When assessing business school and an MBA, the ‘Money Issue’ is nothing if not multi-faceted. Since graduate degrees are an investment, like any other investment, there is up front cost. Some are fortunate enough to not have to secure student loans to help pay for graduate school, but most, unfortunately, do need this type of financial assistance. So, how do you pay for business school once you're in?
Last year, I wrote about a proclamation made by the student loan ombudsman at the Consumer Finance Protection Bureau (CFPB), Rohit Chopra. Mr. Chopra declared the student loan system in the United States economy as ‘too big to fail.’ The student loan debt market, comprised of public and private lenders, shot past $1 trillion in early 2013 and continues its relentless climb.
It is a wonderful thing to not have to take on debt in order to pursue a graduate degree, but if you do have to apply for financial assistance then there is a hierarchy of the four available loan programs. 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
For an informative matrix and discussion of each of these loan options, click on this link from Duke University’s School of Law. It is important to do additional research, as well. Some schools 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.
Further, it is important to keep in mind that lending to grad 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 on or after December 16, 2013. Take a moment to read the full press release here.
Tackling the student loan market can be overwhelming so never hesitate to use your 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. Make an appointment and do some homework before going in for a consultation. It is also better to get loan applications in as early as possible, so please don’t delay.
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Which of these 4 loan programs are applicable to Indian students who are going to pursue MBA program in USA.