No doubt that the best way to pay for an MBA is to get free money, such as fellowships and employer assistance. Ideally, you’ll also have money set aside for business school, or you can use a portion of your salary if you’re earning a part-time MBA.
But free aid, savings, and wages may not cover the cost of an MBA—especially at a top-tier school. The bill for such programs can be more than $200,000, according to Poets & Quants, a web-site that covers top business schools.
You can also get MBA student loans to bridge the tuition fee gap. But before you borrow from others, use these strategies to pay for business school.
Find MBA fellowships, scholarships and grants
Fellowships, scholarships, and grants are helping you don’t have to repay. Most fellowships and grants are awarded by the business schools themselves, although private MBA scholarships are available from companies or professional associations.
Unlike undergraduate scholarships, which may be based on your financial needs, MBA fellowships and scholarships are usually awarded on the basis of merit alone. You may qualify based on criteria such as a college GPA, GMAT score, or any professional achievements you have.
This business school may automatically offer assistance when you are accepted – the MIT Sloan School of Management at the Massachusetts Institute of Technology in Cambridge, Massachusetts, for example, awards over 60 fellowships this way. In other business schools, you might have to apply separately. Contact the School of Business Financial Aid Office for more details.
Use employer aid for business school
Money your employer provides or you earn by working by your self can help you pay for an MBA. If you already have a job, reach out to human resources to see what benefits that the company offers for education, as well as its rules for that assistance.
Tap into savings
Most students begin MBA programs in their late twenties, after starting their careers. It’s possible that working back then has convinced you that earning an MBA is worth it for your future. And by this time you may hopefully have saved some of your salary to cover the cost of the degree.
The ideal budget puts at least 20% of your money toward paying down debt and achieving savings goals, such as paying your MBA fees. If you’re not specifically saving for business school, don’t touch other savings — like emergencies or retirement.
Take out business school student loans
MBA students can cover the remaining costs with federal or private student loans. Federal loans are best if you plan to work for a nonprofit or if you are unsure of your career path.
But if you’re already employed or won’t need access to repayment programs like public service loan forgiveness, shop for a private business school loan. Here is the reason:
- Higher federal interest rates and fees for graduate students. Unsubsidized federal loans come with higher interest rates for graduate students by (5.28%) than undergraduates (3.73%). The interest rates for Federal Graduate PLUS Loans are 6.28%.
- Your work history is likely a big advantage for you. All federal loan borrowers receive the same interest rates, Private loans set rates based on your financial situation. If you worked for a few years before getting your MBA and built up your credit, you may qualify for a lower interest rate than federal student loan offer. You can also save more by choosing a variable rate, if you plan to pay off loans quickly or are confident that you could afford the payments if that rate goes up.
- All graduate student loans are interest-bearing. Graduate students are not eligible for federally subsidized loans. The government pays interest on subsidized loans at certain points, such as when you are enrolled in school at least half-time. Since only unsubsidized loans are available to graduate students, you will not receive potential interest savings from federal loans that undergraduate students receive.
Use the Student Loan Calculator to determine how much loans it will cost you to pay for your MBA. Just for comparison, business school graduates owe about $66,000 in MBA student debt, including college loans, according to the National Center for Education Statistics.
If you decide that federal loans make sense for you now, but your plans change in the future, you can refinance your MBA loans after school to save money.
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