You’re excited. You just got into your top picks for business school and are deciding which one to attend. One thing you should keep in mind while you’re comparing is how much each school will cost.
Here’s the process, from start to finish, brought to you by Juno, an organization that helps you navigate student loans for free.
Step 1. Analysis
What sort of financial aid package did you receive from each school? Do you want to appeal to get more aid? (Hint: The answer is likely yes.)
What’s the school’s stated cost of attendance compared to how much you received in financial aid? Take a look at our budgeting article for more information on how to budget as an MBA student.
If you didn’t receive enough grants and scholarships to cover the cost of attendance, you’ll have to take out student loans or pay the difference in cash if you can afford it.
Because student loans usually have relatively low-interest rates, you may be better off taking out loans and not liquidating assets (and incurring taxes to boot).
Step 2a. Compare Prices
There are two options: federal and private student loans.
Within federal student loans, there are two categories:
- Unsubsidized Direct Loan: You can take out up to $20,500 a year in unsubsidized Direct Loans. It’s the cheaper federal loan option with a current interest of 6.54% for the 2022-23 school year.
- Grad PLUS Loan: You can borrow up to the cost of attendance minus any aid. It’s the more expensive federal loan, with a current interest rate of 7.54% for the 2022-23 school year.
You should always compare federal loans with private student loans, which can have lower interest rates if you have a credit score of 650 or higher.
But Juno can help get you the lowest private student loan rate on the market, guaranteed. You should still shop around to make sure you’re getting the best deal.
Step 2b. Compare Protections
It’s important to compare not just interest rates but also benefits and protections. Private student loans don’t have any of the protections that federal loans do.
If you plan to work in a job that would make you eligible for Public Service Loan Forgiveness (PSLF), you may want to consider taking out only federal student loans. You’ll likely save tens of thousands in total interest by working toward PSLF instead of taking out private loans.
If your future career has a relatively low salary, you may also opt for federal loans so you can utilize income-driven repayment (IDR) plans.
Traditionally, most MBA students graduate and go onto lucrative careers that are ineligible for both PSLF and IDR plans. Hence, Private Student Loans offering lower interest rates than the federal options are a popular choice.
Step 3. Get Quotes from Multiple Lenders
Private loans assign interest rates based on your credit score, income and other factors. You usually can find out what your rate would be in less than 10 minutes with a soft credit check, which doesn’t affect your credit score.
Some lenders make you do a hard credit check to get your interest rate. Hard credit checks are necessary for taking out a loan, so some people choose to get rates within the same two-week window that they submit the actual loan application. If you get multiple hard checks within 14 days, they should count as only one check on your report.
Even if you do have multiple credit checks on your report, you’ll usually lose only a few points on your credit score. This is temporary and your score should rebound in a few months.
Step 4. Pick a Loan (or Multiple Loans)
Once you’ve evaluated all your options and done the calculations (this calculator tells you which mix of loans is the cost optimal option for your situation), you’re ready to select a student loan.
After choosing a lender, you’ll wait for it to coordinate with your school to confirm you can take out the amount you’ve requested.
Step 5. Wait for Your School to Confirm
Schools need to authorize that the loan amount is acceptable, which means that what you’re requesting is within the stated cost of attendance minus any aid already awarded to you.
Each school has a unique timeline for amount confirmation and certification. Some will do it on a rolling basis. Some will wait for a day that’s within a few weeks of the tuition due date.
If the loan is stuck in this place for a long time, it’s not a bad idea to reach out to the financial aid office and ask if it has received a certification request from your lender. Ask what the estimated approval time is.
After the school confirms and certifies the amount, the lender will begin the process of sending the money to the school.
The funds are sent or disbursed based on the billing schedule set by the school. Typically, the school requests funds at the beginning of each semester.
Step 6. The Funds Are Sent
When the lender sends the funds, the school should receive them within a couple of weeks. From there, you should be good to go.
If you’ve taken out more than what tuition costs, the school should cut you a check for the remainder, which you can use for cost-of-living expenses.
You can then put those funds in your bank account and use them for rent, books, supplies, and more.
Nikhil Agarwal is a co-founder of Juno. He started Juno in 2018 to negotiate a group discount for student loans and has since successfully grown the business to help students with over $400M of loans. He has an MBA from Harvard and a bachelors in Aerospace Engineering from University of Illinois – Urbana Champaign.