This post originally appeared on Stacy’s “Strictly Business” MBA Blog on U.S.News.com
Getting your MBA acceptance letter is a once-in-a-lifetime experience, but submitting your deposit for business school is a thrill of a different kind.
After you decide where to attend, you’ll only have a few months to get your finances in order. Before it’s too late, take a look at how to assess the following sources of funding when planning to finance your MBA.
1. Scholarships and fellowships: Scholarships are clearly a great source of funding – it’s free money – but it’s easier said than done to get them. Be aware of how your school makes scholarship offers, as you may need to prepare a separate application to be eligible.
You may also need to submit a different application for each fellowship or scholarship. Don’t lose out because of a missed deadline. Look beyond your business school, too, to organizations like the Forte Foundation or Consortium for Graduate Study in Management that offer highly valuable scholarships for MBA students.
2. Company sponsorship: If you’re one of the lucky few with a sponsorship offer, make sure you know exactly what you’re getting into before you accept. Because sponsorship often comes with an obligation to return to the company after you complete your MBA, take a step back and assess whether you’re absolutely confident you want to return. Breaking such an agreement after your earn the degree can lead to not only strained relationships with former colleagues, but also a mountain of unforeseen debt.
Some lenders such as CommonBond will allow you to take out a loan to pay for an MBA even after you’ve graduated, but it’s always better to be prepared ahead of time. Meanwhile, if you plan to return to your company but don’t have sponsorship, it never hurts to ask about options. See if you’re eligible for any reimbursement given the new skills you’ll bring to the table.
3. Retirement savings: This less obvious pool of money comes with a few extra considerations, first and foremost being that you should always think hard before touching money set aside for retirement. However, those who have saved aggressively already and plan to continue doing so may find it worth it to take some money out for the short term.
You’re exempt from the 10 percent penalty for early withdrawals when you put the funds toward qualified higher education expenses, of which attending business school is one. You’ll still face income tax on this money, but the tax burden will likely be less when you’re in a graduate student tax bracket.
4. Federal loans: The U.S. government offers at least two loan options for each academic year: the Stafford Loan and the Grad PLUS Loan. The Stafford is limited to $20,500 for a year, while the Grad PLUS is available up to your school’s cost of attendance.
5. Private loans: When you’re looking for the right loan, it pays to shop around and find a lender you trust at an interest rate you like. After all, your MBA is only two years, and you’ll probably be working with your lender for 10 or 15 years.
Private loans can provide customized options to help you save, sometimes at rates even lower than the federal government’s. If you’re looking to augment your other MBA financing, seek a lender with great customer service and ask about what loan options can maximize your savings.
Finally, use an online MBA student loan calculator to organize your costs and see how loans with different interest rates can work in your favor. Your MBA is a great investment, and I hope you can make the best use of the months ahead to make sure you have all the funding you need.