Top Ways to Help Pay for Your MBA

Decided to get your MBA but don’t have a clue how to pay for it? Relax. If you’re REALLY committed to getting an MBA, there are a number of ways to come up with the cash. I emphasize being “really” committed because some of these methods will require so much paperwork that your patience will surely be tested. However, if you’re approved, the outcome will be well worth the effort.

Here, in no particular order, are the top ways most students pay for their MBA’s:

1. Pay as You Go. The majority of people pay for their higher education the old fashion way – out of their own pocket. I was working full-time, trying to raise 2 teenager boys, AND was trying to carry a more-or-less full class load: all at the same time. I am definitely not a unique case. If you’re really serious about completing Grad School, you’ll find a way to work for and come up with the cash. It’s “old school” and extremely difficult at times but you get a debt-free degree at the end.

2. Ask Mom and Dad. Your parents may be in a position to help out with Grad School. However, keep in mind that by the time you’re ready for Grad School, your parents are probably getting ready to retire. They’re probably trying to figure out how they’re going to take care of themselves on a fixed income, much less how to take care of you so make sure you take this into consideration. Again, this varies from family to family but it is an option.

3. School Payment Plans. Most universities offer flexible payment plans that break up tuition into several, easier-to-digest, payments throughout the semester. These are usually available at no, or at very little, interest. To take advantage of these, make sure you contact your school’s Financial Aid office WELL BEFORE the semester begins.

4. Employee Benefits. If you’re working, either full or part time, make sure you check with your employer to see if they offer, or would be willing to offer, any tuition reimbursement benefits. Many companies recognize the benefit of having employees pursue higher education and are willing to contribute in a variety of ways, from allowing you paid time off to actually paying some or all of the cost of some classes. Note that most employers offer reimbursement programs. This means that you still have to come up with the money to pay for the class in the beginning. You get reimbursed when you pass the class. Also, most employers will only pay for classes that have some relevance to your job. Don’t expect to get reimbursed for that pottery class, for example, unless you actually work for a pottery company. Lastly, some employers see this as a no-interest employee loan and may require that you continue working for them for a period of time in order to “forgive” the loan. Make sure you ask about and understand all the provisions of your employer’s educational assistance program.

5. Sallie Mae Loans. The Financial Aid Office of your university can also make you aware of any federal student loan and/or grant programs that you might qualify for. The paperwork is a real chore but has actually been streamlined from years past (as if that’s any consolation). Repayment of most loans of this type does not kick in until after you graduate. However, the fact that repayment is so far in the future lulls many people into thinking that they’ll never have to worry about it. Believe me, the day your payments are due to begin will eventually come – usually sooner than you think and never at a good time. Make sure you’re ready. Also, you should note that these types of loans DO NOT GO AWAY if you ever declare bankruptcy so again, borrow only what you’ll eventually be able to repay.

6. State and Local Programs. Many States have their own programs that you might qualify for. Most of my MBA was paid for by a Texas program for veterans attending State universities – I say “most” because the program only covered tuition costs. I still had to pay all the various student and lab fees, books, parking, and other expenses out of my own pocket (about 60% of the total cost). Again, your school’s Financial Aid Office should be able to give you details on what’s available and how to apply.

7. Traditional Bank Loans. Many banks and credit unions offer educational loans. Their terms and interest rates will vary significantly from bank to bank so make sure you shop around. Your school’s Financial Aid Office may be able to recommend where you can get some of the best terms. Keep in mind that no matter what the bank calls it, these are still traditional loans in that you will still have to put up some collateral to guarantee the load – either that or your parents will have to co-sign.

Although you’ve got a number of places to go to look for help in paying for your MBA, here is some final advice that applies to them all:

1. Line up as many sources as you can. Most students end up with a combination of money sources. I ended up (a) self funding, (b) taking advantage of Texas’ veteran program, and (3) using my schools payment plan to spread the payments over several months. I also had a few classes that applies to my current job reimbursed by my employer (4). Whether or not you think you actually need the money, go ahead and apply. Always better to have it and not need it…..you know the rest.

2. Apply Early. The application process for any kind of loan or grant is never quick nor painless so plan ahead. Otherwise, you might have to sit out a semester.

3. Get a Financial Advisor – even if it’s your Dad at first. Getting an MBA is a huge investment in terms of time, and of course, money. You cannot get enough advise from enough people. Ask your parents. Ask your school’s Financial Aid Office. Ask your banker. Ask your employer. Make sure you know EXACTLY what the various loans are going to cost you – in repayment terms, in interest, or in a time commitment at a particular job.

4. Don’t Overborrow. Remember that all these loans will have to be repaid someday. What if the MBA job market craters just before you graduate? What if the Stock Market crashes? What if you get married/divorced/pregnant/or any one of a number of life-changing events? How will you repay your loans then? Make sure you think ahead because you’ll be done with school and out in the job market before you know it.

Hiram
MBA, University of Houston 1989