MBA Student Loans
Compare multiple MBA student loans without negative impact on your credit score.
Compare MBA Student Loan Options
For those looking to receive an education in business, going to school for an MBA is the next step after receiving an undergraduate degree. And with the number of college graduates continually increasing, an MBA may be the quickest and most effective way to stick out among the crowd.
Applying for an MBA student loan is fast and easy:
How Pasha Funding Works
Compare Best Graduate Student Loan Rates
As with the majority of graduate school programs, an MBA degree is a large financial commitment. While the costs vary widely depending on the school and ranking of the program, the tuition can range anywhere from $20,000 to more than $160,000. For students wanting to fund their education, there are plenty of loan options to help pay their way.
What is an MBA Loan?
An MBA loan is a loan that is extended to a student to pay for their education. In this case, it is a graduate school MBA program. With the cost of MBA programs constantly rising, many students are finding they need to take out loans to fully fund their education.
For students receiving an MBA loan, it’s important to note that they are intended to pay for all educational expenses and not just tuition. Room and board, books, and supplies are among the items that can be paid for using an MBA loan. There are federal and private loans available to students and we will cover everything you need to know in this article.
Top MBA Loan Options
How Do MBA Loans Work?
An MBA loan is provided to you as a student and will pay for all of your educational expenses. There are two main types of loans, federal and private. They work similarly, although there are slight differences in the application and repayment process.
Applying for a federal loan begins with the student filling out the FAFSA. While in Undergrad, the FAFSA would be filled out by your parents if you are considered a dependant, but for graduate school such as an MBA, the FAFSA is fully dependant on your finances.
Once the FAFSA has been filled out, you will receive a financial aid package from the school that contains scholarships, grants, and federal loan options.
For private loans, you will apply directly with the lender. This will require a credit check, and if you do not have good enough credit you could be required to use a cosigner.
For either federal or private loans, the money will be sent directly to the school to pay for expenses such as tuition, fees, and housing. Any leftover money will then be sent to you to pay for food, supplies, transportation, and any other necessary educational expenses.
Types of MBA Loans
There are two major types of student loans. They are federal loans and private loans. While the goal is the same (paying for education), the way they work varies slightly.
Federal loans are operated by the US government. They are preferable to private loans as they have fixed interest rates and benefits such as potential loan forgiveness. For graduate school such as an MBA, there are two federal loans available.
- Federal Direct Unsubsidized Loans - These are available to all students regardless of financial situation. No credit check is required.
- Direct PLUS Loans - These are additional loans that do require a credit and financial check. If you don’t qualify financially, you cannot receive a PLUS loan.
Federal loans are provided through the Department of Education. There are a variety of repayment plans available that can vary depending on your income and ability to pay.
A private loan is provided through a private company. Some popular loan providers include SoFi, Sallie Mae, and CollegeAve.
All private loans require some sort of credit or financial check to qualify. For students that don’t have a credit history, you will likely need a cosigner to qualify.
While federal loans have one fixed rate that is offered to anyone, private loans can vary by a great deal depending on your finances. Whereas federal loans offer only a fixed rate, private lenders usually offer both fixed and variable rates.
Private loans tend to be recommended as the last option due to the usually higher rates as well as the lack of federal benefits such as loan forgiveness and income-based repayment options.
Pros & Cons of MBA Loans
As with any large expense, deciding on whether or not to take out an MBA loan should be considered very carefully.
- Great Career Opportunities - Compared to a typical bachelor’s business degree, an MBA offers more opportunities. Management positions are expected to grow by nearly 10% by 2030.
- High Earning Potential - If you can think of any CEO you know, there’s a very good chance they have an MBA. Employers across the country offer an average of $115,000 to new MBA graduates.
- Federal Benefits - If you take out a federal loan, you will have the opportunity for loan forgiveness, income-based repayment plans, and other federal benefits.
- Cost - Graduate school is expensive, and receiving an MBA is no exception. You will likely look at spending $50,000 on the low end and six figures for higher-ranked schools.
- Not Fully Necessary - While most CEOs have an MBA, today it is less necessary. Companies are looking to hire a wider variety of degree holders as it provides a more holistic view for their business, making an MBA not necessary for all paths.
- Program Strength - Receiving an MBA from a community college is much different than going to an Ivy League. The cost of getting a lower-ranked MBA may not be worth the minimal salary bump you may see.
Types of MBA Programs You Can Obtain a Loan For
There are plenty of options when it comes to receiving your MBA. Maybe you want to do it part-time while you work, maybe you prefer online classes. Either way, here are different programs you can use your MBA loan for.
Would you like to receive a degree from a school out of state or far away, but you don’t want to move? An online MBA is a great option. With Zoom and online classes becoming more prevalent than ever, there are plenty of schools that offer online MBA programs that will give you the same degree as in-person learning.
If you want to earn an MBA while still working your current job, a part-time MBA is likely for you. These usually involve night or weekend classes that are outside of typical working hours. While they may take a bit longer to finish, you will be receiving your income during the whole process.
An executive MBA is geared towards those that already have plenty of working experience and want to take the next step. This focuses on leadership and teamwork and you’ll notice that most of your classmates will be older than your typical college students. The classes usually meet on weekends or evenings, allowing students to continue working while in school.
Certain schools offer other MBA programs, such as accelerated MBA’s that are more intensive but only take about a year. Either way, your MBA student loan will be able to pay for whatever program you decide to enroll in.
Need help choosing student financing?
No worries, we've got you covered! Compare multiple student financing options in just minutes without impact on your credit score.
Average MBA Loan Interest Rates
Interest rates are one of the most important aspects of school loans. This is especially true for MBA loans, which can be quite a lot of money.
Federal unsubsidized loans have a fixed interest rate of 5.28%.
Federal PLUS loans have a fixed rate of 6.28%.
Private loans have interest rates that vary widely depending on the applicant’s credit score and financial history. They also offer both fixed and variable rates. Currently, most fixed-rate private loans start around 3% and go up from there.
How Much Can I Borrow For an MBA Loan?
Depending on what kind of loan you take out, the amount that you can borrow varies.
Most private loans will allow you to borrow the full amount of your education, minus any other financial aid that you have received. This allows you to fully fund your education.
Federal PLUS loans will also pay for the full amount minus any other financial aid.
Federal unsubsidized loans, however, have a limit on what you can borrow. These loans do not require a credit check and allow a maximum of $20,500 to be borrowed per year.
What Is The Average MBA Student Debt in the United States?
The average MBA student graduates with $66,300 in debt. This is cumulative debt that includes both undergrad and graduate loans.
With the tuition and fees varying so widely among schools, so does the average debt. Bloomberg found that 18% of MBA students borrow over $100,000 for their education.
Can MBA Loans Be Used to Pay For Living Expenses?
In fact, MBA loans can be used to pay for nearly any educational expense.
- School Supplies
All of the above and more are allowed to be paid for with your student loan, making sure that you are covered for everything you need while in school.
Can International Students Qualify For an MBA Loan?
International students are not allowed to receive federal or state funds. This means that none of the federal loans discussed earlier can be given to international students.
For most private loans, this is also the case. Many lenders have a citizenship requirement that precludes most foreign students from taking out loans.
This isn’t fully true for all companies though. Certain private lenders do offer international students loans, but they likely come with less than ideal terms.
Do I Need a Cosigner to Get an MBA Loan?
You will not need a cosigner for a federal direct unsubsidized loan. These loans do not involve any credit or financial check and are offered to all students.
For private and PLUS loans, you will require a cosigner only if you have bad credit or poor finances. This will all be checked by the lender or the government when you apply, and if declined you will be informed of the need for a cosigner.
Which Type of MBA Loan is Best?
The best type of loan depends on your personal preferences, but most financial advisors will recommend you max out your federal loans first.
In fact, most private lenders even state on their websites that you should start with federal loans before switching to private.
The most commonly recommended path is:
- Start with scholarships and grants
- Move to federal loans
- Utilize private loans to cover any remaining expenses
Are MBA Loans Worth It?
MBA loans are worth it if you believe you will make enough money to cover the cost of your education. This fully depends on each individual’s situation and there isn’t a one size fits all answer for the question.
In general, if you believe an MBA will give you a significant salary increase or more opportunities than you would have without the degree, it’s safe to say it would be worth it.
But if you get the degree and will not use it at all, or are in an industry that doesn't require degrees, it would likely be a waste of money.
Apply For an MBA Loan Online
In summary, here are the best currently available rates for MBA loans.
|Citizens||3.23% and up||1.03% and up|
|College Ave||2.94% and up||0.94% and up|
|Sallie Mae||3.5% - 12.6%||1.13% - 11.23%|
Compare rates from multiple lenders in just minutes by getting started now.