MBAs can cost more than $50,000 a year.
While earning an MBA degree can advance your career path and future earnings, many people find it difficult to shoulder the upfront cost. Tuition at the top business schools can soar above $100,000 for an entire full-time MBA program. Even attending a public B-school can be costly. For instance, a few public MBA programs charge more than $50,000 a year for both in-state and out-of-state tuition, according to tuition data reported to U.S. News in an annual survey. For prospective MBA students, here are 15 areas to explore to help pay for a graduate business degree.
Business school fellowships
A few business schools offer generous fellowship awards. These awards are similar to scholarships, since this is grant money that doesn't need to be repaid. Harvard Business School, for example, offers need-based fellowships to roughly 50% of each class. According to the school's website, the average HBS fellowship is around $40,000 a year, or $80,000 total.
"Most schools, including Bentley, offer a number of merit MBA scholarships that don't involve a work component," says Gordon Berridge, associate director of admissions at the McCallum Graduate School of Business at Bentley University in Massachusetts. Berridge says graduate scholarships are based on previous educational achievements, GMAT or GRE scores and what the student is likely to contribute to the incoming class.
Working as a graduate assistant while enrolled in an MBA program is another way to pay for business school. Grad assistants typically work alongside faculty or administrators in research roles or in educational or administrative activities. "These positions are generally only offered to full-time graduate students with limited work experience and are awarded for merit," Berridge says.
MBA students looking at external scholarships should consider exploring niche awards such as those related to a specific business field, B-school experts say. "If you're interested in taxation, research what types of scholarships are available for people looking to pursue a taxation degree," Berridge says.
Some companies offer an MBA sponsorship to high-achieving employees, but experts say this usually involves some type of contract or obligation such as remaining at or returning to the company upon degree completion. Other forms of employer sponsorship include tuition reimbursement with a maximum allowable amount per year. "Read your employee handbook or talk to human resources to find out if your company has a standard tuition assistance or sponsorship program in place," says Dennis Yim, director of live online courses at Kaplan.
Federal student loans
At least two federal student loan options are available each academic year for U.S. students: the federal direct unsubsidized loan and the Grad PLUS loan. The direct loan is limited to $20,500 per year while the Grad PLUS is available for the cost of attendance minus the total of all other forms of financial assistance. Typically, the interest rates on these loans are higher than the rates offered to undergraduates. Currently, the loan interest rate is 5.28% for a graduate direct loan and 6.28% for Grad PLUS. To apply for these loans, students must complete the Free Application for Federal Student Aid, known as the FAFSA.
Private student loans
Private lenders can provide customized options such as loans at a variable or fixed rate. These loans consider an applicant's credit score and may have lower interest rates than federal loans. Some lenders offer specialized MBA loans, including Citizens Bank and CommonBond.
Individual retirement accounts
According to IRS guidelines, those who make an early withdrawal from an individual retirement account, or IRA, for a qualified education expense are exempt from the 10% penalty. Attending a business school qualifies for this exemption. But account holders who make an early withdrawal will still face income tax on those funds.
529 college savings funds
While tax-advantaged 529 accounts are typically thought of as a popular way to pay for college, you can also use these funds for graduate school. A family, for example, can decide against tapping these funds for undergraduate expenses and save the money to cover graduate school costs.
Special government grants
A few federal government programs can help a student pay for an advanced business degree overseas, such as the Fulbright Business Grant. For example, Fulbright scholarship awards for business grad students can subsidize MBA studies in countries such as Finland, Mexico, Spain and Taiwan.
Making your case to MBA financial aid officers
An MBA hopeful who chats with a business school financial aid officer is more likely to receive a generous grant than an anonymous applicant who school officials are less familiar with, according to admissions experts. During such a talk, a prospective MBA student should emphasize his or her interest in a particular B-school and be upfront about financial constraints, experts suggest. Though it is possible to have a productive conversation of this sort via email, experts say a phone call, video conference or in-person meeting is more likely to yield results.
Asking a business school for support as soon as possible
The longer an MBA applicant waits to submit a request for financial aid, the lower his or her odds of success, since there is typically more cash available at the beginning of an admissions round than at the end, according to admissions experts. Some business schools have a limited pool of money to draw from that is designated for a particular application round, experts warn.
Showing a B-school why you deserve funding
Simply demanding more money than the amount you've already been given, if you've been granted an MBA scholarship or grant, is not a winning approach, according to admissions experts, who note that it is essential to provide a compelling justification for your request. For instance, if you received a more substantial aid package from another school that you are considering, that is worth mentioning, experts say.
Building on one-year scholarships
Some MBA scholarships for full-time students last for a single year even though MBA programs typically last two years. One simple way for potential business school students to increase their pot of scholarship money is to request that a one-year scholarship automatically renew for the second year, MBA experts recommend. Current MBA students who want to boost their scholarship awards should strive for excellence in courses and extracurricular activities so that they can be competitive candidates for awards that subsidize further study.
Demonstrating gratitude for scholarships
A B-school applicant who conveys how much he or she would appreciate a scholarship and how much it would help him or her is a much more attractive scholarship candidate than someone with a presumptuous demeanor, MBA admissions experts warn. If a B-school agrees to increase a candidate's scholarship, he or she should assume that the adjustment is the school's final offer and should not attempt to negotiate further, experts suggest.
Learn more about applying for an MBA.
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How to win the money you need to pay for an MBA
-- Business school fellowships
-- Graduate scholarships
-- Graduate assistantships
-- Industry scholarships
-- Employer sponsorship
-- Federal student loans
-- Private student loans
-- Retirement savings
-- 529 college savings funds
-- Special government grants
-- Making your case to MBA financial aid officers
-- Asking a business school for money as soon as possible
-- Showing a B-school why you deserve funding
-- Building on one-year scholarships
-- Demonstrating gratitude for scholarships