Federal loans are the best for MBA students, and private loans are next. But there are other ways to pay for business school besides student loans. Best MBA Student Loans
The truth is that it costs a lot to earn an MBA. The Masters of Business Administration degree could help you improve your business skills, but it does cost money. And is it worth it?
A recent post on Investopedia says that the average cost of tuition for a two-year MBA programme is $80,000. And that’s just the cost of tuition.
When you add in other costs like books, lodging and board, and more, the price might go up to between $100,000 and $200,000. And for a full-time program, the cost of lost wages may be very high.
You’re probably going to require student loans as part of your financial assistance pie, whether you’re looking at a part-time or full-time MBA program. Here’s what you need to know about how to pay for an MBA school, including the best student loans to use.
Let’s have a look at it. Best MBA Student Loans
How To Pay For Your MBA (Order Of Operations)
There is a smart order of operations to pay for your MBA program – and it doesn’t start with student loans. Before you ever embark on an MBA program, you need to strongly consider the ROI (Return On Investment) of your MBA programme. Best MBA Student Loans
The goal of an advanced degree, like an MBA, is to help you move your career (and salary) forward. Beyond your current job, an MBA also enables you to build a stronger network that might allow you to get a better job after graduation.
However, you need to align your MBA with your skills and job experience. An MBA loses a lot of it’s value within 1-2 years after graduation. As such, you need to combine your MBA with your skills to maximize it’s value. If you’re overeducated and underexperienced, you won’t see a great ROI. Best MBA Student Loans
When it comes to calculating the ROI, it’s all about how much you’re going to spend, and how much debt you’re going to take on. Follow this list from best to worst to get an idea of how to pay for your MBA program.
- Employer Tuition Assistance Programs
- Your Own Savings
- Scholarships and Grants
- Direct PLUS Student Loans
- Private Student Loans
Of course, there are variations on a theme – especially when it comes to paying for an MBA. For example, your employer might cover all the costs of tuition, and you just need to pay for the remaining items. This could lead you to change your order of operations, since Direct PLUS loans might be off the table. Best MBA Student Loans
It’s always important to analyze what you need for your own situation.
Employer Tuition Assistance Programs
One of the awesome things about an MBA programme is that many employers also different tuition assistance programs to help pay for all (or some) of the cost of getting your MBA. These programs might go under the name Tuition Reimbursement Program or Tuition Assistance Program. Best MBA Student Loans
For example, in my situation, my employer offered to reimburse me $5,250 per year until my MBA was paid off. This was win-win. It allowed me to get an MBA almost free, and my employer received some assurance that I would stick around – if I left, I didn’t get any of the accrued money that was owed to me.
As such, I had to take out student loans up front to pay for my MBA, but my employer reimbursed me annually until the student loans were paid off. Best MBA Student Loans
There are also student loan repayment programmes that some employers are starting to offer. These can be a great asset if you already have student loans.
Your Own Savings
After looking into employer assistance programs, you may consider using your own savings. This is especially true for individuals who are going back to school mid-career. You might have enough in savings to make a strong dent in the cost of your MBA programme. A few rules to keep in mind when using your own savings to pay for an MBA: Best MBA Student Loans
- Never use retirement plan money (i.e. don’t pull or take a loan from your 401k, IRA, etc.)
- Ensure that you have an emergency fund of at least 6 months
If you follow those rules, it’s safe to use the other money to pay for school. This could significantly reduce or eliminate the amount of student loans you would potentially need to borrow. Best MBA Student Loans
Scholarships And Grants
Going back to school for an MBA, you might not have even considered scholarships and grants as something MBA candidates “do”. But there is definitely free money available to graduate students like MBA candidates, and you should take advantage.
Check out this list of MBA scholarships available.
Also, don’t dismiss grants either. There are many different grants that you might qualify for if you put some time and research into it. Check out our guide on using grants to pay for college. Best MBA Student Loans
Direct Graduate Student Loans
If you’ve exhausted all the options to pay for your MBA, it’s time to look at Direct Grad Student Loans. Direct Grad loans are the best student loans to take out for your MBA. The reason is simple: Grad Loans allow for income-driven repayment plans, student loan forgiveness, and hardship options like deferment and forbearance. Best MBA Student Loans
These loans can be take out to cover the maximum cost of attendance (according to your schools’ financial aid office), minus any other financial aid received. For most MBA candidates taking out student loans, Direct Grad Loans can make up the difference of what’s needed to pay for college.
Note: Starting in 2026, there will be new caps on Direct loans for graduate school of $20,500 per year, and $100,000 lifetime limit. Given that an MBA is a two year program, keep in mind you’ll likely face more issues with the annual limits versus the lifetime limit.
Direct Grad Loans have some of the highest interest rates for Federal loans, so it’s important to consider that when borrowing. If you have excellent credit, you might want to consider other options now or later. Best MBA Student Loans
Private Student Loans
Some MBA candidates cannot solely rely on Federal loans to pay for the cost of getting an MBA.
Either they exhaust Federal loan limits due to their school’s cost, they need more funds to cover living expenses while attending school, or they need more time to complete their education (which increases cost). Best MBA Student Loans
Others may find more value in taking on private loans given their excellent credit and ability to repay. In this case, private student loans may be a cheaper alternative due to their low interest rates and excellent borrower programs.
We recommend borrowers shop and compare their private student loan options. It’s essential to get at least 2-3 quotes from lenders and see your options first. Platforms like Credible and Splash make comparison easy, but they don’t have all the lenders available.
Here are two other great private MBA student loan options: Best MBA Student Loans
Sallie Mae MBA Student Loans
Sallie Mae is probably one of the most well-known lenders on this list. They are the nation’s largest private student loan lender by loan volume. As a result, they also offer some of the most competitive private MBA student loans out there.
You can take out Sallie Mae student loans starting at just $1,000 (which is one of the lowest) and can borrow up to the total cost of education². Sallie Mae has a variety of repayment plans to select from; they offer 48 months of deferment during your residency and fellowship⁴, and 12-months of interest-only payments after your grace period.⁵ Best MBA Student Loans
Ascent MBA Student Loans
Ascent Student Loans is a solid choice for a private lender, as they offer great graduate student loans for business schools. They also offer a solid loan amount range from $2,001 to $400,000*, competitive rates, and easy repayment terms. Best MBA Student Loans
They offer loans starting at just $2,001* minimum, and they offer 48 month loan deferment while in school and a grade period to postpone full principal and interest payments up to 36-months after graduation, up to 9 months after leaving the programme, or otherwise dropping to less-than-half-time enrolment.
International MBA Student Loans
International students cannot get federal student loans and must rely on private student loans. International students make up anywhere from 18% to 20% of the MBA population in the United States. Best MBA Student Loans
There are two main options for international student MBA loans. Prodigy allows international students to borrow up to $220,000. They also don’t require a US cosigner, and have various repayment options. Check out Prodigy here >>
Another option is MPower. They have a lower lifetime limit of $100,000, but also may be a good choice for international business school students. Best MBA Student Loans
Refinancing Student Loans After Graduation
If you’re finding this article after you’ve already taken out loans for your MBA, you might consider student loan refinancing for your MBA loan. Best MBA Student Loans
If you have private loans or high-interest Federal Loans (like the Direct PLUS Loans mentioned above), refinancing might allow you to lower your payment or save on interest on your MBA student loans. Through refinancing, you take out a new student loan from a private lender and use it pay off your other loans. With the new student loan, you may qualify for a lower interest rate, better repayment term, or lower monthly payment. Best MBA Student Loans
If you have Federal student loans, refinancing will cost you the ability to apply for an income-driven repayment plan or forbearance. That’s why, for many borrowers, we don’t think you should refinance your Federal student loan for a private student loan.
However, in some cases, MBA candidates are the exception to the rule. After getting your MBA, you might have the potential to see your salary rise by a significant amount of money. For many, this means they would benefit more from getting a student loan with a low interest rate, versus keeping a Federal student loan. Best MBA Student Loans
For example, Direct PLUS Graduate loans currently have an interest rate of 8.048%. But you can refinance with Credible and potentially save a lot in interest!
See if Credible makes sense to refinance. You can shop loans in 2 minutes. As a bonus to College Investor readers, you’ll get up to a $1,000 gift card when you refinance with Credible. See terms. Check out Credible today.
Final Thoughts
The bottom line is that getting an MBA can be expensive, but for many, it’s worth it. The trick is to ensure that you’re figuring out how much it’s worth – almost like Step 0 of your MBA education.
Remember, you can ensure that an MBA is valuable by paying as little as possible out of pocket. Start checking with your employer, and looking to maximize student loan tuition assistance programmes. Only borrow in student loans what you absolutely have to.
Remember, what’s the end goal of your MBA degree? Don’t just go get an MBA “just ’cause'”. Have a clear path to getting a return, and be mindful of how you spend and pay for it. Best MBA Student Loans
Frequently Asked Questions About Student Loans For Your MBA
Which MBA student loan is best?
The best MBA student loan is going to be a federal Direct Graduate Loan. After that, it’s important that borrowers shop around for private loans and get multiple quotes. Best MBA Student Loans
Should students take out student loans for an MBA?
Only if necessary. The should exhaust other options first, especially programs like employer tuition reimbursement.
What to look for in an MBA student loan?
Borrowers should look at federal student loans first. After that, they can look at private MBA student loans. For these looks, borrowers should look at the interest rate, loan term, and repayment terms to find what works best for them.
How long are MBA loans?
Federal Direct loans can be extended to 25 years of repayment. Private MBA loans range from 5 to 20 years. Best MBA Student Loans