MBA Loans

The majority of MBA students finance at least part of their education through student loans. This article provides information on the types of student loans available, how to apply for them, and examples of private lenders.

Types of College Loans

Sources of loans money include the federal government, state governments, private organizations, and the schools themselves.  Loans are usually categorized based on whether they are public or private, as well as whether or not they are subsidized or need-based.

A subsidized loan is a type of government loan where the interest is paid for while you are in college. Subsidized loans are different that student loans in deferrment, where the loan doesn't have to be paid off until after graduation but interest is added the loan during the course of your MBA program. Need-based loans are given to students that can't afford the cost of college.

There are four types of MBA loans:

• Need-based Federal Loans
  • Perkins Loans are awarded to students who demonstrate the greatest levels of financial need
  • Federal Subsidized Stafford Loans have an annual borrowing limit that increases after each year of school you complete.

• Non-need-based Federal Loans
  • Federal Unsubsidized Stafford Loans allow you to add interest fees to your loan until graduation. This means that you will end up paying more.

• State loans
  • These loans are neither need-based, nor subsidized.
  • Visit the websites for your state's higher-education agencies to see what loans are available to you.

• Private loans
  • Like state loans, private loans are usually never subsidized or need-based. Interest rates vary.
  • These loans can come from banks, private organizations, and the colleges themselves.
  • Private loans usually require you to have a co-signer.
  • Interest rates vary, but banks usually have the highest interest rates. Private organizations and foundations are more likely to offer lower interest rates.
  • Some colleges offer loans with lower interest rates than federal loans.

Applying for Financial Aid

You may have to try several different avenues in order to get enough loan money to finance your education. Here are the steps you should follow:

1. Get a copy of your credit report. Eligibility for student loans depends on your credit history, and getting your credit report ahead of time will allow you to fix any errors or problems. Americans can get one free credit report a year from each of the three major consumer credit reporting companies: Equifax, Experian, and TransUnion. To get your report, visit AnnualCreditReport.com.

1. Call the schools you are applying to. They can help connect you to the right student loan programs and may even act as a guarantor for private loans. You should also look at the financial aid sections of business school websites, since schools often list their loan and scholarship recommendations online.

1. Submit your Free Application for Federal Student Aid (FAFSA) online. Contrary to popular belief, the FAFSA isn't just for undergraduate students. Filing your FAFSA is the first step in applying for federal student aid, and will qualify you for Stafford and Perkins loans.

1. Research and apply for MBA scholarships. While you will probably have to rely on loans to pay for at least part of your MBA, it is also worth looking into scholarships. Scholarship money can take away some of your financial burden since it's money you don't have to repay. To start your scholarship search, check out our article on How to Get an MBA Scholarship.

1. Apply for teaching assistantships. Work study can help lessen the amount of debt you need to pay off when you graduate.

1. Research and apply for private institutional loans. Some schools may have their own private loan programs or can recommend private lenders, so be sure to ask Admissions.

Student Loan Companies

Here are two examples of respected educational lending institutions that provide MBA Loans:

• Citibank's CitiAssist Graduate Loan Program - CitiBank's student loan division provides standard loans to U.S. citizens and international students looking to study in the US. Citibank also works with specific schools, such as Wharton, to provide tailored loan packages to their students.
• Sallie Mae - Sallie Mae runs a private MBA loan program.