FUNDING YOUR MBA:

Tips for financing your advanced degree

GETTING STARTED

Obtaining your MBA is as an investment in your future career. Studies show that professionals with an MBA earn substantially more than their BA and BS degree counterparts. Funding an MBA can be an expensive proposition. Most students tap a variety of funding sources including fellowships, grants and loans.  

Remember, your budget must factor in not only tuition costs, books, transportation, housing and living costs, but also debt you may already have incurred prior to starting grad school.

The First Step

While assistance can be found from various sources, we suggest your first call/online research be directed to the school's financial aid office for details on its process, deadlines, and required documents.  

One commonly used document is the Free Application for Federal Student Aid (FAFSA). The FAFSA should be submitted to most schools after January 1st and before June 30th for you to be considered for federal loans.  In addition to the FAFSA, some schools may require that you submit additional financial information to determine your financial aid award.  Schools may also ask you for your most recent income tax returns.

Funding Sources: Explore Your Options

There are a variety of funding sources available - here are some to explore. We recommend starting early and tracking deadlines carefully.

Grants. Various groups, institutions, and charities give private grants. Most look for some type of affinity between the student and the organization granting the money. MBA programs may have merit-based (given for outstanding academic achievement) or need-based (given for the most financial need). There are also grants for students interested in pursuing specialized courses of study. At most schools, when you apply, you are automatically considered for awards for which you may be eligible. All grants are competitive and often include a rigorous application process. Plan ahead, because deadlines could be earlier than you expect. Grants are essentially a gift and do not require repayment.

Scholarships and Fellowships. Scholarships and Fellowships are monies given by a group, institution or charity to help cover or defray some of the costs of your MBA. These are typically need-based or merit-based. Most scholarships are competitive and require that you fill out an application, which includes a description of your current circumstances, an essay about why you deserve the money, and some indication of your future plans. Scholarship money, like grants, typically does not require repayment. However, many scholarships have terms that require the student keep up certain grade point averages or follow a particular course of study. All have application deadlines. Start applying early and continue your research/application even when you are enrolled.  There are several online scholarship search engines, but be cautious about choosing a service that requires payment. We recommend www.stufund.com as a reputable source to get you started.

Work/Study or Graduate Assistantships. Some MBA programs may offer students eligible for financial aid a position in a "Work Study" program. This is an arrangement that allows students to work on campus to help cover some of their education costs. Graduate assistants undertake a variety of duties that may include teaching, support of computer labs, working in university administrative offices, or support of faculty research. Most graduate assistantships do not begin until the student's second year.

Employer-sponsored Programs. Corporate America invests millions of dollars to support MBA students' educational efforts. Start by visiting your own employer's website to see if you are eligible for any of their scholarship or tuition reimbursement offerings. If you are a recent graduate, look at companies that offer comprehensive educational benefits for those employees who want to continue their education. Whether you are a current college student entering the work world or a current employee looking to return to school, internships and/or full-time employment with companies that offer tuition reimbursement plans are an excellent way to fund your MBA. Many of these programs will require you to work full time or work for a certain number of years after graduating as a condition of receiving financial assistance. You may also have to maintain a certain GPA while taking classes in order to get reimbursed.

Loans. There are a wide variety of loans available to students, both federal and private.

• Stafford Loan. The most popular federal loan, the Stafford Loan is either subsidized or unsubsidized. Subsidized Stafford Loans are loans that the federal government makes interest payments on while you're in school, if you qualify based on need. This means you pay no interest on your loans until after you graduate or leave school. With an Unsubsidized Stafford Loan you will begin making interest payments right away. You do not have to pay back any principal during school, but unsubsidized loans require that you either make interest payments during school or have the interest deferred (added to your principal) thus raising your loan balance. The maximum total debt for the Stafford Loan is $138,000, no more than $65,500 of this amount subsidized.

  • Amount Allowed: Up to a maximum of $20,500 per year ($8,500 in a subsidized Stafford Loan and $12,000 in an unsubsidized Stafford Loan)
  • Benefits: Repayment can be spread out over ten years and a cosigner is not needed
  • Eligibility: A student must be enrolled at least part-time, be a citizen or permanent resident of the United States, and be a graduate or undergraduate student
  • Interest Rate: Fixed at 6.8%
  • Repayment: Begins six months after graduation
• Perkins Loan Program. The Perkins Loan Program offers low-interest, long-term, deferred repayment loans to students also. Most financial aid offices will package this loan automatically for the student if the funds are available. The annual maximum for a graduate student is $6,000.
  


• Amount Allowed: depends on when you apply, the amount of funds available at the time, and your level of need
• Benefits: low interest rates and you do not need a cosigner
• Eligibility: a student must be enrolled at least part-time, be a citizen or permanent resident of the United States, be in good academic standing, and be registered in the Selective Service
• Repayment: 9 months after graduation, you can spread repayment out over ten years (or longer depending on the borrower's income)
  
  
• Graduate PLUS Loan. The Graduate PLUS Loan is a new federal loan program. It is designed to take over where the Stafford and Perkins Loans leave off.
  
• Amount Allowed: Eligible graduate and professional students can borrow up to the cost of attendance minus any other financial aid they have received 
• Eligibility: Largely dependent on the borrower's credit rating and history, as opposed to the purely financial need-based Stafford and Perkins Loans; borrowers may need a co-signer if their credit is insufficient
• Interest Rate: Fixed at 8.5% and it is charged from the date of the loan's first disbursement
• Repayment: Can be deferred while you are in school
  
  
• Private or Alternative Loans. Private or alternative loans are offered from a variety of banks and financial institutions. We suggest applying for federal loans first. If the funds from your grants and federal loans don't cover all of your costs, then you will need to seek out a Private Loan. Be aware that when applying for Private Loans, a credit check is involved. Loan approval is based on the credit history and the lending company may require that you have a co-borrower. Your school may have a list of lenders that have programs available for your financial situation.

Funding Your mba Checklist

Here are a few things to keep in mind when seeking funding for your MBA. 

• Keep track of financial aid deadlines.  Filing early is the best way to assure funding.
• Get your finances in order.  You may need to look at consolidating your undergraduate loans to make monthly payments manageable.
• Eligibility for aid requires at least part-time status.  Consider your course schedule accordingly.
• Financial aid awards do not automatically renew.  This includes having to renew the FAFSA form and school specific application form each year.