Tag Archives: student loans

Planning for Your MBA Expenses

Business school is an expensive investment, and it’s never too early to start figuring out how to pay for it, even if you are not thinking of applying until a year or two from now. Fortunately, …

Paying for your mba

Business school is an expensive investment, and it’s never too early to start figuring out how to pay for it, even if you are not thinking of applying until a year or two from now. Fortunately, schools want to work with students to find a solution to financing school through a combination of loans and scholarships.

The MBA admissions blog at the Chicago Booth School of Business recently posted a great article with tips from the Financial Aid Office that will help orient potential b-school applicants no matter where they ultimately plan to apply. The first step is knowing what expenses to expect.

Begin by checking out the tuition rate at your target schools online, and take note also of the typical cost of attendance on top of tuition, which includes housing, textbooks, health insurance, living expenses, etc. that all students need to pay for.

While the school’s published cost of attendance is a clear starting point that factors in tuition as well as cost of living estimates, you may need to cover additional costs before, during and after your program.

To address the before costs, you’ll want to assess your personal financial situation carefully to see what your cost of attendance really entails. For example, it might cost you money to relocate to a new city or commute to campus.

You also might still have recurring bills that can’t be changed, such as an installment loan on a large purchase. Even updating your business wardrobe to prepare for interview season can amount to several hundred dollars if you’re not planning carefully.

Prior to even starting their MBA, many students create a savings goal for how much money they want to set aside by the time school begins. The rationale being that every extra dollar you save now is one you won’t have to borrow.

“Your MBA costs, however, won’t be limited to tuition and the necessities mentioned above,” the article notes, since “Many programs also offer endless travel opportunities – academic, career-related, and purely social.”

In fact, the travel and networking experiences that MBA students have at their fingertips is just one of the many amazing benefits of business school. Whether the motive is a tech trek to Silicon Valley, an finance industry conference in New York, or a trip bonding with peers in Belize, these adventures can make quite a dent in a student’s wallet.

And don’t forget that “You will also likely get involved with several student groups, which generally have fees to join,” the Financial Aid Office adds.

While it can be daunting to pay hundreds of thousands of dollars to earn an MBA, most business school graduates experience a substantial salary increase. The vast majority report having greater job satisfaction and the ability to advance quickly and, therefore, earn more in shorter time.

“Your lifestyle during your time as an MBA student can vary wildly based on your choices and, ultimately, you can control how far your money will take you,” the Booth financial aid team notes. “Be mindful in choosing the right balance for you and plan to be strategic with your spending. “

The article concludes with advice on other funding options for MBA hopefuls, so click over for more information that’s Booth-specific.

If you have any financing questions at all, you should contact your prospective school’s financial aid office. You can also get advice through admissions events. Financial aid officers are an amazing resource; they’ve seen it all before, and they want to ensure qualified candidates can pay for a degree.

Starting early – about three months before applying – is also really helpful if you’re pursuing scholarships, fellowships or grants. Since scholarships are free money, competition can be fierce, and you’ll benefit from having the extra time to create strong scholarship applications and from knowing the key deadlines so that opportunities don’t pass you by.

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MBA Debt Hurts Women More Than Men, Bloomberg Finds

Earlier this week, Bloomberg took a look at the gender pay gap among MBA graduates and found that it will take women an average of one year longer than men to pay back their student …

Earlier this week, Bloomberg took a look at the gender pay gap among MBA graduates and found that it will take women an average of one year longer than men to pay back their student loans.

According to an analysis of data from its annual ranking of MBA programs, the men and women surveyed borrowed a median of $75,000 to finance their MBA degree. At graduation, MBA debt made up 56% of the take-home pay for men and 62% of women’s compensation.

However, in the video above, Bloomberg‘s Francesca Levy notes that six to eight years out, women are earning an average of $140,000 while men earn $175,000 annually. Employers, either consciously or unconsciously, are paying women 80% of what men with the same degree take home.

“As the gender pay gap widens, the loans begin to weigh more heavily on women than on men. The typical woman would repay the debt seven years after getting her MBA, a year after the typical man who went to business school,” Bloomberg researchers found.

Four years after graduating, student debt takes up 25% of women’s earnings but only 14% of men’s.

One of the things driving the disparity is bonuses—that extra income that many people depend on as a huge chunk of their salary, says Levy. “Bosses are making decisions about individual people and it’s trending in this one direction where probably equally qualified men and women are getting really different outcomes, and the difference just grows and grows year after year.”

Ultimately, women who pursue an MBA at one of the world’s elite business schools are making a safe bet that their eventual return on investment far outweighs the heavy debt they will initially incur.

“Most of them end up earning six figures and get rid of their loans relatively quickly,” Bloomberg researchers have found. “They just arrive at that promised goal later than men.”

You may also be interested in:

Study Examines Male-Female Wage Gap, Post-MBA

Enrollment Flags for Women Pursuing the MBA

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NYU Stern Offers Loan Assistance to Socially-Minded MBAs

New York University Stern School of Business, with support from its Social Enterprise Association MBA club, has announced the establishment of a Loan Assistance Program for full-time, part-time and Executive MBA graduates. The program seeks …

New York University Stern School of Business, with support from its Social Enterprise Association MBA club, has announced the establishment of a Loan Assistance Program for full-time, part-time and Executive MBA graduates. The program seeks to reduce the financial burden of repaying business school loans among graduates who pursue career paths in social enterprise.

Careers in this field often have smaller compensation packages than tracks such as financial services, consulting and marketing, and this new initiative supports the School’s mission to develop leaders who create value for business and society.

“Business has the power to improve the world,” says NYU Stern’s dean, Peter Henry. “We encourage students to consider the world’s most pressing issues as opportunities to raise their ambitions to create value for business and society. With our new Loan Assistance Program, we hope to minimize financial constraints that might otherwise dissuade our students from exploring opportunities about which they are passionate.”

MBA graduates who earn up to $100,000 may apply annually to NYU Stern’s Graduate Financial Aid Office for the Loan Assistance Program within the first 10 years of their graduation. They have the potential to receive up to $15,000 each year, based on a sliding scale, which represents one of the highest amounts from business schools.

In addition, Stern has broadened the definition of eligibility compared to peer schools. Graduates may apply if they work in a US or international organization with a socially oriented mission, including not only tax-exempt organizations, government agencies and nonprofits, but also L3c and certified B companies.

The application deadline is November 1. Current MBA students graduating this May may pre-apply for the program up until June 15, with the awards contingent upon their meeting the program’s criteria by November. Beginning in 2013, the pre-application deadline will be February 1.

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Strive to Lighten Your M.B.A. Debt Load, or Budget Well

This post originally appeared on the U.S. News–Strictly Business blog. Attending a top-tier business school is””you guessed it””an expensive proposition. Take Harvard Business School: The M.B.A. class of 2013 student budget hovers around $84,000 for …

This post originally appeared on the U.S. News–Strictly Business blog.

Attending a top-tier business school is””you guessed it””an expensive proposition. Take Harvard Business School: The M.B.A. class of 2013 student budget hovers around $84,000 for tuition, living expenses, travel, and other ancillary costs. Once you tack on the opportunity cost of two years of forgone salary, it’s easy to see why, as Poets & Quants points out, six-figure debt is commonplace for most graduating M.B.A.’s.

While freshly-minted and debt-laden M.B.A.’s are out of luck, current business school students and applicants may find some solace in President Obama’s recent announcement regarding student loan reform. In a nutshell, the plan will reduce monthly payments to 10 percent of monthly discretionary income for low-income borrowers, and drop interest rates for students who consolidate into the government’s direct-loan program. Also, any remaining balance would be waived after 20 years.

But what should you do if the mere thought of carrying vast amounts of debt for decades leaves you reaching for the Maalox?

Find inspiration in No Debt M.B.A., a blog by a 20-something professional with a seat at one of the top five M.B.A. programs. The blogger and student has a lofty goal of graduating from business school in 2013 with no student loans. Since learning this spring that she got into her dream school””she only applied to one””the author of No Debt M.B.A. has written numerous posts about student loans, maximizing financial aid, how to minimize the expense of applying to business school, and much more.

Many M.B.A.’s shrug off massive student loans as a necessary investment to achieve that hefty return on investment from their post-M.B.A. salaries, but No Debt M.B.A. chafes when people tell her not to worry about graduating debt free, since she’ll be rolling in dough once she’s back in the work force.

“Student loans are not the investment, your degree is,” she writes. “The other important note is that when you leverage debt you are also leveraging risk which reduces the value of your return on investment relative to a safe bet.”

Part of her success””she has received a significant grant and will manage to pay for the entire first year in cash””is frugality, as evidenced by her ode to beans post and living with a $25 a week grocery budget. Given the tough economic climate, some schools have also taken steps to prepare M.B.A. students for living in leaner times.

Ann Richards, associate director of admissions and director of financial aid at Cornell University’s Johnson Graduate School of Management, suggests the tried-and-true concept of actually living like a student. This means sharing an apartment, asking family for support, reducing discretionary spending, and skipping that once-in-a-lifetime vacation before starting business school.

When asked to advise incoming students on managing their finances, Richards says preparing is key. Candidates should check their credit reports frequently and fix any problems that appear on their reports, and should put themselves on a budget and start to save for “non-educationally related” expenses like apartment deposits, moving costs, and interview expenses.

“Get your credit in order before you apply to business school,” Richards urges.

Ultimately, taking on student loan debt is a personal decision. If an M.B.A. will lead to a career with a salary commensurate with the cost of the debt you are about to incur, the decision may be an easy one. Mark Zupan, dean and professor of economics and public policy at the Simon Graduate School of Business at the University of Rochester, advises incoming students to create a business plan to manage their finances while studying.

“We’re rated number one in ROI among private business schools in the U.S.,” Zupan says, “but failing to plan is planning to fail.”

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