How to Pay for an MBAJanuary 5, 2021
For many, obtaining a graduate degree is a natural next step in their career path. In fact, in 2019, 13.1% of U.S. adults reported having an advanced degree. And the popularity of earning an MBA is on the rise following the recession caused by the coronavirus pandemic. The big question for most people, though, is how to pay for an MBA.
If you are thinking about going to school for an MBA, you may have a little sticker shock at tuition costs. The average MBA graduate takes out $66,300 in student loan debt for their MBA alone. That figure can even top $100,000 for big-name business schools. Although these are staggering amounts, it doesn’t mean the degree is unobtainable or that you will have to take on that much debt. There are many options to help you finance an MBA:
Perks of Earning an MBA
Although paying for an MBA can be expensive, there are many benefits to business school. Here are just a few of the benefits of having an MBA:
Business school is a great opportunity to expand your networking connections. You will have many interactions with fellow students in school, whether through collaborative projects or interactions in class. You will also have access to respected professors in the business community. These connections could help you achieve career goals in the future.
The work it takes to pay for and obtain an MBA requires skills that may translate directly to your career. Budgeting and organization are essential for business leaders. Classes and required projects will help improve your communication, both written and verbal. Leadership skills and critical thinking will help you earn an MBA and achieve greater career success.
With an MBA degree, more and better job opportunities will be available to you. Many employers value an MBA degree. And even if they do not require one, it’s often preferred. In 2019, 77% of the employers surveyed in the United States planned to hire MBA graduates.
An MBA also provides you the flexibility of being your own boss one day, with the skills you learn to start your own business.
Higher Earning Potential
MBA graduates can earn $20,000+ more than graduates with only bachelor’s degrees in business. In 2020, it was projected that an MBA graduate would earn a base salary of an average of $79,043 compared to $57,939 for a bachelor’s degree in business. According to a survey conducted by U.S. News, the average compensation for a 2019 MBA graduate, including salary and bonuses, was $106,757. An MBA degree can be a great asset to help increase your earning potential.
Options to Help Pay MBA Tuition
If the benefits are convincing enough that you want an MBA, you may want to start planning how you will pay for tuition. If you’re deciding how to finance your MBA, check out out some of these options to see which would be the best for you:
When you weigh your school options, consider whether the school offers any scholarships, grants, or fellowships. These are attractive options because they do not need to be repaid, allowing you to graduate debt-free or at least with a lot less debt. For MBAs, scholarships, grants and fellowships are often awarded based on merit. There are, however, some schools offer need-based aid as well.
In addition to searching for scholarships and grants through your school, you can also find them through business organizations. The requirements may vary. For example, some may require a certain GPA or a specific concentration of study. Either way, these are great opportunities that may help you pay for an MBA.
Filling out the FAFSA makes you eligible to receive federal student loans. Federal student loans for graduate school typically have higher interest rates than undergraduate loans, so be sure to take that into account.
A better option may be private student loans, which can offer more competitive rates. If you have a high credit score and strong credit history, you could save thousands of dollars on interest costs by borrowing at a lower interest rate.
When you graduate with MBA loans, you may find that you can lower your interest rate or lower your monthly payment by refinancing MBA loans. When you refinance, you consolidate specific loans of your choosing and take out a new loan with a private lender, typically with a new interest rate and loan term.
If you have already started your career but are looking to go back to earn your MBA, check with your employer about any school benefits. Some companies offer employer-sponsored MBA programs allowing you to attend while your company foots the bill. Other employers may offer tuition reimbursement no matter what type of degree you are working towards. These benefits may come with some strings attached, like a commitment to work for additional years after earning your degree or a cap on the amount of tuition reimbursement.
If you’re wondering how to finance an MBA, you may choose to explore graduate assistantships. As a graduate assistant, you may help faculty conduct research and other courses or administrative work. In return, you can earn money to cover tuition costs and may even earn a stipend for living expenses. Each school determines the availability and benefits. These positions are usually based on merit and are not need-based.
If you are fortunate enough to have a 529 plan with some remaining funds, they can be used to help pay for an MBA. Be sure to check with the plan administrator for the full details on qualifying expenses that the money can be used towards.
Obtaining an MBA degree will cost you time and possibly a significant amount of money, but the benefits it can bring often outweigh the costs. Using some of the methods mentioned to pay for an MBA can allow you to worry less about the cost. Focus on the “why” for obtaining your degree and your ultimate goal, and you can succeed.