How to Pay for an MBA: Business School Funding Options

The best way to pay for an MBA is with money you don’t have to borrow, like fellowships and help from your employer. Ideally, you’ll also have money put aside for business school if you’ve worked for a few years, or you can use some of your salary if you’re getting an MBA part time.

But free aid, savings and wages might not cover the roughly $66,000, on average, cost of an MBA. And the bill is closer to $200,000 if you attend a top-tier program, according to Poets & Quants, a website that covers graduate business schools.

To fill business school tuition gaps, you can turn to MBA student loans. Here’s what to do before you borrow.

1. Find MBA fellowships, scholarships and grants

Fellowships, scholarships and grants are aid you don’t have to repay. Most fellowships and grants are awarded by business schools themselves, though private MBA scholarships from businesses or associations do exist.

Unlike undergraduate scholarships, which may be based on your financial need, MBA fellowships and grants are usually awarded on merit alone. You may qualify based on criteria like your undergraduate GPA, GMAT score or any professional accomplishments you have.

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“MBA fellowships and grants are usually awarded on merit alone.””

A business school may automatically offer this aid upon your admittance — MIT Sloan School of Management at the Massachusetts Institute of Technology in Cambridge, Massachusetts, awards over 60 fellowships in this fashion, for example. In other schools, you may have to apply separately. Contact your business school’s financial aid office for details.

2. Use employer aid for business school

Money your employer provides or you earn by working can help you pay for an MBA. If you already have a job, reach out to human resources to see what education benefits the company offers, as well as its rules for that assistance.

Some employers — like the global consulting firm Deloitte — will pay for all or part of your MBA if you agree to return to the company for a set number of years after school. But companies that pay for an MBA are rare: A 2017 survey from the Graduate Management Admission Council found that less than 10% of full-time MBA students expected to receive employer sponsorship.

Even if your employer won’t sponsor your MBA, it may still assist you via tuition reimbursement. These programs typically offer up to $5,250 toward eligible education expenses, though amounts vary by employer. Because these are reimbursement programs, you have to cover costs upfront via a different means — like savings or loans.

Assistantship jobs can provide money toward tuition, as well as a monthly stipend. Business school assistantships may require helping school faculty with tasks like conducting research or grading papers. The number of assistantships a school offers is often limited. And unlike federal work-study, assistantships aren’t need-based — only high achieving students are typically hired. Contact your school’s employment office for details.

3. Tap into your savings

Most students start MBA programs in their late 20s, after they have started their careers. That time working likely convinced you that getting an MBA would be worth it for your future. It also hopefully was when you saved some of your salary to cover the cost of the degree.

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“If you haven’t been saving specifically for business school, don’t touch other savings — like for an emergency or retirement — to cover MBA expenses.””

An ideal budget puts at least 20% of your money toward debt repayment and savings goals, such as paying for an MBA. If you haven’t been saving specifically for business school, don’t touch other savings — like for an emergency or retirement — to cover MBA expenses. Opt for student loans instead.

4. Take out business school student loans

After exhausting the other options, MBA students can cover any remaining tuition gap with federal or private student loans.

If you plan to work for a nonprofit or aren’t sure about your career path, take out federal loans first. In these situations, federal loans offer unique benefits like income-driven repayment and Public Service Loan Forgiveness. You can receive federal loans by completing the Free Application for Federal Student Aid, or FAFSA.

» MORE: NerdWallet’s guide to the FAFSA

If you’re already employed or won’t need federal loan benefits, shop around for a private business school loan. These could costs students who have good credit, or a co-signer with good credit, less when it comes time to repay their MBA loans. Here’s why:

Federal interest rates and fees are higher for grad students. Unsubsidized federal loans come with higher interest rates for graduate students (4.30%) than undergrads (2.75%). Interest rates on federal graduate PLUS loans are 5.30%. Unsubsidized loans come with an origination fee of roughly 1%, but that fee is four times higher for PLUS loans. Most private lenders don’t charge origination fees.
Your work history is likely an advantage. All federal loan borrowers receive the same interest rates. Private loans determine rates based on your financial situation. If you’ve worked for a few years before getting an MBA and have built up your credit, you may qualify for a lower interest rate than federal student loans offer. You could also save more by opting for a variable rate, if you plan to pay loans off fast or are confident you could afford payments if that rate rises.
All graduate student loans accrue interest. Graduate students aren’t eligible for federal subsidized loans. The government pays the interest on subsidized loans at certain points, like when you’re enrolled in school at least half-time. Because only unsubsidized loans are available for graduate students, you won’t receive the potential interest savings from federal loans that undergrads do.

Use a student loan calculator to determine how much loans will cost you to pay for an MBA. For comparison, business school graduates owe roughly $66,000 in MBA student debt, including undergraduate loans, according to the National Center for Education Statistics.

If you decide federal loans make sense for you now, but your plans change in the future, you can refinance MBA loans after school to potentially save money.

» MORE: Compare graduate student loans

Readers also ask

Executive MBA programs are for seasoned professionals; the average student has been in a management position for close to nine years, according to the Executive MBA Council. These students work full-time while attending school in a modular fashion, like every other Friday and Saturday.

Sponsorship is more likely for executive MBA students — 40% expect to receive this kind of funding. Those who don’t receive a sponsorship can use the same types of aid available to other MBA students. Even though executive MBAs don’t follow a traditional class schedule, they still meet the half-time enrollment requirement to qualify for federal student loans.

International students can use many of the same methods to pay for an MBA — except for federal student aid. This is available only to U.S. citizens and eligible noncitizens.

International MBA students may be able to take out private student loans, if they have an eligible co-signer or have established credit history on their own. Otherwise, they’ll have to look for a niche lender that works with international students.

» MORE: Best student loans for international students