website mba.com in 2011.

Why the hesitation? The top three reservations people have are unaffordability of education, fear of accumulating a large debt and uncertain job prospects.

The uptake of the fulltime 2-year MBA as an option too has dropped (only 42% said they were considering the 2-year MBA in 2011, against 47% in 2009), indicating that confidence in the MBA degree might be lowering. Nevertheless, in absolute terms it is still the most preferred mode of management education for prospective students.

Master’s degrees in accounting or finance however are on an upswing, with an increased percentage of people (mostly younger than 24) across the world indicating these programs as their preferred modes of education. India however breaks this trend. A previous GMAC survey discovered that India was the only country whose youngsters had not shown keenness towards master’s degrees in accounting and finance at international universities, ostensibly because the business schools in India already provide plenty of management education options for freshers at a cheaper price.

Among all regions, Indians continue to rely on education loans the most to finance their MBA education abroad or at Indian schools that accept the GMAT, such as the Indian School of Business, Hyderabad or the PGPX at the Indian Institute of Management, Ahmedabad. However the drying up of non-co-signor loans for b-schools abroad (such as CitiAssist) is propelling Indians to increasingly use their own savings or those of their parents to muster up the $70,000 that is required at the minimum for studying at a reputed b-school abroad.

According to GMAC, prospective MBA students from India plan to finance 37% of their MBA expenses through loans, 17% through parents (up from 13% in 2009) and 12% through personal savings (up from 8% in 2009). The reliance on scholarships and grants is reducing, with only 22% prospective MBA students from India planning to target scholarships in 2011 as opposed to 30% back in 2009.

“A significant positive development in the Indian context has been the emergence of education loans as a core offering for many of the top banks in India. Consequently, Indian students now have greater choice to avail of a loan and on favourable terms,” Alex Chisholm, senior statistical analyst at GMAC told PaGaLGuY.

He also added that there were as many as 465 management programs offered by Asian b-schools (including 160 in India) that accepted the GMAT scores so even if prospective MBA students from India were finding American or European management education unaffordable, there were enough cheaper options within Asia that they could fund with greater ease.

But Asia comes only second to the USA among the most preferred MBA study destinations for Indians. As many as 47% Indians who participated in the survey wanted to attend a business school in the US followed by 24% who wanted to study in India and 10% in the UK. Those who were targeting India stated affordability of education and better jobs within the country as the underlying reasons. Whereas those who wanted to go abroad stated international career aspirations and networks as their reasons.

Given the increased difficulty in arranging finances to study abroad and the subsequent debt, is it still worth it to study MBA abroad as opposed to getting one from an Indian b-school?

“The value of the MBA can not be measured purely in monetary terms. Alumni report to us that their level of satisfaction with their graduate management degrees is consistently high at the personal, professional and financial levels. This has held true in both good and bad economic climates. Ultimately this question must be considered on an individual basis because it depends on the goals, motivations, and reservations of prospective students,” said Chisholm.

He added that even though studying abroad was expensive, it wasn’t as if the fees at India’s business schools were getting any cheaper.

“At most top Indian schools, fees have been raised three times over the last six to seven years and now range between $20,000 and 35,000 while the fees have remained more or less constant at business schools abroad. While six to seven years ago, the financial gap would have been 4x to 5x, it is now 2x to 3x. At the same time, management programs from top schools in the US and Europe do offer the opportunity for a highly diverse and rich learning environment, better prospects for international career mobility, a global peer network, multi-cultural exposure and most important, a reputation that is recognized by corporate employers worldwide,” he said.