Pursuing an MBA can be a highly rewarding decision professionally, socially, and financially. But it isn’t cheap!
Affordability is top of mind for many potential applicants. Luckily, there are many ways you can reduce the cost of getting your degree. We’ll break down those costs, share some tips to maximize your financial aid, and explore your student loan options (in case you need them).
Understanding the true out-of-pocket expense to obtain your degree:
Step 1. Start by Learning the Sticker Price of the Schools You Want to Attend
There are a few key terms you need to understand to master the financial aid process. Let’s start with Cost of Attendance (CoA). This is the “sticker price” and each school publishes its own figure on its financial aid site.
Cost of Attendance estimates the total cost of attending an MBA program each year and typically includes:
- Tuition and fees
- Estimated cost of course materials
- Health Insurance
- Estimated Room and Board (where you’ll live and what you’ll eat)
- Some allowance for personal expenses like travel (but less than many students typically spend)
Don’t let this figure scare you away because it is only a starting point!
We’ll touch on strategies to rescue the sticker price through financial aid and scholarships.
Step 2. Apply For Financial Aid
Once you’ve been accepted to a program (congrats!), you need to start thinking about financial aid.
Merit-based Aid: You’ll typically hear about merit-based aid as soon as you’re admitted. Think of this like a discount to tuition because the school really wants you to attend.
Need-based Aid: Fill out the FAFSA application (through the Department of Education). Then fill out the financial aid application for each school that admitted you. Most schools will get back to you in several weeks with your Financial Aid Award Letter, which will be made up of grants and loans. Grants are effectively discounts (money that does not need to be paid back).
Step 3. Consider Negotiating Your Financial Aid Results
This is where things get interesting. Think of your financial aid award letter as a first draft as opposed to a finished product! If you really want to go somewhere and the cost after scholarships and aid is too high, try asking for a little more financial aid (seriously).
Many schools (but not all) are willing to increase the amount of aid they offer in order to get you to commit.
Why You Should Ask for More Financial Help:
- Many programs are already budgeting for this. They expect some portion of admitted students to appeal for more aid.
- Schools won’t rescind your acceptance just because you ask for more financial help (politely).
- If you aren’t the one asking, you can bet someone else in your incoming class is. The worst you can hear back is a simple no! But the upside can put you ahead financially after graduation.
There are two broad scenarios where asking for more aid can help:
You received Merit-based aid from multiple schools
Let’s assume you were admitted to two programs, A and B. You really want to attend Program A, but B offered you significantly more financial aid. It’s perfectly fine to let Program A know that you sincerely want to attend but just need a little more financial help. They may not be open to matching the aid from another program, but they could help bridge the gap.
Circumstances have changed since you submitted your need-based aid application
Maybe you omitted something from your original need-based aid application. Or some life circumstance has changed (growing family, changes in employment, etc.). Let the financial aid office know and ask if they can reconsider the amount of need-based aid for which you qualify.
Step 4. Apply to External Scholarships
Start exploring external scholarships as soon as you can!
Many MBA programs publish a list of external scholarships that students have applied for in the past several years. We’ve done our best to collect publicly available links to these resources for 52 MBA programs here.
Step 5. Budget for Some Extra Expenses
We’ve found that a school’s estimate for cost of attendance is often a bit too conservative. The MBA experience is as social as it is academic, which leads the average student to spend approximately $10,000-16,000 more per year than the school estimates.
Where does that money go? Trips, campus clubs, conferences, dinners, and more. Once you’re on campus, especially at the beginning, it can feel like you have to take part in every activity you hear about (the FOMO is real). But not every event or trip is really worth stretching your budget for.
Once you finish these steps, you’ll have a good sense for the out-of-pocket cost to complete your MBA. Let’s wrap up with a quick overview on how to pay for it.
According to GMAC (which runs the GMAT), roughly ⅓ of MBA students get financial help from parents and employers, ⅓ use personal savings, and ⅓ use loans to pay for the degree.
Understanding the Student Loan Landscape
First, know that if you need help paying for school, you’re not alone. Over the last 5 years, the average MBA student in our database borrowed ~$62K per year to complete their program.
Second, if you ever have questions about student loans, your financial aid office is a great place to start. They’ve seen every scenario and genuinely want to help.
Let’s break down your options – Federal Loans and/or Private Student Loans.
Federal Student Loans come directly from the Department of Education and there are two types you can access – Grad Direct & Grad Plus. It’s more confusing than it needs to be. Just know that Grad Direct has lower rates than Grad Plus, but you cannot borrow more than $20,500 per year. Grad Plus is a bit more expensive than Grad Direct, but it allows you to borrow up to the full cost of attendance (CoA). You can use a combination of both programs, and many people do!
Federal loans are a great option for many students because:
- Everyone gets the same rate, regardless of credit score. If you have limited credit history, a Federal student loan could be cheaper than any private options you find.
- They come with protections and safeguards in case you have trouble affording loan payments in the future.
Private student loans are provided by many banks, credit unions, and fintech lenders (like Juno). Unlike Federal loans, they typically do not include origination fees and the rate you qualify for depends on the strength of your credit history. Many MBA students qualify for lower rates from private lenders and choose to go down this path.
Our advice: See what rates you qualify for from private lenders and compare them to Federal student loan rates using this calculator. If you qualify for lower private rates, you’ll need to decide if the savings are worth giving up some of the features of a Federal loan.
Make Sure You Get the Lowest Private Loan Rates
If you decide to check your private loan rates, make sure to check out Juno! But first, a quick story:
One of my classmates and I needed student loans to attend HBS, but we weren’t happy with the rates we found.
So, we tried something different and created the first collective bargaining group for student loans. In 6 weeks, we gathered 700 classmates who also needed loans. Then, we reached out to dozens of banks asking if they would negotiate rates if we all went to one lender. It worked, and we saved each person over $15K, on average!
Over the last four years, we have been expanding the group and improving the offering. The larger we get, the more negotiating leverage we have with lenders. And as of today, we have helped 100K+ members in the U.S., Canada, and Western Europe pay for school.
Every year, we aggregate demand for new loans from incoming MBA students and organize competitions between lenders who bid for your business. We don’t charge you and expressing interest in our negotiating groups does not obligate you to do anything. Just think of joining Juno as a way to increase our collective bargaining power and to add another option for financing your MBA.
If you might need a student loan for Fall 2023, sign up here by April 30th so we can add you to the negotiation group. It’s free and there’s no obligation to take a loan.
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