How to pay for an MBA

Private student loans are one option to consider for funding an MBA. (iStock)

Earning an MBA has become more attractive thanks to the coronavirus pandemic. A declining job market, extended application deadlines, and relaxed admissions requirements have been attributed to the surge in interest in business programs. A report from the Graduate Management Admission Council found that 67% of U.S. MBA programs recorded an increase in application volume in 2020.

But earning an MBA doesn't necessarily come cheap. According to a compilation of data completed by Credible, the average MBA debt is $66,300.  Depending on your choice of school, you could easily spend $100,000 or more to earn a business degree — and money for college isn't easy to come by.

How to pay for your MBA program

If you're considering applying to business school and need help paying for your MBA, here are three options to consider.

  1.  Look for fellowships, grants, and scholarships
  2. Apply for a business school student loan
  3. Take advantage of an employer's tuition program

Just remember, MBA students: If you're ever looking for a private loan to pay for your business school expenses, an online marketplace like Credible can help. With Credible, you can compare student loan lenders and rates and determine what kind of offers you qualify for.

1. Look for MBA fellowships, grants, and scholarships

MBA fellowship programs, grants, and scholarships can help with covering the cost of an MBA without creating loan debt. These can be need-based, meaning your eligibility is determined by financial need. Or they can be merit-based, meaning your eligibility is based on your academic and professional achievements.

The main advantage of using fellowships, scholarships, and grants to fund an MBA is that generally, they don't need to be repaid. There can be exceptions, however, where you may need to fulfill work or service commitments to keep your awards.

If you're not sure where to look for these options, your school's financial aid office can be a good place to start. You can expand your search online as well. Just be sure to pay attention to application deadlines so you don't miss your chance to apply for a particular award.

Credible also makes it easy for MBA students to add a cosigner to their loan application and compare multiple lenders to see which one gets the best loan terms and lowest interest rate.

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2. Apply for a business school student loan

Student loans can also help you pay for an MBA. With the Federal Reserve reducing the fed funds rate to near historic lows, now could be an optimal time to borrow to lock in low interest rates.

You may first want to apply for federal student loans. Federal student loans can offer fixed interest rates but there are limits on how much you can borrow. Taking out private loans can help fill any funding gaps and you could choose from loans with fixed interest rates or variable interest rates. To learn more, you can visit Credible to compare interest rates for private loans from multiple lenders without affecting your credit score.

When taking out federal or private loans, it's important to consider what you might pay each month. A student loan calculator can help with estimating your payments. You can also use a refinancing calculator to gauge your savings if you're interested in student loan refinancing undergraduate loans you already have.

Keep in mind that refinancing student loans or taking out private student loans for the first time generally requires a good credit history and credit score. If you're new to using credit, you may need to get help from a cosigner to qualify.

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3. Take advantage of an employer's tuition program

If you choose to pursue a career in public service after graduation, it's possible that you could have some of your MBA debt canceled through the federal student loan forgiveness program. But if you end up working in the private sector, you could still have a shot at loan reimbursement or forgiveness through your employer.

According to a Willis Towers Watson Survey, the number of employers who are willing to offer some type of student loan relief to employees is on the rise. The options can include reimbursement for tuition expenses and fees, refinancing arrangements, or opportunities to consolidate student loans. You can reach out to your human resources department to see what type of student loan help might be available.

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Explore all the options to pay for an MBA

Fellowships, scholarships, grants, student loans, and employer assistance can all make earning an MBA less financially taxing, especially if you don't have cash savings you can use to cover higher education costs.

If you're interested in student loans specifically, first make sure you understand the differences between federal student loans and private student loans. Next, consider how much you'll need to borrow to pay for graduate school and use a student loan calculator to estimate your payments. If you plan to apply for federal student loans, you'll also have to complete the Free Application for Federal Student Aid (FAFSA).

You can apply for private student loans directly with the lender. Be sure to check the minimum credit score and other requirements to apply for private loans. Again, be aware that you may need a cosigner to be approved for private loans. And of course, it helps to use an online tool like Credible to compare student loan rates so you can find the loan option that best fits your budget.

MBA students who need more advice on paying for their MBA or finding student aid can always reach out to their school's financial aid office for further assistance.

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