College students and business professionals seeking graduate-level education often consider pursuing a a Master of Business Administration (MBA) program. This business-focused two- or three-year program is offered by hundreds of colleges and universities in the United States and abroad.
An MBA is an attractive option for those who want to further their career in business – or even start their own business. In 2018, more than 140,000 applications were submitted for an MBA program, and more than 100,000 MBA degrees were awarded in the same year.
The edge an MBA can provide to a business professional has remained strong over the years. It is estimated that future earnings can rise significantly after graduation. In some industries, salaries can rise 10% or more with an MBA, and it’s expected that the average MBA graduate’s salary will exceed $150,000.
The motivation behind getting an MBA is clear; however, the increasing cost of earning such a degree can be daunting for many. It’s important to understand just how much an MBA costs and the strategies to help pay for it.
How Much Does an MBA Cost?
Depending on the university or college, the cost of an MBA can range significantly. Recent statistics show that one year’s tuition can cost $50,000, while a two-year program may total $80,000. Top business schools across the country charge much more, leaving students with a bill of more than $100,000 for an MBA degree.
In addition to tuition expenses, many MBA students need to cover the cost of living while completing the program. Housing, food, transportation, and other bills can add up quickly. MBA candidates may not have enough set aside to pay for both tuition and living expenses out of savings or earnings. It may also be a challenge to continue working a job thoughout an MBA program. Many MBA students are often in need of some form of help to help complete their degree program.
Different Ways to Pay for an MBA
Fortunately, there are ways for MBA students to cover their expenses during a two- or three-year degree program. Here are a few ways to pay for an MBA.
Many employers see the value in employees who have earned an MBA. To reap the rewards of having an MBA on the team, a company may subsidize the partial cost of attending school. While an employer sponsorship will not pay for a six-figure degree program, it can help bring down the costs of tuition and living expenses significantly. Companies such as Bank of America, Deloitte, Wells Fargo, and more offer tuition reimbursement programs.
Employer sponsorship for an MBA program may come with strings attached, however. An employee using this method may owe time back to the employer after graduation, or face having to reimburse the company for its contribution to the degree. It is necessary to evaluate this option thoroughly before accepting sponsorship to ensure it fits with your career goals moving forward.
Federal Financial Aid
MBA students may also consider federal financial aid in the form of student loans. Federal student loans are available to graduate-level students with minimal credit or income requirements. Students may borrow up to $20,500 per year from the Department of Education (DE), with no more than $138,500 in total over the course of a degree program. All graduate federal student loans are unsubsidized, meaning interest accrues from the moment the funds are dispersed.
Federal student loans offer income-driven repayment programs once a student leaves school, which can be helpful if income is not high after graduation. However, the accumulation of unsubsidized interest on graduate student loans can be burdensome during school. Furthermore, expensive programs may outstrip the loan limits offered by the DE which can be a serious limitation.
Although there are not as many graduate-level scholarships available compared to undergraduate, scholarship opportunities still exist for MBA students. Public and private companies, non-profit organizations, and unions may offer scholarships to well-qualified MBA students. Scholarships are helpful because these funds do not need to be repaid, making them one of the most advantageous forms of financial aid.
However, the low number of available scholarships means these awards are highly competitive each year. The availability and competitiveness make them especially hard to find and win.
Private Student Loans
Finally, private student loans are also an option, and they are available from a variety of lenders and banks. Private loan eligibility requires candidates to pass a credit check and have high income. For high-credit applicants, they may offer lower interest rates than federal loans. In times of need, they can bridge the gap in funding, and they can be affordable for highly qualified applicants. However, they come with a few caveats.
Applicants must qualify based on their credit score and income, so certain low-credit and low-income applicants may be stuck with higher interest rates – or simply be declined. In many cases, a cosigner is required, but keep in mind that some lenders, such as Discover, do not offer cosigner release forms, putting the cosigner on the hook for full repayment. They also don’t have the same federal loan protections such as IDR programs, so a borrower can face greater difficulties during financial hardship.
Putting It All Together
Earning an MBA can be a lucrative career move, providing an opportunity to push income into the six-figure range. However, the cost of attaining an MBA is high. Fortunately, employer sponsorships, federal and private student loans, and scholarships are alternatives to paying for it out-of-pocket.
Business-minded professionals should consider all the strategies mentioned here, including the benefits and drawbacks to each, before committing to an MBA program. Paying for it is one step. You still need to pass the courses and get your degree. After that, it’s time to prepare for interviews and start advancing your career.
Andrew is a Content Associate for Lendedu – a website that helps consumers, college graduates, small business owners, and more with their finances. When he’s not working, you can find Andrew hiking or hanging with his cat Colby.