MBA Loans

A very common way that business students pay for graduate school is through MBA loans.

Loans provide needed funds to pay for some or all MBA expenses.

Keep in mind, loans involve borrowed money that has to be paid back, with interest added on.

Generally speaking, there are two types of loans out there.

There are Federal Student Loans - loans provided by the U.S. federal government.

There are also Private Student Loans - loans provided by third party, private lenders.

Take a look at both types of loans for MBA students that are avialable...

Federal Loans - Federal loans are available to graduate and undergraduate students...so you may recognize this type of financial aid. The Stafford loan is the most common and the one we will focus on here. There is also the Perkins loan, but this is for students that show "exceptional financial need". All federal loans are obtained by submitting a Free Application for Federal Student Aid (FAFSA). The advantages of federal loans are the lower interest rates and the favorable repayment terms. There are two types of Federal Stafford loans...

• Subsidized Stafford Loans - This is the most ideal type of federal loan. The interest is paid or "subsidized" by the government until that six months after you graduate. After that time, you repay the loan (interest and principle). This type of loan usually has a lower award amount and is based on financial need.
• Unsubsidized Stafford Loans - This is a federal loan where interest must be paid by you while you are in school (unless you opt to have it added to your loan balance). In other words, the loan is not subsidized by the government. No principle is paid until six months after you graduate. This type of loan usually has a higher award amount and is not based on financial need.

Private Loans - The interest rate for a private loan is usually not as low as that of a federal loan. However, private education loans are often more favorable than other types of loans (i.e. a car loan). From Sallie Mae to Citibank, there are a myriad of private loans out there. Private lenders provide loans for educational purposes just as they do for other purposes. Shop around when it comes to private MBA loans so you can get the best deal.

Business schools often have their own funds to lend but often opt not to because of the ease and availabilty of federal and private loans. So, it may be worth your while to inquire about school-based loans if you are need of additional financial aid. There are advantages and disadvantages to both federal and private loans. Look at both types to see what loan type best fits your situation. Often, the cost of the MBA program is such that both loan types are needed.