MBA Student Loans: Borrowing for Business School
MBA student loans are a reality for most students pursuing an advanced business degree. Business school is challenging enough, paying for your MBA does not have to be. There are a number of student loan options available for professional school. Here’s what you need to know.
Loans for Business School
Using loans for business school is a popular way to finance your MBA. But this should be a supplement to scholarships, Federal Work Study (for those with demonstrated financial need), and employer tuition reimbursement (if applicable). You’ll definitely want to compare federal loan options, but if you still have a void in your financial aid picture you may need an MBA Loan.
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Benefits
- Easy online application!
- No origination fees, late fees, and no insufficient fund fees. Period
- Flexible repayment options to help you find the right loan for you
- 0.25% discount when you set up autopay✝
MBA Student Loan Rates
The interest rates for MBA loans can be highly competitive. Federal student loans rates for business school start at 4.30% for unsubsidized student loans and 5.30% for Grad PLUS Loans. But private student loans offer competitive rates often with no origination fees. Current rates range from 1.04% to 13.72%.
The rate you qualify for will depend on your creditworthiness and/or that of your cosigner.
Best MBA Student Loans
It is always best practice for MBA students to exhaust federal loans first as they come with certain benefits and protections (such as lengthy deferment and forbearance terms, and various repayment options) that you will not find with private student loans. However, private student loans may offer more competitive interest rates, save you money on fees, and may allow you to borrow enough to cover your financial gap. Here are our top picks for private student loans for business school.
We work with the top lenders that offer options for MBA Students.
Borrower Benefits
The following benefits may be included in your MBA student loan.
No Prepayment Penalties
This is standard across the board but always reassuring. If you come into a windfall or just work really hard to earn extra cash to pay down your debt, there is no penalty for early repayment.
Auto-Debit Discount
This is also a pretty common incentive, but the savings could be between 0.25% and 0.50% cut from your interest rate when payments are automatically deducted from your checking or savings account. Just be on the lookout for any disclaimers that indicate the qualifying account needs to be associated with the bank or lender you may choose to borrow from vs. an account of your choice.
Existing Customer Discount
Some lenders may offer a rate reduction (typically 0.25%) if you are an existing customer with a prior or qualifying account.
Cosigner Release
If it is important to you that you have the ability to release a cosigner from your loan in the future, look for this option when reviewing loan programs. The lender will require anywhere from 12 to 48 monthly on-time payments to qualify. And, of course, your creditworthiness will need to be reevaluated at the time you request your cosigner to be released to make sure you can handle the payments on your own. Each lender will set their own terms for cosigner release, so make sure to read through the fine print.
Deferment and Forbearance Options
Lenders may offer member protections in the form of deferments or forbearances. For example, if you run into a financial hardship or unusual circumstances, such as a job layoff or military deployment, your lender may grant you a temporary postponement of loan payments. This will enable you to get back on your feet, avoid your loan being considered delinquent or entering default, and help protect your credit. But, the total amount of available deferment or forbearance time may be limited and the number of qualifiers for these options may also be restrictive.
Free FICO® Credit Scores
Periodic free credit scores may be provided by certain lenders, typically on a quarterly basis. Along with furnishing your actual score, you may be given information about the primary factors impacting your score and tips or best strategies to monitor and handle your credit in the future.
Choice of Repayment Plan
This comes in two stages. First, your lender may offer choices up front that could save you money. An example would be an interest-only payment plan while you’re in school that could provide a lower rate than a deferred repayment option. Second, you may find that some of today’s lenders give you the choice of how many years you’d like to repay your loan. For example, you could choose 8, 10, 12 or 15 years. Keep in mind that there are no prepayment penalties but a choose-your-own repayment plan could help ensure your payments are structured in a way that keeps you on top of your finances according to your financial circumstances and desired schedule; especially if you choose an auto debit payment method.
Federal Student Loans for MBA
Keep in mind federal loan options like the Direct Unsubsidized Loan, and the Grad PLUS Loan for graduate students can also be used to finance your education. These loans (or the option of these loans) are presented to you in your financial aid award letter from your school. Federal loans are known to have a number of deferment and loan repayment options associated with them.
Graduate students can borrow up to $20,500 per year in the Direct Unsubsidized Loan program and up to the full cost of attendance (minus all other received aid) in the Grad PLUS Loan program, a loan that requires a credit check. However, you should note that in today’s marketplace private lenders may offer rates that are lower than some of the federal student loans. Neither the Direct Unsubsidized Loan nor the Grad PLUS Loan are subsidized for graduate students. This means your loan will accrue interest from the day it is disbursed, and you will be responsible to repay that interest.
Part-Time MBA Student Loans
Part-time students as well as full-time students may be eligible to borrow MBA loans provided they meet the following criteria:
- U.S. citizen or permanent resident*
- Enrolled at least half-time as a graduate student (at an eligible institution)
- Making satisfactory academic progress (SAP)
- Have a positive, verifiable credit history — or a cosigner with a strong credit history (as well as meet all other lender criteria)
*Some lenders will accept applications from foreign borrowers applying with a creditworthy cosigner. The cosigner needs to be a U.S. citizen or permanent resident.
MBA Student Loan Limits
The minimum MBA loan amount you may be eligible to borrow is usually $1,000 but you will want to check with your lender.
The maximum amount you can borrow is the full cost of attendance, less other aid, as certified by your school.
MBA Student Loan Repayment
The length of your student loan repayment term will depend on your loan balance, but could be as long as 20 years following your in-school deferment and grace period. Your lender may offer different repayment options while you’re enrolled in school, like immediate repayment, interest-only payments, or deferred payments. Once you graduate (or drop below half-time enrollment), your lender may allow you to choose your repayment term. The longer your repayment term, the more affordable your monthly payments will be, but on the flip side, the more you will repay in total.
If you’re looking to simplify your student loan payments, or lower your interest rate, you may want to consider student loan refinancing. Some of the benefits of refinancing may include:
- Lowering you monthly payment amount
- Lowering your interest rate
- Decreasing how much you pay over the life of your loan
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- Direct Stafford Loan Limits for Borrowing
- Private Student Loan Repayment Options
- Student Loan APR: Calculating the Real Costs
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