Purpose of this article: to explain some options you have to come up with the funds to go to your dream graduate school.
Overview:
You have just been accepted to graduate school, and while you already know the return on investment is high, you have some questions on how to pay for this. The article below will give you some of the best tactical strategies to come up with the money for graduate school.
Strategy 1: Contact the financial aid officers at your school and ask about Fellowships or Scholarships
Many business schools offer lucrative merit-based and/or need-based fellowship awards, and similar to scholarships, these awards do not need to be repaid. On top of fellowships, most schools offer a number of merit-based and/or need-based scholarships. Eligibility for these awards is based on a variety of factors like previous educational achievement, GMAT or GRE scores, and other career related factors.
The stats show that one of the best schools for fellowships is the Harvard Business School. According to the school’s website, “HBS Fellowships are gifts that do not need to be paid back, and nearly 50% of the class receives a fellowship award. The average HBS Fellowship is approximately $37,000 per year, or $74,000 total. All students are encouraged to apply for an HBS Fellowship after being admitted to the program.”
So regardless of your background and career interests, your best bet toward obtaining one of these lucrative offers is to talk with the financial aid department of your respective school as soon as you apply/know that you are getting in. These awards a typically limited and are given out pretty quickly.
Strategy 2: Borrow smartly from the Federal Government
In order to be eligible for federal loans, you will need to be a U.S. citizen and file a form called the Free Application for Student Aid (FAFSA). Once filled out, this form will give you access to federal student loans. Your options from a federal loan standpoint are:
• Stafford Loans (Federal Direct Unsubsidized Loans)
• Graduate PLUS Loans
The following details the characteristics of each of these federal loans:
Stafford Loans (Federal Direct Unsubsidized Loans)
• You can borrow $20,500 annually and $138,500 max lifetime for non-health fields like business
• You can borrow $41,167 annually and $224,000 max lifetime for health fields
• The interest rate is fixed at 6.0% as of June 1, 2017. New rates will be determined on June 1, 2018
• There is a 1.066% origination fee that is deducted proportionally from the loan disbursements. This means that you will receive less money that the amount you actually borrowed
• This loan is Unsubsidized which means interest accrues during the entire time you are enrolled in school
• You do not need to demonstrate financial need to qualify and you don’t need good credit to obtain
• Repayment of this loan is delayed for 6-month after your gradation date and is ultimately unavoidable unless you are eligible for loan discharge or forgiveness
Graduate PLUS Loans
• You must borrow the full amount ($20,500) of the Stafford Loan first, before borrowing any of the Graduate PLUS Loan.
• Once you borrow the full amount of the Stafford Loan, you can then borrow up to the remaining cost of attendance.
• The interest rate is fixed at 7.0% as of June 1, 2017. New rates will be determined on June 1, 2018.
• There is a 4.264% origination fee that is deducted proportionally from the loan disbursement similar to the Stafford Loan
• You do need to demonstrate good credit to obtain and the government does reject applicants who have had significant financial trouble
• Repayment of this loan is delayed for 6-month after your gradation date and is ultimately unavoidable unless you are eligible for loan discharge or forgiveness
So, in summary the federal student loan options for graduate students are as follows:
Strategy 3: Carefully consider if a private loan is a viable option for you
Borrowing funds for graduate school from private sources like banks or Sallie Mae can be an option for you. But my honest advice will be to opt for loans from the federal government because the interest rates and origination fees are typically better. And from a repayment option, the federal government loans give you more flexibility with plans like income driven repayment.
Nevertheless, if you are still interested in pursuing private lenders, here are some options from NerdWallet.
Strategy 4: Follow one of these three alternative options to finance your degree
If you find yourself unable to secure funds from fellowships, scholarships or student loans, the following three options could serve as a last resort:
1. Graduate Assistantships – under this method, you would work as a graduate assistant for the university while enrolled in your MBA program. Click here to see an example of Michigan State University graduate assistantship program
2. Industry specific scholarships – just like it sounds, based on what you are pursuing, there can be a ton of industry specific type scholarships. Just note that they are usually in small denominations of $1,000 to $5,000 so you will have to collect a lot of different types to fund the full cost of attendance
3. Employer Sponsorship – companies often have tuition assistance programs as well as full on sponsorship programs for high performing individuals. The “catch” though is you usually have to return to that same company for a certain period of time.
Closing
Financing your graduate degree is more than possible and will more than likely take a combined approach. The best-case scenario would be to get a fellowship or scholarship through your university. But the most likely scenario will be funding our education with a combination of student loans from the federal government. My hope in writing this article is that after reading this, you will feel more confident in finding the funds necessary to finance your graduate degree.
Aside: If you are an international student, the type of loans your can apply for depends upon whether or not you have a U.S. cosigner. With a U.S. cosigner, you will be eligible to borrow from a number of different lenders. Without one, your options are very limited and usually gravitate towards the private student loan variety.