Even MBA students need to discover the best financing options for their graduate studies. While an MBA may be one of the better financial decisions for post-college studies, schools must still be paid prior to admitting students for classes. If you’re looking for info on private lenders, federal aid, scholarships, and more this is the place to be. And, no matter how you fund your MBA studies, it's all but assured that you will graduate with a degree that will serve you well into the future.
How Much Does an MBA Cost?
An MBA is not a cheap degree. Though each school has its own pricing structure, you can expect to pay around $40,000 per year, on average. And that’s the cost before various fees, books, possible travel expense, and your living costs. Those added dollars could add up to $30,000 to your MBA total. If you are a student in a city like New York or San Francisco, with a higher cost of living, your costs could be an additional $40,000 per year. Thus, a two-year program in an expensive urban center might set you back upwards of $160,000 for the two years. Naturally, there are online options and programs in more affordable areas to consider.
Keep in mind that cost should not be your primary concern when choosing an MBA program. Try to focus on attending the best, most well-respected program you possibly can. For instance, a Harvard MBA will surely set you back a lot more than a state school, but the rewards can more than offset the initial cost.
Specific MBA Concentrations
Though it's easy to estimate costs for a general MBA, things get trickier when you are seeking a specific concentration. These can involve added costs, may require that you take more prerequisite courses, or may involve travel expenses. For instance, if you decide to work towards an MBA that focuses on engineering or information technology, the program may need coursework that your undergraduate program didn't cover. Other programs in supply chain management or international business may feature terms abroad that will necessitate that you be a full-time student and that you cover rent for that period of time. However, some abroad programs are in conjunction with other universities that may offer student housing for an affordable rate, it just depends on what degree you’re trying to earn and what’s available.
Further, some programs offer concentrations that extend past the 2-year core MBA coursework. These are sure to be more comprehensive, but the added concentration will also add to your expenditures. However, the concentration will be worthwhile when it results in your dream job.
These tuition and other school expenses can all be accounted prior to enrollment, which will help you make your best decision. As for living expenses, those might be more variable, but you should be able to arrive at a reasonable estimated cost and structure a budget accordingly.
How Will You Pay For it?
It might be a good idea to try to fund your degree with cash as much as possible. Savings are a great way to pay for your MBA without accruing interest on top of the principal cost. Student loan interest can easily increase the cost of your degree. Since graduate school is all but inevitable for most professionals, you should start saving for graduate school as soon as possible.
One way to start saving is to purchase a house that can accrue equity while you work on your first job. You might even team up with other new graduates and pool your resources to purchase the best investment property possible. When you split the mortgage, you can save money on top of your equity. You and your team may not even need to sell in order to fund graduate school. The house can be then rented and used as an asset for future purchases.
Another way to save extra money is to pick up side gigs to help supplement your income. There are a number of opportunities that allow you to work at your convenience. With a ride-share gig, for instance, you can work on the days that suit you best. That supplemental income can help you meet or exceed your savings goals and attain the coveted MBA all the sooner.
One option for funding your MBA is to use a traditional IRA or a Roth IRA as a savings vehicle. The Roth IRA has restrictions, however, in that you can only withdraw a certain percentage for education without penalty. A traditional IRA, on the other hand, can be used in part or in whole to fund educational expenses. The primary caveat is that you, or the student in question, must be enrolled more than half-time in an institution accepted by the Department of Education.
Parents or grandparents can use their retirement plans to help with education, as well as spouses. Thus, if you are married, you could help your spouse with educational expenses, including books, from your IRA. Since their earnings are sure to rise after graduation, this sort of investment may pay off many times over.
However, prior to using your IRA to fund education, you should discuss this option with your financial advisor. IRS rules are always subject to change and you want to conduct your business under the current rules.
Fellowships, Research Assistant Positions, Grants, and Scholarships
One of the best ways to fund your MBA is to win a fellowship, grant, or a scholarship. You don't have to repay these funds, and some include interesting work opportunities in top firms. For instance, Goldman Sachs offers a fellowship that includes a summer associateship. You'll be paid for your associateship and you might even land a full-time job as a result. Goldman pays its fellows an additional $40,000 when they sign on for full-time work, plus you may also receive a signing bonus.
Other investment banks offer fellowships as well, and many are targeted at minority communities, including LGBTQ and various ethnic groups. There are also fellowships available for specific programs both home and abroad. Many of these fellowships are worth $10,000 and up, which can be fantastic news for any MBA student.
Some programs also offer research assistantships. These can be a fantastic opportunity to receive a stipend and gain valuable experience. Further, when you work through your MBA as a research assistant, your resume will gain a new level of prestige. These positions may be especially valuable if you intend to pursue academia at some point after graduation.
Many states offer financial aid to MBA students. These scholarships and grants are often awarded to minority or underprivileged students, who tend to be underrepresented in MBA classrooms. There are also MBA scholarships that states designate specifically for female MBA candidates. Some states, and individual programs, offer scholarships for special concentrations.
For instance, you might find a scholarship that supports your focus on entrepreneurship or technology. Some states might also encourage students to focus on sustainability or international business. The options can be limitless but you should check with your program's financial aid office to discover what your state has to offer.
While most graduate students must find ways to finance their education apart from their employers, the MBA is in its own class. Employers know that fostering MBAs among its ranks will benefit everyone. Clients are impressed and are more likely to trust a firm with a full roster of MBAs and the added expertise will benefit everyone. Thus, if you find a program that will directly benefit your current job or duties, your employer might be willing to provide tuition assistance. You may have to provide some evidence that the program's goals align with your specific business functions, on top of meeting other criteria, such as promising to stay with the company for a set period of time after you earn the degree.
Most employers agree to repay tuition costs provided that the student meets certain standards. Most often you must maintain a minimum GPA, such as a 3.0. Tuition reimbursement programs also may be structured or available only to those in certain MBA programs. One chief criterion for the program you choose is accreditation.
Programs that have a national accreditation, such as AACSB or ACBSP are more likely to receive employer funds. Though a regional accreditation might be accepted by your employer, those two accrediting agencies are among the best you can ask for in an MBA. There may even be employers who offer a tiered program that will reimburse a certain percentage for regional programs but more for an AACSB program.
Federal Financial Aid
Federal financial aid is, of course, available to MBA students. You’ll need to fill out a FAFSA form, which may be familiar from your undergraduate days, and you must also maintain a minimum number of credit hours, but the funds are available. These loans will begin accruing interest shortly after graduation, however, so make sure that you have a repayment plan in mind before you take out the loans.
Some loans allow you to start making payments while you're still in school. This may be helpful if you are still employed or are working with your employer's tuition reimbursement program. Thus, you can possibly dramatically cut your long-term debt obligations before you receive a cap and gown.
- Federal Direct Loans:
There are four separate types of Federal Direct Loan. All of these loans are available for Public Service Loan Forgiveness (PSLF) and have flexible repayment plans.
- Direct Graduate PLUS Loans:
This loan type will cover the full cost of your education. These loans are fixed-interest loans and do have an origination fee.
- Federal Perkins Loans:
This Federal loan is based on financial need and are available to students at any level or type of institution. The loan amount is determined by your school's financial aid department, if they participate in the program. Not all MBA programs support the Perkins loan program.
Personal Business School Student Loans
MBA students can also take out personal loans to help with business school. Federal Aid can only go so far, after all, and students often need help with books, living expenses, and travel, not to mention tuition. Federal loans will not cover the extra costs of school like travel and off-campus room and board. Most personal loans originate through private lenders, such as Sallie Mae, and will accrue interest on a variable or fixed-rate basis, depending on your loan terms. Keep in mind that you should always exhaust federal loan options prior to resorting to private lenders.
These private lenders do offer flexible lending programs, but they often have more stringent repayment plans and possibly higher interest rates, too. However, your situation may be best suited to these lenders, especially if your federal options have already been tapped.
While most will seek out Sallie Mae for their personal student loan, there are many other lenders who provide loans to students. For instance, College Ave is a lender that offers a full suite of student loan options, including those for MBA students.
As with federal loans, many private, personal loans can often be structured in such a way that you don't need to start making payments until after graduation. Other private, personal loans may begin accruing interest and require payments more immediately. There are many online tools to help you discover the best loan type for your education, but you can always consult with a financial advisor to discover the best financing option.
Veterans who seek to advance their education after they've served are eligible for the GI Bill. This program has been intact since World War II and serves to support veterans as they transition back to civilian life. There are many permutations of the GI bill and some will ask that you make decisions early in your military career that will result in certain benefits packages upon retirement. Furthermore, there are packages that cover either active-duty soldiers or reservists.
Not only are veteran soldiers covered by the GI Bill, but their families are also acknowledged by the GI Bills benefit package. That is, soldiers' families can also receive educational benefits. Both spouse and dependents of active duty soldiers may attend college or graduate school with help of the GI Bill. Keep in mind that these benefits have limits. However, if students plan carefully, the GI Bill can go a long way indeed.