Financing Your MBA

This thread is amazing.. I highly recommend reading through from the first post to the end.. very educational.

A private vs public loan question:

For people who have no intention of working in the government and are confident in job prospects, are there any other reasons for getting a public loan over a private one? I'm curious because rates for fixed private loans with cosigner seem lower than Stafford or Grad PLUS..

Private loans can have variable rates. So while it might be low now, it can skyrocket later. The Direct and Grad Plus have fixed rates.





Weird, the above post is 100% copied and pasted from a book, Case Studies and Cocktails.

Thanks for the heads up.

Can someone comment on this plan?

I live in CT and have not purchased any 529. They have a 1-1 deduction up to 5k. I am planning on going to school in September. Is it possible to fund my 529 this year and then just withdraw it the same year? (I would probably withdraw the same day, so there is no investment risk)

i could do this for 2 years, and save 600-700 in CT income tax

Hi All,

I am not seeing anything addressing a particular problem I am having with the student loan process so I am hoping someone on this thread may have some knowledge. My tuition and mandatory fees are going to be covered by my parents but I will need to take out loans the cover the rest. Most of the student loans I am seeing disburse to the school you are attending and then the office of financial aid hands over the amount of money that remains after tuition fees etc have been deducted. Having spoken with a Columbia Business School Financial Aid Officer briefly they indicated that they are obligated to subtract the tuition first and then disburse the loans even if the tuition has already been paid.

For tax reasons my parents have to pay the school tuition directly or else the money given to me or paid off on my loan is subject to a gift tax on them or income tax for me. Has anyone else had this type of situation and if so what was the solution? Were you able to get a private lender to disburse a student loan directly to you or work something out with the financial aid office at your school?

Thanks!

any data about Canada ? what are the options for financing an MBA in Canada?

lilmisskate86 - are you repaying your folks after all of this? If so, you can structure this as a loan with an absurdly low interest rate (not like they're high right now anyways). That way instead of the paying a gift tax or losing out on financial aid, you get the maximum value of your debt and get to take a tax deduction for interest and school tuition payments.

If they're just paying tuition and mandatory fees, then I'm incredibly jealous . One way to deal with that may be to set up a trust with you and your siblings as beneficiaries, although this will also effect how the school views your assets and may be subject to the same tax (I'm unclear about this). Regardless, see you next fall at CBS.

Have any Americans started shopping around for private loans? What are the popular lenders offering the best rates? Sallie Mae looks pretty good right now.

Is there some sort of search engine or comparison tool for this type of thing?

Similar to the last question - just curious if any other Americans have priced out private loans? If I can get a 2-3% interest rate loan from Sallie Mae I am totally rocking that.

Unfortunately, I didn't receive any scholarship money but I have excellent credit and quite a bit saved up (enough to pay for my entire two years). Maybe it's the inner financial geek speaking , but I would totally finance my education at ~3% since I'm pretty confident that the return on my investments will be above that. I can always payoff the loan in full immediately if interest rates skyrocket.

Discover Financial and Wells Fargo have competitive rates. I have excellent credit and my parents offered to co-sign, so based on what I've seen it's definitely worth it for me to mix in a healthy amount of private variable-rate with the fixed government. I'm of the opinion that rates are going to remain low for the next few years, at minimum.

I'm of a similar opinion. If I may ask, what rates were they quoting you for both fixed and variable? Also, how much did having a cosigner help? My parents are pretty anti-debt but I might be able to convince them if it gets me a lower rate.

Does anybody know if you are required to take the full unsubsidized loan amount if you take the federal loans? I am looking at my finances and depending on the job my wife gets I might need some loans but not a full $20,500. Can you accept federal loans and ask for just $10,000 for example?

EDIT: In case anybody else is wondering, I called the financial aid office and they said yes. You can accept any amount up to $20,500 in Federal Loans.

This isn't quite correct. You have to report gifts over $13k but you won't necessarily have to pay taxes on it. Each person has a lifetime gift exclusion of over $5 million dollars that you can give to whoever you want without having to pay gift tax on it. Additionally, each year you get $13k (recently upped to $14k) that you can give to whoever you want without it counting against your lifetime gift exclusion (of more than $5 million). That's why you have to report gifts over $13k, so that the IRS knows how much of your $5 million exclusion you've used.

It's called an 'exclusion' because that amount is excluded from gift taxes.

For Variable, I think i was about a 5.5% to start before having a co-sign, and 3.25% with (Prime + 0)

Does it make sense to apply with a co-signor if they have a lower credit score than you and/or are retired?

My credit is decent (735) given my super short credit history, but I know that a lot of people suggest getting a cosignor for private loans. My dad is maybe the only one who would make sense. His credit is about 50-60 points lower than mine (doesn't have a credit card or any loans or outstanding debt) and he's retired and living off investment income and social security.

Neither of us can imagine it'd make much sense for him to apply with me, and I don't want to unnecessarily have his credit pulled if it wouldn't make a difference. Anyone have experience with this?

Even though his credit is lower than yours, its still not horrible. From the bank's perspective there is a chance that you could have financial difficulties while he is still able to make payments on the debt, which means that they have a better chance of getting their money back than if they relied only on you for repayment.

It may not make as much of a difference to your interest rate as it would if he was the one with a higher credit rating, but it is still better than not having a cosigner.

Thanks for your advice! I spoke with a Discover rep who basically confirmed everything that you said and suggested trying a co-signer just to see. Still waiting to hear back on my final rate—on my own, I got prime+2.75% (6% currently), so I’m hoping that will go down once he’s added.