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Financing Your MBA

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Re: Financing Your MBA [#permalink] New post 14 Jan 2009, 20:02
With interest rates at historic lows, has anyone going to school this fall looked into financing options? I know there are the Stafford loans at 6.80% fixed, has anyone found any better deals? Where are private student loan rates coming in these days?
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Re: Financing Your MBA [#permalink] New post 22 Jan 2009, 10:15
solaris1 wrote:
For borrowers with excellent credit (750+ FICO), I am currently hearing of "private" (school-certified) loans at Prime+100bps or around 1mLIBOR+400bps. But this will vary by the school you're attending and your credit history.

If these rates stay in effect until May or July 2008, I personally intend to apply for a 1mLIBOR indexed loan over the GradPlus loans which are, as we know, 8.50% fixed but also include 3.00% upfront in origination fees and a 1.00% federal default fee. The "private" loans, for borrowers with excellent credit, tack on 0% in fees. I am led to believe a LIBOR indexed loan is preferable to a Prime indexed loan because the spread between the two has been increasing over the years, in 1mLIBOR's favour.

This is just based on my (limited) research so far. YMMV. I'd love to hear if anyone else has found other information worth sharing.


Solaris,

Where are you getting this info from? I'm really curious about these prime+100bps loans. I've got a great credit rating and I'm thinking I should be able to do better than 8.5% considering the current prime rate.

Do you just go through your school?

RF
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Re: Financing Your MBA [#permalink] New post 22 Jan 2009, 10:56
Oh wow. Solaris - you are very knowledgeable in this area.
Thanks for your very detailed answers.

May I ask, do you do this for living? I am curious.
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Re: Financing Your MBA [#permalink] New post 22 Jan 2009, 14:38
I will throw in there that private loans don't always offer the bells and whistles of the federal dollars. Flexibility with repayment (income-sensitive, graduated, forbearance, extended payment terms) is mainly what i am thinking of. Private student lenders vary quite a bit, while all federal lenders follow the exact same rules.
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Re: Financing Your MBA [#permalink] New post 22 Jan 2009, 15:23
solaris1 wrote:
If you are uncomfortable with this interest rate risk, you should take out the GradPlus loan which offers a fixed 8.5% rate no matter what.

Bear in mind you can also take out $41,000 (over two years) worth of federal loans through the Stafford program @ 6.8% fixed. I plan to take the full amount in Stafford loans before considering "private" education loans.


Ahh!!! No locked in rate. I see!

Ok, the Stafford is looking much better at this point.

It is a gamble, but I would a relatively safe one if you feel you can pay off the loans in a short period of time?

For example, if you finance $41K of the $90K of tuition by Stafford, then the remainder ($49K) at 4.X% variable rate, the prime would have to go up almost 300 bps before you matched the rate on a Stafford, right?

If you feel you can pay off the loans in 5 years or less (at least the non-Stafford loans), even if the prime rate went up 600 bps, the overall impact would be relatively small.

Considering the state of the credit market/economy I would guess that rates will be relatively low for the next few years.

Or am I missing something here?

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Re: Financing Your MBA [#permalink] New post 23 Jan 2009, 00:12
Loan Crisis Hits the MBA World
With big lenders requiring co-signers, international students are finding that money is tight. For many, B-school dreams may be over before they start

http://www.businessweek.com/bschools/co ... =rss_daily
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Re: Financing Your MBA [#permalink] New post 23 Jan 2009, 02:33
ninkorn wrote:
Loan Crisis Hits the MBA World
With big lenders requiring co-signers, international students are finding that money is tight. For many, B-school dreams may be over before they start

http://www.businessweek.com/bschools/co ... =rss_daily


Yes, this is true. It is just not possible to get a co-signer. And not all schools have equal empathy towards the situation..

BTW, I do not think the international student population will reduce alarmingly , since anyway lion's share of the international students in TOP US B-schools have credit history ( and in many cases Green Card) in US or come from the creme-de-la-creme segment of an international country. There will be reduction of international student of course but the first two groups will fill that shortfall.
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Re: Financing Your MBA [#permalink] New post 23 Jan 2009, 03:13
Do they count green card holder as international student though?

I agree with you. The numbers won't go dip at all.
I've been hanging out with internationals since I was an undergrad..and..I notice a lot of creme de la creme internationals for undergrad. I'm not saying all of them are, but a big portion of them usually would be successful regardless of bschool.
For school, I believe they don't even need any kind of loan. And these people have good 'why mba' stories too (because they have something running already that they can take further if they have that mba) plus loaded recommendations.
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Re: Financing Your MBA [#permalink] New post 24 Jan 2009, 16:25
I recall reading, some time ago, that one should try to postpone any financial gifts when attempting to secure Federal aid for B-School. When I receive my Financial Aid package, will the amount I have in my 401(k) and/or savings account affect how much the Federal government would be willing to loan me? I recall hearing that one could borrow up to the full budgeted yearly amount from the Fed, but I'm guessing the amount of money in my accounts would determine how much Uncle Sam gives me in subsidized loans.

Last edited by MeddlingKid on 24 Jan 2009, 16:51, edited 1 time in total.
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Re: Financing Your MBA [#permalink] New post 24 Jan 2009, 16:52
aaudetat wrote:
MeddlingKid wrote:
I recall reading, some time ago, that one should try to postpone any financial gifts when attempting to secure Federal aid for B-School. When I receive my Financial Aid package, will the amount I have in my 401(k) and/or savings account affect how much the Federal government would be willing to loan me? I recall hearing that one could borrow up to the full budgeted yearly amount from the Fed, but I'm guessing the amount of money in my accounts would determine how much Uncle Sam gives me in unsubsidized loans.


they do not count qualified retirement accounts (401k, IRA) or the value of your home. They will look at non-qualified accounts, such as savings, money market, stocks, etc.

The subsidized/unsubsidized part is determined by need.


So a person could, theoretically, take out the full amount in Plus loans even if he didn't receive any need-based Stafford aid?
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Re: Financing Your MBA [#permalink] New post 24 Jan 2009, 16:58
Yes, but why would you want to do that if you can take $20,500 in unsubsidized Stafford loans at 6.8% each year, as opposed to the GradPlus loans at 8.5%.

Eligibility for unsubsidized Stafford loans is not need-based. And even if you qualify for subsidized Stafford loans, you can only borrow $8,500 a year under the auspices of that program.

MeddlingKid wrote:
So a person could, theoretically, take out the full amount in Plus loans even if he didn't receive any need-based Stafford aid?
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Re: Financing Your MBA [#permalink] New post 24 Jan 2009, 18:00
solaris1 wrote:
Eligibility for unsubsidized Stafford loans is not need-based. And even if you qualify for a subsidized Stafford loans, you can only borrow $8,500 a year under the auspices of that program.

not need-based? my bad. I know that in undergrad my friends from wealthier families got all of their staffords as unsubsidized while mine were all subsidized.
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Paying for MBA [#permalink] New post 25 Jan 2009, 02:39
I read this article talking about financial aid and loans are down this year. This hasn't hit me yet, since I applied in R2. For those of you that applied in R1 and got admitted, have you guys started looking into how to finance the education? Is financial aid and loans really down? I think Kry said his loan jumped to 11%, that's crazy, my credit card rate isn't even that high. Any anecdotes you would like to share?

http://news.yahoo.com/s/ap/20090125/ap_ ... PCw_Gs0NUE

Last edited by nink on 25 Jan 2009, 05:35, edited 1 time in total.
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Re: Financing Your MBA [#permalink] New post 25 Jan 2009, 09:24
solaris1 wrote:
Just a quick comment, the official website for federal student aid programs is:
http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp.

Everything else is just some lender posing as an "official" resource. StaffordLoan.com is just a site owned by one such lender, and is not affiliated with the Department of Education's Stafford program.

While you are free to go with any lender for Stafford and GradPLUS loans (the incentives and rates virtually all lenders offer are now identical), it's probably a good idea to pick a Stafford/GradPLUS lender "recommended" by your school's financial aid office.

This doesn't apply to private education loans however.

isa wrote:


Woah - good to know that there are sites posing as "official" resources. Thanks for the heads up.
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Re: Financing Your MBA [#permalink] New post 25 Jan 2009, 09:26
solaris1 wrote:
And the rates you posted isa apply to undergraduate Stafford loans. Stafford loans for graduate study are fixed at 6.80%, they don't come down gradually like the undergraduate ones will in coming years.


Good to know solaris1 - I was actually going to ask why they come down gradually. I had heard that the rates were fixed so that was confusing. :)
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Re: Financing Your MBA [#permalink] New post 26 Jan 2009, 13:04
FYI

BW is hosting a chat with with Dan Thibeault, president and co-founder of Graduate Leverage, a student lending organization launched by Harvard Business School students. He’ll be answering questions about everything from how international students can find a co-signer to how much money you’ll really need to fund your MBA education.

http://forums.businessweek.com/n/pfx/fo ... &tid=79078
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Re: Financing Your MBA [#permalink] New post 26 Jan 2009, 13:29
ninkorn wrote:
FYI

BW is hosting a chat with with Dan Thibeault, president and co-founder of Graduate Leverage, a student lending organization launched by Harvard Business School students. He’ll be answering questions about everything from how international students can find a co-signer to how much money you’ll really need to fund your MBA education.

http://forums.businessweek.com/n/pfx/fo ... &tid=79078



FYI - I met this guy and thought he was pretty cool. We talked about teaming up to do something at Fuqua, but somehow first year slipped away from me....
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Re: Financing Your MBA [#permalink] New post 05 Feb 2009, 16:56
I have no problem covering the tuition and estimated living expenses through scholarship and Stafford loans. However, I am very confused as to how one covers car payments and credit card debt through the two years without income. I know it is illegal to direct education loans to such expenses, but I also find it hard to believe that no one has ever attended grad school who hasn't owned their car in full or had zero credit card debt. Also, I know federal loans can't be taken out over the school's estimated expenses. My particular school's estimate seems paltry at best...can private education loans be taken out to cover expenses above the estimated amount, or are these too capped off at what the school estimates?
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Re: Financing Your MBA [#permalink] New post 09 Feb 2009, 10:57
Has anyone tried to take a loan against their current mortgage to fund their education?
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Re: Financing Your MBA [#permalink] New post 09 Feb 2009, 13:33
I'm going into B-school with no debt, save a leased car that I'll be making payments on for another year and a half or so. The payment isn't bad. I know it'll make things a little tighter budget-wise, but who's to know if I use part of my cost of living allowance from my loan to pay for my car (and save on, say, rent or something else)? Surely others have done this.
Re: Financing Your MBA   [#permalink] 09 Feb 2009, 13:33
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