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If you’re considering going to business school, you know it can be a big expense. MBA students can accumulate $100,000-plus in student loan debt, depending on where they go to school. You can look into scholarships, grants and employer-sponsored programs to help finance your MBA. If you still need help, there are also multiple student loan options for your MBA.
You might stick with low-interest, easy-to-obtain federal loans, but private lenders can be tapped as well, and may even offer better interest rates if you have excellent credit.
Find out about different MBA loans below, and learn which factors to keep in mind as you compare options.
- Student loans for your MBA: Federal interest rates
- Student loans for your MBA: Private interest rates
- MBA student loan origination fees
- Refinancing options for MBA loans
- Repayment plans for MBA loans
- Other options for financing your MBA
- Choosing between federal and private student loans for your MBA
Student loans for your MBA: Federal interest rates
If you take out a federal loan for your MBA program, your options are direct unsubsidized loans and direct PLUS loans. Graduate students aren’t eligible for subsidized federal student loans.
The annual limit for direct unsubsidized loans for graduate school is currently $20,500 (you may be able to borrow more if you are enrolled in an eligible health profession program). A PLUS loan may be an option if you max out that limit and still need financial aid.
A direct unsubsidized loan has an interest rate of 6.08%, as of the writing of this article. Because it is unsubsidized, the loan builds interest even while you’re still in school. A direct PLUS loan has a current interest rate of 7.08%.
Direct unsubsidized loans do not take your credit into account, while PLUS loans do.
Student loans for your MBA: Private interest rates
Federal student loans generally have lower interest rates than private loans. Federal loans are also typically fixed for the life of the loan, and private loans can have a variable rate, or a range for fixed rates going from low to quite high, depending on your credit.
If you have excellent credit, however, a private lender may approve you for a lower interest rate than you would get for a federal loan, which may save you money over the long haul.
You might consider a private loan from the start, or you might take out a private loan if you have exhausted all of your federal loan options. There are several options available for private student loans, including banks, credit unions and online lenders.
Citizens Bank and College Ave are just two lenders that offer student loans for your MBA. Both allow you to choose between a variable and fixed interest rate. While a variable interest rate is often low at first, it can fluctuate and rise with the market, so it can cost you more later.
Here you can read more about our picks for the 8 best private student loans available.
MBA student loan origination fees
If you take out direct unsubsidized or direct PLUS loans, there are fees to consider. The government takes out the fee before they disburse your loan, so the amount you receive is slightly less than the loan you take out.
If you take out a direct unsubsidized loan, the government will charge you a loan fee of 1.059% if taken out on or after 10/1/19 or before 10/1/20. If you take out a direct PLUS loan, your fee will be 4.236% if taken out during the same time period.
Private loans tend to work differently. Many private lenders do not charge application, disbursement or origination fees. Citizens Bank, for one, says borrowers save over $900 on average in fees.
Refinancing options for MBA loans
There is one downside to federal loans: If interest rates go down, you cannot refinance your loans through the federal program. In that instance, you must refinance through a private lender instead.
Keep in mind that if you refinance from a federal loan into a private loan, you lose the benefits that come along with having federal loans, including flexible repayment terms, federal forgiveness programs and options for forbearance and deferment if you are unable to make payments for a certain time period.
If you already have private MBA loans, you can refinance them to a lower interest rate as the market and your credit improves. By refinancing, you could save hundreds or even thousands of dollars over the length of your repayment term.
You can go here to read about the five best banks through which to refinance your student loans. And here are 10 key questions to ask before refinancing your student loans.
Repayment plans for MBA loans
Federal loans offer unique benefits when it comes to repayment — benefits that can make managing your debt much simpler.
First, you do not need to start making payments on your federal loans until you graduate from school. With private loans, you may be required to make payments right away, which can be a lot of pressure while you are trying to get your MBA, though you may get a lower interest rate if you go with this option. You also may have the options of deferring your payment until you’ve graduated or dropped below half-time enrollment, or making interest-only payments while still in school.
If your income is relatively small after you graduate, your federal loans may be eligible for an income-driven repayment plan (IDR). Under an IDR plan, your payments are capped at a percentage of your income and can be as low as zero. With private loans, IDR plans are not available and you have to keep up with your payments, even if you have a small income.
Additionally, in the case of death or total disability, your loan servicer will discharge your federal student loans. For private loans, that may not be the case. And because many private loans require a cosigner, that means a loved one could potentially end up making payments on a loan even after the borrower has passed away.
Other options for financing your MBA
While loans can be a good way to finance your MBA, keep in mind that there are other options that could help you slash the debt.
- Consider grants and scholarships: Scholarships for MBAs are competitive, but you may be able to get one from an outside organization or from your school. For example, the University of Florida has offered full tuition scholarships for eligible MBA students. And Harvard has an MBAid program that offers needs-based tuition assistance and summer fellowships.
- Talk to your employer: Some employers offer tuition reimbursement plans for graduate school that can put a real dent in your debt load. Talk to your employer about your plans for getting an MBA, and see what kind of programs they might offer.
- Look into loan forgiveness: You may qualify for a federal loan forgiveness program depending on how you plan to use your degree, and you may qualify for a forgiveness program through your school as well. For example, Stanford has offered forgiveness for MBA students who work in government or at approved organizations designed to improve society, such as a section 501(c)(3) or a 501(c)(4).
Choosing between federal and private student loans for your MBA
In many cases, it makes sense to take out as many federal loans as you are eligible for before turning to private student loans to pay for the rest of your education.
Federal loans typically have lower interest rates and more generous repayment terms. However, some borrowers with excellent credit and steady incomes may benefit from going through a private lender.
You can look deeper into the differences between federal and private loans by consulting our comparison guide. And for more information on managing graduate school loans, check out the ultimate student loan repayment guide for MBA grads.
Rebecca Stropoli contributed to this report.
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Here are our top student loan lenders of 2022!| Lender | Variable APR | Eligibility | |
|---|---|---|---|
 | 0.94% – 11.98%1 | Undergraduate Graduate | |
 | 1.13% – 11.23%*,2 | Undergraduate Graduate | |
 | 0.94% – 11.44%3 | Undergraduate Graduate | |
 | 1.47% – 11.31%4 | Undergraduate Graduate | |
 | 0.95% – 11.18%5 | Undergraduate Graduate | |
 | 1.03% – 11.01%6 | Undergraduate Graduate | |
 | N/A7 | Undergraduate Graduate | |
 | 0.00% – 23.00%8 | Undergraduate Graduate | |
| * The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers. 1 Important Disclosures for College Ave. CollegeAve DisclosuresCollege Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 11/24/2021. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term. 2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply. 3 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest. Earnest DisclosuresActual rate and available repayment terms will vary based on your income. Fixed rates range from 3.19% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.19% APR to 11.69% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, and using the daily interest rate based on actual days in the year and rounding up, plus a margin and will change on the 1st of each month. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. 4 Important Disclosures for Ascent. Ascent DisclosuresAscent loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: AscentFunding.com/Ts&Cs. Rates are effective as of 01/01/2022 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes income-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions, please visit AscentFunding.com/Cashback. Cosigned Credit-Based Loan student borrowers must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs are available for the most creditworthy applicants and may require a cosigner. 5 Important Disclosures for SoFi. Sofi DisclosuresUNDERGRADUATE LOANS: Fixed rates from 2.99% to 10.66% annual percentage rate (“APR”) (with autopay), variable rates from 0.95% to 11.18% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.08% to 10.90% APR (with autopay), variable rates from 1.00% to 11.29% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 10.66% APR (with autopay), variable rates from 1.15% to 11.18% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 11/01/2021. Enrolling in autopay is not required to receive a loan from SoFi. Loans originated by SoFi Lending Corp. or an affiliate (dba SoFi), licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org). 6 Important Disclosures for Citizens Bank. Citizens Bank DisclosuresUndergraduate Rate Disclosure: Variable interest rates range from 1.03% – 11.01% (1.03% – 10.24% APR). Fixed interest rates range from 3.23% – 11.70% (3.23% – 10.83% APR). Graduate Rate Disclosure: Variable interest rates range from 1.89% – 10.66% (1.89% – 10.41% APR). Fixed interest rates range from 4.64% – 11.23% (4.64% – 10.95% APR). Business/Law Rate Disclosure: Variable interest rates range from 1.89% – 9.22% (1.89% – 8.50% APR). Fixed interest rates range from 4.24% – 9.74% (4.24% – 9.02% APR). Medical/Dental Rate Disclosure: Variable interest rates range from 1.89% – 8.02% (1.89% – 7.72% APR). Fixed interest rates range from 4.18% – 8.54% (4.18% – 8.24% APR). Parent Loan Rate Disclosure: Variable interest rates range from 1.97%-7.06% (1.97%-7.06% APR). Fixed interest rates range from 4.55%-7.58% (4.55%-7.58% APR). Bar Study Rate Disclosure: Variable interest rates range from 4.44% – 9.58% (4.44% – 9.52% APR). Fixed interest rates range from 7.39% – 12.94% (7.39% – 12.82% APR). Medical Residency Rate Disclosure: Variable interest rates range from 3.53% – 7.03% (3.53% – 6.75% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR). IS Variable Rate Disclosure: Variable Rates advertised are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%. ERL Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of December 1, 2021, the 30-day average SOFR index is 0.05%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%. Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer. Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review. Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount. 7 Important Disclosures for Funding U. Funding U DisclosuresOffered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service. 8 Important Disclosures for Edly. Edly Disclosures1. Loan Example:
About this example The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment. 2. Edly Student IBR Loans are unsecured personal student loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply. |
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