Why get an MBA? One of the major reasons is salary; an MBA puts you in a position to earn more. But in order to get the monetary benefits that stem from an MBA degree, you have to make an investment. The real question may be how to pay for an MBA. All of you future MBAs know that return on investment is everything, but you want to make a smart investment, especially if you are taking out a loan. Let’s examine the four types of loans that can help you secure that valuable MBA degree.
There is a definite hierarchy of the four available loan programs for an MBA degree. To reduce the cost of capital, apply to financial aid programs in the following order:
Federal Perkins loan
Federal Unsubsidized Stafford loan
Fixed-rate federal PLUS loans
Private student loan
Duke University’s School of Law provides an excellent in-depth discussion of each of these loan options. It even includes a great matrix-- a key source of information (and weird Microsoft Excel fetishes) for many an MBA. You need to take initiative and do additional research, as well. Some business schools and programs have in-house loan programs with attractive rates and lenient repayment stipulations. Also, states might have student lending programs that could win the day over both federal and private lenders for the smart future MBA degree holder.
Even more, you must keep in mind that lending to business school students is perceived quite differently than lending to undergraduates. This could mean that item number four on the above list may well end up at number two depending on your credit and current private lending offerings. For example, one recently announced campaign from Discover® Student Loans, in cooperation with GMAC, offers a 0.25% interest rate reduction to those who sat for the GMAT exam (read: perspective MBA degrees) on or after December 16, 2013. Take a moment to read the full press release.
Tackling the student loan market can be overwhelming so never hesitate to use your business school’s Financial Aid Office. The folks who work there will be far more knowledgeable about all of this than you and will help you find the cheapest money out there-- consider connecting them your first homework assignment as an MBA candidate. Make an appointment and look around for other information before going in for a consultation-- remember: you are going to be a business person. Now’s the time to start using those future MBA skills to kick off your new career on the right foot.
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