Funding your MBA
Tips for financing your advanced degree
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. Federal student loans may be obtained directly from your school’s financial aid office.
- 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 There is a low, fixed interest rate and repayment begins six months after graduation.
- Perkins Loan Program. Perkins loans are need-based, low-interest loans. The amount of the loan is determined by each college and is based on the expected family contribution. To be eligible for this loan, students must have also applied for a Pell Grant. Repayment doesn’t begin until a student graduates or falls below half-time enrollment status at school.
- Graduate PLUS Loan. The Graduate PLUS Loan is designed to take over where the Stafford and Perkins Loans leave off. Eligible graduate and professional students can borrow up to the cost of attendance minus any other financial aid they have received.
Total deferment is an option on some student loans in which the student decides not to pay any of the principal loan amount and interest during the time he/she is enrolled in college. This postpones loan repayment until after graduation. Usually, the loan amount continues to earn interest even though you’re not paying. At the end of school, that interest gets rolled into the principal loan amount. Therefore, upon graduation, the loan amount will be larger.
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.