So, you finally decided that it’s time to ‘up your game’ and you think the way to go about it is to get an MBA. Most MBA graduates would agree that this is definitely a good move if you want to advance your career faster and earn more. While an MBA offers the highest return on investment (ROI) of just about any business program, tuition costs have to be paid upfront. Unless the program is free, this can place a serious financial strain on students until they land that big promotion or bump in pay. Fortunately, there are a number of funding options from private and federal sources that can help students pay for their MBA and minimize debt. Some of the best options are institutional scholarships and fellowships, outside scholarships, employer sponsorship/tuition assistance, private loans, and federal loans.
Institutional Scholarships and Fellowships are “awarded” to students, so these funding options won’t leave a trail of debt. One of the most common types of scholarships is the merit scholarship. This is a type of financial aid that recognizes a very specific talent, skill, or promise. Not to be confused with need-based grants, which are awarded on the basis of financial need alone, merit-based awards may come from the school or outside sources.
According to a 2014 U.S. News & World Report article, “business schools usually award a variety of merit-based scholarships, which some institutions call fellowships, and the types of scholarships can vary from school to school.” For example, Harvard Business School offers an array of fellowships, including need-based, nonprofit, summer, leadership, science, and others ranging from around $10,000 to $20,000 or more, while B-schools such as Kelley School of Business at Indiana University and Ross School of Business at the University of Michigan offer full-tuition scholarships.
Talk to your financial aid office to find out which scholarships and fellowships may be available to you.
Outside Scholarships are awards offered by sources outside of the college or university you are attending. Like institutional scholarships, outside scholarships come with zero debt. The following are just a few examples of the types of outside scholarships available:
- Continuing MBA students, including research grants
- Gay & Lesbian MBA students
- International MBA students
- MBA students in particular career/discipline areas (Finance, Marketing, etc.)
- Minority MBA students
- Women MBA students
Take a look at the Outside Scholarship Resources guide offered by Tuck School of Business at Dartmouth, or try GoGrad, for information about specific scholarship programs and how to contact them. Another good source is the MBA Scholarship Book: Your Guide to the Best Scholarships Available from 100 Full-Time MBA Programs by Steve Sed. And it’s well worth the research. Outside scholarship awards may range from several hundred dollars up to several thousand dollars or more. To learn more about scholarships, take a look at our MBA Scholarship, Sponsorship Guide.
Employer Sponsorship and Tuition Assistance programs are other funding options that can help you dodge the debt bullet. Companies want to invest in future leaders who will propel company performance, so they are willing to help you pay for your MBA. Apple, Bain and Company, Bank of America, Chevron, Ford, Intel, Wells Fargo, and Target Corporation are just a few of the thousands of companies that offer programs. Even if your company doesn’t have a formal sponsorship or tuition-assistance program, they might be interested. It’s up to you to convince them of your value to the company.
Private Loans have certain requirements that must be met for approval including good credit, solid income, and sometimes a cosigner. Some may require payments while you are still in school. The upside is this type of loan can provide customized options to help you save, sometimes at rates even lower than the federal governments, according to U.S. News & World Report. The best way to go about finding the best private loan is to “seek a lender with great customer service and ask about what loan options can maximize your savings.” Tip: consider a credit union.
Federal Loans are guaranteed by the federal government and they are based on need. This means that lack of income or a less than stellar credit history will not result in rejection. Besides guaranteed approval for students that demonstrate need, federal loans do not have to be repaid until the student graduates, leaves school, or drops to less than half-time enrollment. The interest rate is fixed and contrary to what U.S. News has to say, rates are often lower than private loans, says the U.S. Department of Education, and much lower than some credit card interest rates. Let’s just say, some private loan options may be better than certain federal loans, and vice versa.
Federal loan programs also provide ways to lower monthly payments and minimize debt. For example, some or all of your loans may be forgiven if you land a job in public service or education, and repayment plans may be tied to your income. This is particularly helpful if it takes a while to find a lucrative position. Finally, federal loans offer forbearance and deferment options if you ever run into trouble repaying the loan. To get a federal student loan, you must complete the Free Application for Federal Student Aid (FAFSA).
Although not as popular as the funding options listed above, full or partial self-funding can help minimize or eliminate post-graduation debt. Some students may find that it’s worth it to use part of their salary and/or savings to pay for their MBA. Savings can always be replenished later, thanks to that strong ROI we talked about earlier, and many students may find that living frugally for a year or two is a good trade off.
Keep in mind that self-funding is often easier for part-time and online MBA students. These flexible schedules allow students to continue working full-time while earning their degree.
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"Federal Student Aid." Federal Student Aid. U.S. Department of Education, n.d. Web. 31 July 2016.
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Mitchell, Mark J. "Merit-Based Awards: Trends and Perspectives." National Association of Independent Schools (NAIS). National Association of Independent Schools (NAIS), 31 Aug. 2012. Web. 21 June 2016.
"Need-Based Aid vs. Merit-Based Aid." The Princeton Review. The Princeton Review, n.d. Web. 21 June 2016.
"Need-Based Fellowships." Financial Aid. Harvard Business School, n.d. Web. 21 June 2016.
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