There are several avenues for financing your MBA, from scholarships and loans to earning as you go and corporate support.
Scholarships and Grants
Many institutions offer merit-based scholarships to applicants who demonstrate qualities and assets that will enhance the student body. Need-based funding also exists, but it is often not as plentiful at the graduate level and sometimes requires applicants to file additional need analysis forms.
Scholarship databases can be helpful, but be cautious as not all are reputable.
Student Employment and Graduate Assistantships
Part-time, on-campus work programs-which can be with faculty, as resident assistants, or other institutional jobs-are often referred to as "work study." Be aware that there are some business schools that recommend that students do not work due to the rigors of the curriculum.
Graduate assistantship awards usually waive tuition and provide a stipend for living expenses for students who work a minimum number of hours per week as determined by the institution.
Federal Student Loans
You may receive federal aid-which must be repaid-from your institution, a private lending organization through the Federal Family Education Loan Program, or from the government through the Direct Loan Program. Federal student loans are available to U.S. citizens and permanent residents. Here are the most commonly distributed federal loans:
Perkins
- Carries a five percent fixed interest rate
- Need based
- Annual maximum of $8,000
- Application determines eligibility
- Institution serves as the lender
Stafford
- Fixed interest rate is 6.8 percent
- Can be subsidized (borrowers do not pay interest) or unsubsidized (borrowers pay interest while still in school or allow it to accrue and capitalize)
- Application determines eligibility
- Average annual limit for graduate students is $8,500
Graduate PLUS
- 7.9 percent fixed interest rate (8.5 percent through the Federal Family Education Loan Program)
- Covers the cost of attendance minus all estimated financial aid
- Credit based (sometimes requires co-signer)
Complete the Free Application for Federal Student Aid (FAFSA) to determine your eligibility for all the federal loan programs. You will need to have tax return and current assets/investments documents handy while completing the application.
Private Loans
Private loans are an option for many students. They are available through private student lending organizations. The interest rates are variable, generally tied to LIBOR or Prime and may be higher than the federal loan interest rates. The credit history of the borrower/co-borrower is taken into account when determining the rate, and loan fees may apply.
Corporate Assistance
Less commonly, funding comes from a student's employer in the form of tuition reimbursement, payment of certain courses based on achieving a certain grade, or actual payment of tuition with certain conditions attached. Contact your Human Resources department to find out what benefits are offered.
Catherine King-Todd is Director of Financial Aid at Thunderbird School of Global Management. She is quite active in financial aid associations at the state, regional, and national levels and received her bachelor's degree from Central College located in Pella, Iowa.
The full version of this article originally appeared in Hobsons' MBA Guide.
