Making the decision to return to school for an MBA is a big decision. Deciding how to finance your advanced degree is an even bigger decision. Last year, U.S. News and World Report released the statistic that, “about 70 percent of 2013 graduate left college with an average of $28,400 in debt. The rising costs of undergraduate degrees has made pursuing an MBA less popular over the years. Many students finance their MBA through student loans. However, there are several other alternatives to loans that can help students to minimize student loan debt.
M7 Financial is a company that is dedicated to supporting the goals of students and professionals. M7 Financial works in partnership with mbaMission, jdMission, and MBA Career Coaches to provide advising for hundreds of thousands of students around the world. The company offers guides, seminars and advisory services for students and professionals. The company’s collective goal is to “ensure that clients succeed in achieving their educational, professional and personal ambitions.”
In 2014, M7 partnered with Citizens Bank to create a customized experience. They chose Citizens Bank because of their commitment to education and the appeal of their student loan options. Citizen Bank loans have no application, origination or disbursement fees and also offer discounts for borrowers who are or become Citizens Bank account holders as well as for those who opt for automatic deduction of loan payments.
Recently, M7 Financial held a webinar that addressed alternatives to student loans. The company’s co-presidents, Jeremy Shinewald and Cory Pollock moderated the webinar. Shinewald began the webinar by explaining and examine the MBA Budget. A school sets a budget, which combines the average costs of tuition, room and board, books and supplies and personal expenses to create a total cost of one year of school. Loan companies use these budgets to assess the amount of money that will be needed for a loan.
Loans are not the only source of funding for students. During the webinar, Shinewald and Pollock stressed the importance of reducing the dependency on student loans. Students should look in to “free money” from scholarships and fellowships before applying for student loans. Most schools offer scholarships along with acceptance letters. Students should ask the financial aid offices at the schools they are accepted to about additional applications for scholarships.
External scholarships are also a great way to cover the cost of completing the MBA. Minority and Diversity Scholarships are available for students. Students should look in to opportunities offered by religious, ethnic and cultural organizations. Not only is joining groups helpful for covering the cost of a degree, it is also a great networking tool.
Another approach that students can take toward reducing the dependency on student loans is to lean on the financial aid offices of the schools they have been accepted to. Shinewald explained during the webinar that students who receive multiple acceptance offers should go to the school’s admissions office or financial aid office and ask what kind of funding could be made available if you were to choose that school over another. “There are a lot of scholarships out there, spend time looking for them,” Shinewald said.
Another alternative to student loans is the use of corporate sponsorship. Fewer companies are offering compensation to their employees for education. However, speaking with someone in the human resources department at your employer can make a difference. Some companies will be willing to invest in your education if you are willing to sign an agreement that you will not leave the company after completing the program for a certain number of years. Shinewald urges students to “read the fine print” of these sponsorship agreements.
Other options include summer and full time employment. Most business schools offer flexible program options for students who are completing the MBA while being full employed. Part-time, online and flexible programs are all designed to help students to maintain functional employment and be able to complete the MBA program. Many students who are not fully employed while completing an MBA program also look for summer work to hep offset the cost of the program.
“Some companies offer signing bonuses to new employees, sometimes they are up to $40,000,” Shinewald said. Students can also complete freelance consulting work. Many of these freelancing jobs take only a few weeks or months and are highly compensated for their work. Shinewald also urges students to talk with their accountants to find tax credits and deductions.
Shinewald also stressed the importance of cutting back personal spending and sticking to a budget while attending graduate school. “Think carefully about how you are living off of debt,” he said. If you have to use student loans to cover the cost of school, be wary about how much you are spending and what you are spending the loan money on.
Poets and Quants released a story that addressed the amount of money that business schools give away for MBA program scholarships. “The top 25 business schools are handing out nearly #230 million in MBA Scholarships a year,” the article reads. PQ released a chart that compared the amount of scholarships given from the top 25 business schools. On average, Harvard Business School gives $31.5 million a year in scholarships. Fifty percent of the school’s MBA students receive a scholarship.
The next highest amount of scholarship awarded is $16.9 million from The Wharton School. More than 60 percent of students at the UCLA Anderson School of Management receive scholarship funds to cover the cost of the program. Some schools offer merit based scholarships or financial based scholarships. Most business schools also provide funding for current and former military students.
The cost of the MBA can be seriously offset through scholarships and fellowships, as well as part-time or full-time employment. Choosing to cover 100 percent of tuition and costs through student loans can prove to be a financial burden. Researching funding options before applying for loans can save you thousands of dollars on your education. “You should consider as many alternatives as possible before going in to debt over school,” Shinewald said.