Tuition and fees are always a consideration for prospective Master of Business Administration (MBA) students. Although the costs of a graduate business degree can vary widely, average annual tuition at America’s top 15 MBA programs exceeds $60,000 in 2020, according to U.S. News and World Report. A degree from many elite schools can be $70,000 or more per year. And because MBA programs generally take 2 years to complete, students should expect those figures to double.
Most students rely on financial assistance—including grants, scholarships, loans, or a combination of sources—to pay for their educational ambitions. By taking advantage of these opportunities, students can obtain funding for MBA programs and substantially reduce the financial burden of obtaining an advanced business degree.
Financial assistance is available for both in-person and online MBA degree seekers. Washington State University’s Online Master of Business Administration program offers help with financial assistance so applicants can enjoy the full range of MBA benefits.
Apply for Federal Aid
The first step for any prospective student in any program, including MBA programs, is to fill out the Free Application for Federal Student Aid (FAFSA) online. The U.S. government offers more than $150 billion in educational assistance each year to anyone who meets eligibility criteria. General eligibility requirements are simply that one has a financial need, is a U.S. citizen or eligible noncitizen, and is enrolled in a qualified degree or certificate program.
Federal student aid comes in 3 forms:
- Grants. Grants are awarded on a need basis and usually do not have to be repaid. Most federal grants are earmarked for undergraduate students, but some are available at the graduate level for students in particular circumstances. Check the eligibility requirements to see if your situation applies.
- Federal Work-Study Program. This program lets students earn money during the school year while gaining valuable work experience, typically in career-related, part-time jobs.
- Loans. Loans are money that the student borrows to pay for college that must be repaid. Federal student loans include the Perkins Loan and the William D. Ford Federal Direct Loan. Both programs provide loans at low interest rates. Graduate-level loans through the Ford program are unsubsidized and based on educational costs and other aid received.
Free Money
After prospective students know the results of their FAFSA applications, they can start filling in the financial gaps. Although federal loans can be very helpful in a pinch, free money is always better—and fellowships, scholarships, and grants, which are monetary awards that do not have to be repaid, offer a path to this outcome.
The website Nerdwallet explains that at the MBA level, financial awards are usually given out by business schools themselves. Unlike undergraduate scholarships, which are often based on financial need, MBA monetary awards are usually tied to merit. Factors such as a student’s undergraduate GPA, GMAT score, or professional qualifications may all be considered in the awards process.
Policies and procedures for fellowships, scholarships, and grants vary from school to school. Some business schools offer this aid automatically when students are admitted. Others require a separate application. Prospective students should research each institution’s policies carefully to make sure they take advantage of every possible opportunity.
Some institutions, including Washington State University, simplify the process through general scholarship applications that allow students to apply for hundreds of opportunities at once. WSU has connections with more than 700 programs offering anywhere from a few hundred dollars to thousands toward tuition—and students can receive multiple awards.
“Even if your grades aren’t perfect, apply,” WSU urges prospective students. “Academic interests, talent, financial need, community service, leadership, career goals—any of these could qualify you for awards from WSU and from other sources…There are thousands of opportunities waiting for you to find them.”
Employer Aid
For students heading to business school from the working world, employer aid may be an option. Nerdwallet identifies 2 main types of business participation:
- Employer sponsorship. Some employers, such as global consulting firm Deloitte, will fully sponsor an MBA for employees who agree to return to the company for a certain number of years after schooling is complete. Overall, however, full sponsorship is rare. According to a 2017 survey by the Graduate Management Admission Council, less than 10 percent of MBA students expected an employer to fully sponsor their schooling.
- Tuition reimbursement. Limited tuition reimbursement by employers is much more common than full sponsorship. In these programs, a company reimburses a fixed sum or a percentage of tuition. The amount varies from employer to employer. Reimbursement programs typically require students to pay their tuition up front and achieve a certain grade level before receiving any money, so recipients need to figure out how to cover their costs.
Personal Savings
The next option for graduate school payment, says Nerdwallet, should be personal savings. The site emphasizes that these should be savings set aside specifically for the purpose of graduate school. “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,” the site says. “It also hopefully was when you saved some of your salary to cover the cost of the degree.”
Students should never touch money saved for other purposes, such as retirement or emergencies. If students have not specifically set aside funds for grad school, they should consider other sources.
Student Loans
Student loans are the last resource for graduate school payment. Students may have already qualified for low-interest loans under the FAFSA. Nerdwallet explains that federal loans are the best route for candidates who intend to pursue careers in the nonprofit sector. “In these situations, federal loans offer unique benefits like income-driven repayment and Public Service Loan Forgiveness,” the site explains.
For candidates hoping to enter the private sector, private business school loans may be a better deal. Reasons for going this route include:
- Lower interest rates. Interest rates on federal loans are higher for graduate-level students than for undergraduates, and those loans may also charge an origination fee. Private loans usually have no origination fee, and interest rates are lower for candidates with good credit.
- Work history. Private loans take applicants’ work history into account when setting interest rates. Candidates with a strong resume can probably obtain a lower interest rate than they could get on a federal loan.
- Interest subsidies. All federal graduate-level loans are unsubsidized, meaning students will be responsible for any interest that accrues. Private arrangements may enable students to find or negotiate better offers.
- Flexibility. Private loans offer a slate of options that federal loans do not match. Factors such as the ability to choose the repayment period and fixed versus variable interest rates can be strong incentives to choose private over federal loans.
Is an MBA Worth It?
Despite the many financial assistance options available, MBA students typically pay out of pocket for a substantial portion of their schooling. The idea of carrying tens of thousands of dollars in debt—or even more—can be an intimidating prospect. But a recent study by education data and research company Quacquarelli Symonds suggests that the investment is worthwhile.
The study found that the average 10-year return on investment for MBA holders was $390,751, even after subtracting b-school tuition. And at top business schools, the decade-long ROI of an MBA degree exceeded $1 million. Yes, candidates should do everything they can to get part or all of their schooling paid for—but they should not be deterred by the ultimate price tag.
About WSU’s Online Master of Business Administration Program
Washington State University’s Carson College of Business delivers one of the top-ranked MBA programs in the nation. WSU offers an online MBA course curriculum designed to equip students with the tactics, knowledge, skills, strategies, and other resources utilized by today’s high-profile business leaders.
WSU’s Online MBA degree program offers several MBA concentrations—marketing, finance, hospitality business management, international business, and general MBA. For more information, visit WSU’s Online MBA website.
Recommended Reading:
Measuring the ROI of an Online MBA
7 Essential Cost-Saving Techniques for the Modern Graduate Student
5 Indicators That You’re Ready for an MBA
Sources:
Average cost of business school – US News and World Report
Federal aid – FAFSA
Free money – Nerdwallet
WSU’s general scholarship application – WSU
Employer aid, personal savings, and student loans – Nerdwallet
MBA return on investment – Quacquarelli Symonds