Have An MBA Student Loan Question? Ask Cory, Our Resident Expert

Cory Pollock is co-president of M7 Financial

Cory Pollock is co-president of M7 Financial

Cory Pollock is co-founder of M7 Financial, a firm focused on the careers and student loan requirements of students and alumni. Prior to M7 Financial, for ten years Cory was an Investment Analyst and Portfolio Manager with JPMorgan Asset Management’s high yield team that managed more than $30 billion in assets primarily invested in credit related products such as loans. Before JPMorgan, Cory was a fixed income Investment Banker with Banc of America Securities.

Cory has significant expertise relating to loans and credit. In fact, he recently co-authored the Student Loan (Reduction) Primer For MBA Students. Cory also has a passion for helping students and alumni understand all the different alternatives with respect to financing a degree.

We are very pleased that Cory has agreed to answer student loan related questions at Poets&Quants. Just fire away in the comment section below! Want to better understand your financing alternatives? Concerned about about costly origination fees? Not entirely certain about the difference between variable and fixed rate loans? Not sure about the advantages and disadvantages of federal student loans relative to private student loan?

Cory is here to address all your MBA loan queries.

  • Edwin
  • MBA_Dream

    Hi Cory,

    I have a full time MBA offer from Rotman. After pursuing my engineering from India, I worked for a couple of years in South Korea and then in the UK. Because I never worked in India, I don’t have a credit/banking history in India.

    I applied for a loan from Prodigy and secured a partial funding. I also have savings earmarked for my MBA.

    I am still short of $ 54k. I do not have a co-signer, neither in Canada nor in India. Are you aware of any other international organisation who might provide me loan?

    Many thanks!

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  • A.P.

    Hi Cory. Have you ever heard of MBA students with families getting on WIC or some other form of welfare during their MBAs? Is that possible? It could help lower your debt if you can pay for a lot of cost of living stuff with welfare.

  • Rimond

    Check out Prodigy Finance loans!

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  • atul

    Can you list the US MBA colleges who provide Non US cosigner loan facility to International students?

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  • Noman Tahir

    HI Cory
    I am a US resident (not citizen) and I got my US green card few months ago.
    Though my credit score is 695, I do not have sufficient credit history.
    I am planning on doing part time MBA which offers no scholarship and I am relying 100% on student loan

    Do you think I can obtain student loan to cover 100% of the program cost (around $150).
    My wife is US citizen and I can add her as co-signer

    Thanks

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  • Confused

    Hi Cory!

    I appreciate that you take out time to answer questions here 🙂
    I am a little confused about the average financial aid displayed on the university websites.
    Is this amount a one-time offer only for the first year? Or when universities say the average aid is 25k, it means 25k per year with the scholarship amount being renewed the following year – so I can consider it as 50k towards the two-year cost?

    Another question, How much time can students realistically give per week to working part-time in top MBA programs? Is it practical to work part-time or do freelance projects to earn some money to possibly cover living expenses?

    Thanks!

  • Cory Pollock

    I don’t know the answer to that one. A word of caution about the averages on the B-school websites. They may not be very good guidance at an individual level. The actual amount for each individual can be significantly higher/lower then the average. I think that opening up a constructive dialogue with your target schools is the best way to get guidance on these issues.

  • SmartPoorGirl

    Thank you Cory, I will be sure to look into it 🙂
    Another question, I see a lot of forte fellowships too. Based on your experience, What percentage of female candidates are probably being offered these kind of fellowships and scholarships by B-schools. I see the average aid on the B-school websites, but I was wondering if this is higher for women since schools are trying to attract female candidates at the moment.

    Thank you John, for posting this here 🙂

  • Cory Pollock

    If you are an American you should consider both federal government loans and private loans.
    Federal government loans, unlike private loans, are typically not credit based loans. Private loans are credit based and you can enhance your probability of receiving a private loan by having a cosigner (typically a parent, spouse or person close to you). There are many different options for private loans. If you would like more information about private loans I recommend M7 Financial’s free MBA student budget planning session. You can sign up here: https://www.m7financial.com/student-budget-planning-session/

  • Cory Pollock

    I recommend that the 2 of you meet with your school’s financial aid office and discuss all the alternatives available based on your unique circumstances.

  • Cory Pollock

    I suggest reaching out to your target schools and ask them about your eligibility for different forms of financial aid, including waiving the application fee.

    As an American you should consider both federal government and private loans that would cover 100% of your “cost of attendance”. The cost of attendance is provided by the program and is typically easy to find on the program’s website (sometimes it is called a student budget). It is intended to cover tuition and an allowance for living expenses while in the program, although many find this living allowance to be modest.

    Hope this is helpful and good luck with the applications!

  • Here’s one that just came in for you Cory:

    I am an early-career candidate. I am an American currently working in a developing nation, and my income is good where I am, but very low in terms of dollars, when converted. Since I’m a recent graduate I have almost no savings. I think I may have a strong profile despite the age, but financial aid will definitely factor in my decision to attend. As a US citizen I guess I am eligible for several fellowships.

    In your experience, which schools provide the most need-based aid? I know there are merit-scholarships too, but I think I am just at class average in terms of statistics of test scores and GPA for M7 schools.

    I can’t seem to decide where to apply due to this restriction and even the cost of applying is a financial burden for me at this moment!

    Thanks!

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  • Emily

    The final two years of my husband’s PhD program will overlap with my MBA program. He is fully funded + a stipend. Is it possible/legal to take out Stafford loans under his name and then apply them to my tuition, to max out at 82k in Stafford loans for the MBA?

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  • sh

    assuming I need to borrow the full amount for my MBA (100-120k), and I’m in a part-time program, what may be some options available? I know that SoFi and others are nicer to full-time program. Thanks!

  • jona

    How much money do you make a year before taxes?

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  • cangirl

    Hi Cory,

    I just got admission from a top U.S American MBA school. I am being considered for a financial scholarship but I do not know the amount yet. As for financing the MBA, the recommended institution is discovery loan for international students. I am Canadian citizen but live in the U.S so I am considered an international student. As for savings I have just a bit to cover first year of trips but not a lot for living costs. I have only a 2 year credit history in the U.S but I am not a U.S citizen. Do you have recommendations on loan options, that suit a Canadian or someone with limited credit in the U.S? I would love to hear your recommendations on financing school fees and living cost at good rates. Also, if you have someone I can speak too, that would be very useful too.

    Thanks,

    Cangirl

  • Cory Pollock

    One of the things that you should definitely consider is origination fees. These fees are typically a percentage of the loan amount. For example, a 2% origination fee on a $50,000 loan would be $1,000.

    In addition, origination fees can significantly increase your cost of borrowing if you pay back the loan over a short period of time. For example, take a 6% loan with a 2% origination fee. If you paid back this loan in less than one year, your actual cost of borrowing would be more than 8%. However, the impact of the origination fee on the cost of borrowing decreases the longer the loan is outstanding. Accordingly, your evaluation of any origination fee should consider the amount of time you expect the student loan to be outstanding.

  • Sissi Rey

    HI Cory,

    I was recently accepted to Spain’s ESADE MBA program and I am looking at US vs European loans.

    I have a few options with US banks, Sabadell and also Prodigy finance options.

    I wanted to ask if you had any guidance or things that i should look for when evaluating my options.

    Thanks

  • Cory Pollock

    Good question. I have no simple answer but here are some (and by no means an exhaustive list) of the things you should think about before you make a decision on this issue.

    1. What is your cost of borrowing? Obviously the higher the interest rate the less likely you would be to use a loan instead of savings. You can find out your cost of borrowing by applying for a student loan and seeing what interest rate is offered. Also, be aware of origination fees. Some lenders charge these fees and they can materially increase your borrowing cost. For example, a 2% origination fee on a $50,000 loan is $1,000. All things being equal, that is a fee to avoid!

    2. Are you going to need your savings after graduation? Do you intend to start a business, buy a house, get married or start a family after graduation? If so, you may want to preserve some portion of your savings until after graduation and instead utilize student loans. However, remember point #1 above!

    3. How much liquidity do you need to feel secure? Do you need $5,000, $10,000 or $100,000 of savings to feel secure and prepared for unforeseen circumstances such as job loss, health issues, investment opportunities or an unanticipated major expenditure? Most people do not feel comfortable depleting their savings anywhere close to $0.

    4. If you do decide to maintain a level of savings, seek advice from a financial advisor to ensure that your savings are invested in a manner consistent with your objectives.

  • IllinoisEngineer

    Cory, I’m planning financially to pursue an MBA at either a tier 1 or tier 2 school part-time within a year or two (likely Northwestern or Booth). I’m trying to determine what is the best mix (cash/loan) to pay for schooling. I’ve got mutual funds as well (appx 1 year’s of tuition), but I’m not sure if it’s a good idea to tap into those. Currently my annual salary is about 75K with no debt, and about half a year’s tuition in cash. Do you have some suggestions or rules of thumb to answer this question?

  • Cory Pollock

    Hi Anon:

    Thanks for the question. My first thought is that you should definitely discuss this plan with your financial advisor. My second thought is that be sure you are fully considering the attributes of student loans relative to margin loans. For instance, with a student loan you may be able to defer principal and interest payments until after graduation and, depending on your credit profile, you may be able to obtain an interest rate on a student loan that is more favorable than you are anticipating.

    Thanks

    Cory

  • Anon Y. Mouse

    I am doubly fortunate to have amassed a large stock portfolio for my age through frugal living and hard work and to have no debt (I pay my credit cards in full, have no student loan debt, and do not own a car or real estate). My assets are in low-cost index fund stock and bond ETFs (about 90% stock, 10% bonds) under a buy-and-hold strategy. I intentionally have no “emergency fund” because I can obtain cash immediately from Interactive Brokers through a margin loan at a 1.62% floating rate. By using portfolio margin (rather than Reg T margin), I’m allowed to borrow roughly 80-85% of my portfolio value via margin. Under this scenario, I’m thinking that I could save substantial amounts over the years compared to taking out traditional student loans. Would I be crazy to fund my MBA (or as much as possible) on margin?

    I’m thinking the primary risks to this strategy that I need to be concerned with are rising interest rates and a stock market downturn. I have assumed that my margin rate will increase in direct proportion to the fed rate (e.g., a 25bp increase will mean that I’m paying 1.87%; a 100bp increase would mean that I’m paying 2.62%), and I am willing to accept this risk. In any case, even a 100bp increase would have me paying less than I would be paying via student loans. I will seek to control the second risk by borrowing only so much that my portfolio can withstand a 40%-50% drawdown without facing a margin call – and relying on traditional student loans for the rest if necessary.

    I have run this idea by my parents and a good friend and they all think I’m nuts. Am I really missing something here? Are there risks I’m not considering?

  • Stamm

    1. I would have completed exactly 2 years of work experience with
    Infosys by the time I join an MBA program in fall of next year (2016)

    2.GRE score is 300 with AWA 3. I have a high school diploma from the US
    so I was told (by college reps during college fairs) I needn’t write the
    TOEFL.

    3. I graduated with a Bachelors of Technology in
    Electrical and Electronics in 2014 from Amrita School of Engineering. My
    undergrad GPA was around 2.8/4.

    4. I was the secretary of a cultural arts program in my college for a year. I was also a sole Representative of 60 students for 3 consecutive years during college.
    Early 2015, I started my own dance school with more than 10 students
    starting from the age of

    5. Post MBA goal is to work as an HR Manager.

    Please let me know what my “in reach” colleges would be.

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  • fidel305

    is it possible for a relative to make an educational loan from a SEP 401k at a market rate of interest so that when it is repaid lender can receive the interest tax free in her 401k and borrower can deduct the interest?

  • Cory Pollock

    Interesting question. I can give you a more exact answer on this one.

    Based on reported statistics, the percentage of full-time 2014 HBS graduates with debt was approximately 57% with the average amount outstanding being about $79,000. Of course, like any average, there are likely data points much higher and much lower than the average.

    Please let me know if you need anything else.

    Cory

  • UmairK

    Thanks Cory for your very informative response. However I do have one more question: In the above HBS case normally does a student takes a loan of $190,000 ~ $200,000? Or is the average loan size much smaller?

  • UmairK

    Cory,
    I am still looking into different MBA programs, and would it be possible for you to divulge the real cost of an MBA? I want to understand if I get into a full time MBA, what number in terms of loan $ am I looking at?

    Regards,

  • Cory Pollock

    Hi Mike:

    I would be pleased to look at it. Can you forward a link to the page you are asking about and I will get back to you with my thoughts?

    Thanks

    Cory

  • Alexey

    Hi Cory,

    It would be great to know if you are planning to extend loan product line to include international students without a US coborrower, especially for graduate programs other than MBA. I got into Harvard MPA program, but there is not a single bank willing to fund this progam, and that s ridiculous.

  • Chloe

    Hi Cory,

    I want to apply to Colombia and NYU since my family resides in NY-NJ state. However the cost for MBA courses in those 2 universities are significantly high and I cannot afford more than a semester.
    I am an international student so I am not eligible for any Federal Loan. Can you enlighten me with some further information of loans/scholarships/ways to afford the tuition fee for MBA?
    I can speak fluent English since I studied in the UK before (LSE with full tuition-fee scholarship) and have experience in banking industry.

    Look forward to hearing from you.

    Many thanks

  • PDS

    Thanks Cory, but I had been to that page. The options provided there apply to international candidates with US based cosigner.

    -PDS

  • Mike

    Please can you explain the non US cosigner option at Kellogg for international students? It is called option b: without us cosigner. I read online page but I was wondering if you could throw any light on it.

  • PDS

    Hi Cory,
    Would you able to advise about US – based financing options for non-US student with no US consigner?
    If it helps, I am interested in options related to U. of Michigan.
    Thanks.

  • 4_rings

    Hi Cory,

    I’m a ’16 prospect studying for the GMAT and trying to narrow down my list of target schools. I have zero personal or family financial resources to bear and will not have the credit to secure any private loans using any conventional method. I will qualify for some military aid (although not Yellow Ribbon), the amount of which can vary significantly by school due to the complexity of the military formula (by my calculations they’d cover ~$82k of Anderson, ~$63k of McCombs, $44k at BU… that’s out of total cost, not tuition. It really varies).

    Apart from the guaranteed direct loans with the 2-year ceiling of $41k, the military contributions, and any merit / need-based aid I might be offered by the schools, am I missing any potential resources? I’m obviously not going to be bartending nights if I get into a good program. I know there’s no silver bullet here but I’d appreciate any wisdom you have to share. I feel like I should be narrowing my list of targets down by financial feasibility, but the amount of aid to expect from each school seems so unknowable that I’m not sure if that’s possible.

  • Rami

    Hi Cory, I’m a US citizen who has recently been accepted to IESE in Barcelona, Spain. I’m looking into financing options for both tuition and living expenses, as well as the best method for exchanging my USD into Euro if you have any input on that. I really appreciate it!