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Wondering how to pay for that dream MBA?
When assessing business school options and your plans for how to pay for an MBA, the “money issue” is nothing if not multi-faceted. Graduate degrees are an investment. Like any other investment, there is a considerable upfront cost—a cost that continues to increase at many top business schools. Some graduate students are fortunate enough not to have to secure a student loan to help them pay for business school, but unfortunately, most will need some type of financial aid. So, how do you pay for business school once you’ve been accepted?
The student loan market
In 2013, the student loan ombudsman at the Consumer Finance Protection Bureau (CFPB), Rohit Chopra, declared the student loan system in the United States economy “too big to fail.” The student debt market, comprised of public and private lenders, shot past $1 trillion in the early part of that year and continues its relentless climb today.
It’s 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 which you should keep in mind. To reduce the cost of capital, apply to financial aid programs in the following order:
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Federal Perkins loan
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Federal Unsubsidized Stafford loan
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Fixed-rate Federal PLUS loans
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Private student loans
For an informative matrix and discussion of each of these loan options, check out this handbook from Duke University’s School of Law.
Weigh your options
It’s important to do additional research before deciding which loan is right for you. Some business schools have in-house loan programs with attractive rates and lenient repayment stipulations. Also, some states 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 campaign from Discover® Student Loans, announced last year 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 lowest-cost financing out there. Make an appointment and do some homework before going in for a consultation. It’s also better to get loan applications in as early as possible, so please don’t delay.
Do you have any advice for how to pay for business school? Share your comments with your fellow aspiring MBAs below.
The post How to Pay for Business School appeared first on Kaplan GMAT Blog.
