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Do your career goals include working in marketing, accounting, or general management? If so, chances are you’ll want to earn your Master of Business Administration (MBA). But have you thought about how you’ll pay for an MBA?
Not only will you need to invest at least two years to your MBA studies, but you’ll also have to come up with as much as $61,000 per year for tuition at some of the top business schools in the country.
Getting an MBA is an expensive investment, especially when you consider that you need to pay for additional other expenses, like room and board, food, utility bills, and extras like mandatory travel that is common with MBA students. Then there is the less obvious cost of potential lost earnings as you step out of the workforce for two years.
Before you commit to paying for an MBA, calculate the ROI of your degree.
Prospective students often wonder if an MBA is worth it, and for many it is. The median income for an MBA, according to Earnest data, is $115,000 four years out of school (Verify that this figure is correct). Your income may be higher or lower, depending on factors like where you go to school, where you work, and economic growth, but there’s little doubt that an MBA can increase your earning potential.
How Much Does an MBA Cost?
Not all MBA programs will run you as far into the red. While it really varies by school, here are a few examples:
- Massachusetts Institute of Technology estimates total yearly expenses for an MBA from the Sloan School of Management is to be $111,570.
- At the University of Miami School of Business, tuition and other expenses will cost you an estimated $72,137 per academic year.
- If you attend Harvard Business School, be prepared to shell out a hefty $109,124 per year, including room and board.
So how can you pay for your MBA? The answer is likely a combination of financial aid through student loans and scholarships, and maybe even some of your own savings.
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Ways to Pay for Your MBA
Much like when you got your undergraduate degree, there are multiple ways to pay for your MBA program costs. Some might be familiar, while others are very specific to the school you choose to attend.
Start With Financial Aid for Your MBA Degree
Your first step in deciding how to pay for business school should involve going to your school’s financial aid office. You’ll find scholarship information and details about how to apply for other forms of financial aid. The Free Application for Student Aid (FAFSA) must be filled out and submitted in order to receive grants and/or loans. Once you’ve filled out the FAFSA and applied to the college of your choice, the school will often automatically consider you for grants and scholarships.
Apply for Federal Loans
Federal student loans are offered through a college’s financial aid office, and repayment is usually expected to begin once six months have passed after graduation. Federal loan rates are determined by when they are issued and borrowers should check with the Department of Education for exact rates.
|Type of loan||Rates and costs (through 7/1/16)||Maximum borrowing per year|
|Federal Stafford Loan||Fixed 6.6%, with a loan fee of more than 1.062%. Interest accrues with loan origination.||$20,500|
|Graduate PLUS Loan||Fixed 7.6%, with a loan fee of more than 4.248%. Interest accrues with loan origination.||Amount up to the school’s Cost of Attendance minus the amount of all other financial aid you are receiving (including other loans).|
Federal Stafford Loans are a great place to start, as they have a lower interest rate at 6.6%. However, if you will go over your maximum borrowing amount per year, $20,500, then you might consider a Graduate PLUS Loan to help bridge the cost gap.
Research Private MBA Student Loans, Especially if You Have Good Credit
Unlike federal loans, you can apply for private student loans through a lending company, rather than your school’s financial aid office. For borrowers with high credit scores, private loans may offer rates that are more competitive than federal loans.
There are plenty of private loans available—and they can come in fixed or variable rates—but unlike federal loans, private loan rates are different for each lender and applicant. The interest rate you’ll receive on a private student loan will be determined by your credit history, and for some lenders, your employment, income, and savings.
The Federal Work-Study Program Provides Pay & Experience
If you demonstrate financial need, you may be eligible to participate in the Federal Work-Study (FWS) Program, which gives part-time employment to students. Not only can you use this income to pay for associated items with getting an MBA for business school, you can also earn some spending money under the FWS Program. The type of work you are assigned is also usually closely related to what you’re studying in your MBA program.
Apply for Scholarships, Fellowships & Grants
Many scholarships offered by business schools are based on merit, and recipients are chosen according to admissions applications and Graduate Management Admission Test (GMAT) scores. As you consider the schools you want to attend, research the available scholarships they offer and guidelines for eligibility.
There are also countless private scholarships that prospective MBA students can apply to.
There are also scholarships that are specific to ethnicity such as the Stanford Reliance Dhirubhai MBA Fellowship Program, which provides a full scholarship for up to five Indian students who want to obtain an MBA at Stanford Graduate School of Business. African American and Hispanic MBA applicants can seek grants through the National Black MBA Association (NBMBAA) and National Society of Hispanic MBAs (NSHMBA), respectively. Minority grad students who pursue an MBA may also be eligible for a fellowship from the Robert Toigo Foundation, which provides an award of $2,500 per year, paid directly toward your business school tuition.
Look for Employer MBA Sponsorship
Employers offering MBA sponsorship tend to be corporate firms, including management consulting, financial services, or other multinational companies. The quid pro quo for employees earning their MBA through the sponsorship of their employer is that they stay for a certain period of time (often two years) after earning the degree or pay back the tuition costs to their employer.
Alternatively, schools offering executive-level business degree programs for mid-career students — also known as EMBA programs — can be attractive to employers who want to nurture leadership in their most promising employees.
Some companies that offer tuition assistance programs for employees who earn their MBA include Deloitte and PWC. If you’re unsure whether or not your employer will offer MBA sponsorship, you can always simply ask.
School Loan Forgiveness
A number of top MBA programs offer their own loan forgiveness programs for graduates who enter public service after graduating.
For example, Stanford Graduate School of Business will pay a percentage of a graduate’s loans while they are employed in nonprofit or public service positions. The Yale School of Management will support the repayment of annual need-based loans to a maximum of $10,100 per year for graduates working in public or nonprofit sectors. A number of other top schools also offer loan forgiveness programs for MBA degree recipients entering public service, so it’s worth looking around.
What to do After You Complete Your MBA Program
Keep in mind that if you have prior loans from an undergraduate/graduate program, it may be possible for you to defer those payments while you are obtaining your MBA. Contact your lenders to confirm the deferment process. Remember, your total debt will be determined by which types of loans you have taken out and through which lenders.
If reasonable, pay down your previous loan balances before attending your MBA program to avoid accruing further interest while in school.
Once you’ve completed your MBA, your next goal will be to get your new career started. After you’ve secured a position you may be able to refinance your student loans for a lower rate. MBA graduates with federal loans can also use one of the government’s income-based repayment programs until they’re ready to pay off their student loans more aggressively.