How to Pay for Your MBA
Guest post from our friends at CommonBond
Congratulations! You got into business school. The GMAT, video essays, and admissions interviews are (thankfully) behind you. In front of you are new friends, new skills and opportunities, and maybe even new stamps in your passport.
Before you start packing, though, you’ll need a game plan for funding your MBA journey. CommonBond was started by MBAs, so we’ve been there before. Below are some tips to help you figure out how to pay for business school and everything it entails.
Cost of Attendance (COA)
The first thing to figure out when deciding how to pay for b-school is your school’s cost of attendance. The COA includes tuition, room and board, and certain fees and is the legal maximum amount you can borrow in student loans. Check out CommonBond’s MBA Loan Calculator to figure out your school’s COA. In addition to the COA, you’ll also want to factor in other expenses and cushions like b-school travel, commuting, and relocation.
There are a number of options to consider when figuring out how to fund your MBA. These include personal savings, scholarships/fellowships, company sponsorship, federal loans (e.g. Stafford, Direct Grad PLUS), private loans, and family loans, among others. Funding options carry different benefits and tradeoffs.
Some loans offer benefits like deferment, forbearance, employment protections, or no pre-payment penalties. Additionally, you’ll want to assess different loan provider features like interest rates, customer service, ease of process, reputation, and network/community.
At the end of the day, how you fund your MBA is highly specific to your personal situation. Here are just some additional considerations as you evaluate options:
- Safety net retained: How much of your savings/emergency fund should you spend?
- Expected future income: Does your debt load and type make sense given your expected post-MBA income? Can your estimated post-MBA salary support your monthly loan payments?
- Future plans: Are you planning to start a business, or buy a home?
There are two types of federal loans available to MBAs:
- Direct unsubsidized loans: For graduate loans disbursed on or after July 1, 2018, this loan carries a 6.64% APR fixed rate.1 You can borrow up to $20,500 annually in direct unsubsidized loans.
- Direct PLUS Program: For graduate loans disbursed on or after July 1, 2018, this loan carries a 8.07% APR fixed rate.2 You can borrow up to the cost of attendance minus other financial aid received.
Federal loans carry with them certain government protections such as income-based repayment. If you’re planning to work for the U.S. government or a non-profit after b-school, you may also qualify for the government’s public service loan forgiveness plan.
Private loans are another type of funding available to MBA students and may carry lower rates compared to federal loans. They also feature some of their own unique benefits. Most private lenders offer both fixed and variable rate options.
With a fixed rate, your interest rate and monthly payments are fixed over the life of the loan; with a variable rate, your interest rate and subsequent monthly payments may fluctuate over time based on market dynamics. At CommonBond, our MBA Student Loan starts at 6.07% APR and is available without a cosigner.3 [i]
Private loans may also offer benefits beyond lower rates. For example, all CommonBond members get access to our award-winning customer care team and if borrowers run into financial difficulties, the CommonBridge protection program lets them temporarily postpone payments.
When to Apply
If you’re taking out loans for b-school, you’ll want to lock down your funding at least a month before classes start. If you want to get started today with CommonBond and knock one more thing off your pre-MBA “to-do” list, apply for an MBA loan here.
If you have any questions throughout the process, feel free to reach out to our Care Team.