How to pay for an MBA
Key takeaways
- MBA-specific grants, scholarships and student loans can help students pay for an MBA.
- Internships and employer programs may provide money for school as well as earned credit and experience.
- Non-borrowing methods should be used first to reduce loan amounts that must be paid back with interest.
An MBA can land you leadership roles and lead to a high return on investment — but the popular graduate business degree comes at a cost. The cost of an MBA varies, with top-ranked institutions costing between $100,000 and $170,000. That’s why it is wise to investigate grants, employer-funded programs, scholarships and fellowships in addition to loans.
How to pay for your MBA
The average debt burden after completing an undergraduate degree, followed by a Master of Business Administration, is $81,218. However, don’t let sticker shock keep you from your educational and professional goals. Schools, organizations and businesses all offer programs that can make your degree more affordable, and getting a student loan can fill in any gaps.
MBA fellowships, grants and scholarships
Fellowships, grants and scholarships are types of funding for your education that you do not repay. Many of these programs consider your academic record, but some are need-based or geared toward specific groups of students.
For example, the National Black MBA Association awards over $2.5 million in scholarships through its program each year. And the Forte Foundation provides scholarships, fellowships and awards to women pursuing their business degrees. The nonprofit’s Edie Hunt Inspiration Award provides $2,500 to a deserving MBA student as well as networking opportunities and a commendation on their resume.
Corporations, foundations and schools offer these types of aid. With some programs, you may have access to career mentors, networking opportunities and summer work experiences in addition to the basic aid package. To find opportunities, you may use a scholarship search engine and check with your state’s and college’s financial aid department. You’ll likely need to apply for each scholarship and demonstrate your professional experience, volunteerism and community leadership to qualify.
Company-sponsored MBA
Most companies recognize the benefits of investing in their employees through tuition assistance programs or scholarships. Many employers, including Apple, Deloitte, Microsoft and Goldman Sachs offer tuition reimbursement or a tuition assistance program.
Employers find that these programs not only help develop leaders from within the company but can also serve as a recruitment and retention tool.
Talk with your manager about educational opportunities through the company. Programs may offer upfront assistance or reimburse you for completing classes. They may also limit educational options to degrees that align with company priorities or require you to continue working for the company for a defined period after graduation.
MBA student loans
Most graduate students take out federal or private student loans to cover at least part of the cost of tuition and fees, and MBA students are no exception. MBA student loans are intended to help students earn a Master of Business Administration degree. Depending on your degree program, you may attend school part-time or full-time. If you’re using loans to cover both the cost of attending school and living expenses, you will want to be mindful of student loan borrowing limits.
Federal options include Direct Unsubsidized Loans, which let you borrow up to $20,500 each academic year, and Direct PLUS Loans, which let you borrow up to the full cost of attendance.
Borrowers often shop for private MBA loans when they surpass borrowing limits with federal student loans or are offered lower interest rates. If you have a high credit score, private student loan interest rates can be competitive, although these loans don’t offer the same benefits and protections as federal student loans.
Personal savings
If you begin your professional experience knowing you will return to the classroom, you can start saving toward your goal. Using personal savings can reduce your dependence on loans that must be repaid with interest. You could save for college using one or more of these accounts:
- 529 plan: Opening a 529 plan allows you to save for college in a tax-advantaged account, and you don’t pay federal income taxes on the funds you withdraw to pay for qualified education expenses. Also, your money grows tax-free.
- Roth IRA: You can use a Roth IRA for college without incurring an early withdrawal penalty. However, you’ll still have to pay taxes on any withdrawn earnings if you’re under 59-and-a-half.
- Traditional savings account: You could simply deposit a set amount of money into a regular savings account — preferably a high-yield savings account since it earns more interest than the national average rate. However, this option does not offer tax advantages.
Tutoring
Tutoring undergrads and other students can help provide some extra money for your own studies. According to ZipRecruiter, academic tutors make an average of $22 per hour. And if you did well on your GMAT, you could earn around $105 per hour tutoring others to pass the business school admissions exam.
Internships
Internships provide real-work experience for students, while providing a small salary, networking opportunities and, possibly, class credit. ZipRecruiter also reports that the average MBA internship salary is around $35,995. Internships are typically part-time and may work better with your schedule since the employer you intern for knows that you are a student.
How to pay for an MBA when you still have undergraduate debt
Many students pursue their MBA while managing undergraduate debt. Always exhaust your federal financial aid, scholarships and college savings before opting for private student loans. When you need to turn to private loans, compare lenders to find the best loan that works for your situation. That may include lower interest rates, longer repayment terms, cosigner options or long grace periods.
Depending on the types of student loans you have, you may be able to defer your undergrad loans until you finish your MBA. Just remember that interest may still accrue on those loans. Once you’re in student loan repayment, consider income-driven repayment plans for your federal student loans and refinancing for private loans, if it helps make your loans more affordable and manageable.
Bottom line
Getting a Master of Business Administration is expensive, but it’s also becoming more flexible, especially when you know how to pay for your MBA. An increasing number of online programs could open your options without having to relocate. And despite being costly upfront, an MBA often opens new career opportunities for people seeking executive roles and could pay for itself in the long run.
Frequently asked questions
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