5 Ways to Fund Your MBA
Federal Loans
The US government offers a few different loan options for each academic year: the Stafford Loan and the Grad PLUS Loan. The Stafford Loan is limited to only covering $20,500 for a year, but the Grad PLUS Loan can cover the full cost of attendance to your school.
To apply for one of these loans, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). Completing your FAFSA is quick and easy, and it will give you access to a large source of federal aid. There are multiple yearly deadlines, so be sure that you fill out your FAFSA as soon as possible once you get accepted into your MBA program.
Personal Loans
If you can’t receive or don’t want a Federal Loan, you might consider getting a personal loan to finance your MBA. The key is to find the right lender with an interest rate you like. After all, the MBA is only two years, and if you choose a bad loan, you could be paying it off for the next 10 to 15 years.
The great thing about personal loans is that they can sometimes have rates even lower than the government. However, unlike Federal Loans, private loans do not have an income-based cap on monthly repayments.
That’s why it’s so important that you don’t take out too much. Ji Choi and Andy Promsiri, the Full-Time MBA Financial Aid Team at the UCLA Anderson School of Business, offered a warning.
“Just because you qualify for X amount of loans doesn’t mean you have to take it all! Look at your savings, your budget and the cost of education to see how much you will need for tuition, books, living expenses, travel, and ‘surprise’ expenses and borrow accordingly.”
Personal Financing
Your final option for paying for your MBA is paying for it yourself. The first place to look is your retirement savings, such as your Roth IRA. If you’ve already saved aggressively for your retirement, you can use that money to help you get your MBA. The good news is that you’re exempt from the 10% early withdrawal penalty when you put your funds toward a qualified higher education. You’ll still face income tax, but the tax burden will be less.
You can also consider less traditional options like crowdfunding. Prodigy Finance provides MBAs with loans to eight different European schools. Rather than focusing on credit history, it uses a predictive model and interest rates start at 6%. Or you can try CommonBond, founded by Wharton Alumni, to get a loan if you’re enrolled in a top-20 program in the US.
About the Author
Kelly Vo
Kelly Vo is a writer who specializes in covering MBA programs, digital marketing, and personal development.
