Getty Images/iStockphoto
If summer heat waves are causing you to stay inside more, or you have more time off in general, you might be using this time of year to organize your finances before back-to-school season begins. Those planning to go to business school in the fall, for instance, likely want to plan ahead for this expense.
Getting a Master of Business Administration (MBA) degree can be quicker and less expensive than a bachelor’s degree, but after four years of paying for undergrad, it’s not easy for many people to afford this extra education out of pocket.
However, federal and/or private student loans can be used to help cover tuition and other education-related expenses initially. Ideally, you can then get a great job after school to comfortably afford repayment. Starting salaries for those with MBAs are an average of 22-40% higher than those with a bachelor’s, according to the Graduate Management Admission Council.
Still, taking out student loans is an important decision that shouldn’t be taken lightly. There are pros and cons to both federal and private student loans for financing your MBA, which you should weigh before going through with either. Here, we’ll examine some of these and other MBA financial considerations in more detail.
You can start by exploring your private student loan options here to see what qualify for.
How much does an MBA generally cost?
On average, an MBA costs a total of $61,800, according to the Education Data Initiative. Yet costs can vary widely by school. Harvard Business School, for example, is approximately twice as expensive, notes the Education Data Initiative.
Using student loans to pay for an MBA
To cover MBA costs, many take out student loans.
Some students find that federal student loans work better for their situation, such as if they can get a lower interest rate than with private lenders. However, some students find that private student loans offer lower lifetime interest costs.
Or, you might find that a combination of federal and private loans works best. If you reach the $20,500 annual limit on federal unsubsidized direct loans, for example, you might find that private lenders offer better terms than closing a funding gap with federal Grad PLUS loans.
“Federal student loans offer fixed interest rates, regardless of credit, and students can borrow as much as needed themselves,” says Jack Wang, wealth advisor and college financial aid advisor at Innovative Advisory Group. They also “offer a multitude of repayment plans after leaving school.”
At the same time, however, some of these features can be seen as disadvantages, depending on your situation.
“Some cons are the fixed interest rate, which may be higher than an equivalent private loan, and not offering some perks such as cash back for good grades or help with finding a job,” adds Wang. Plus, you want to be mindful of taking out more than you can reasonably repay.
“The biggest drawback to federal loans is that students can borrow more than they may be able to affordably pay back as there is no significant credit check for federal loans,” he says.
Meanwhile, private student loans offer potential advantages, like the ability to choose between taking out the loans yourself or with a cosigner, says Wang, along with choosing between a fixed or variable interest rate, and selecting the type of payment, e.g., interest-only or deferred. Keep in mind, though, that taking out private student loans to cover your MBA tuition means foregoing potential federal student loan assistance, e.g., loan forgiveness or income-based repayment plans, adds Wang.
Explore your private student loan options here to learn more.
How to manage MBA costs
Carefully comparing interest rates between federal and private student loans can help you choose financing that costs less in the long run. And while you certainly want to consider the educational and professional potential of an MBA school, you might also weigh the costs of comparable programs before deciding.
Another way to manage MBA costs, beyond budgeting, is to look for external assistance.
“A common way to reduce the cost of an MBA would be to have your employer pay for it,” notes Wang. “Another would be to work for a company that offers a student loan payment reimbursement benefit. While that does not lower the cost of the MBA on the front end, it can certainly reduce the cost of the loan on the backend, which can be just as good.”
MBA costs can be high, but the future earnings potential stemming from these degrees can make them worthwhile. Taking out student loans can help cover the initial costs, and you might then be able to get help repaying them from your employer.
To apply for , the process is typically pretty straightforward. You can go to a lender’s website and start an application by filling out some basic information like your name, Social Security number and school.
Before you apply though, you might consider viewing customized rates through lenders’ sites, before they do a hard credit check with your application. See how different student loan providers’ rates and payment terms compare to determine what best helps you manage MBA costs. Check private student loan rates and options here now or via the below table.
For all the latest Automobiles News Click Here
For the latest news and updates, follow us on Google News.
