Figuring Out Your Finances

Getting a graduate business degree is a major investment.

Your family may have helped you pay for an undergraduate degree, but you may have to find a way to fund your business degree on your own.

Students typically finance degree-school with some combination of savings, earnings (for those who are working), and loans. Loans are usually available—lenders feel confident that people getting graduate business degrees will have the earning power to pay them back.

Start Your Planning Early

Even while you’re thinking about applying to business school, you should start to get your finances in order—consider saving some money to pay for at least a part of the cost of your education. Reducing your credit card debt and paying down your car payments now will make it easier to save and will also prepare you to live on a student budget once you are back in school.

Consider the Pros and Cons of Borrowing

There are two big “ifs” in the financial aid process:

1. The school has to approve your application for financial aid.
2. A lender has to loan you the actual money.

Before you apply, you should reduce as much of your personal debt as possible and make sure you are up to date on all credit card payments and outstanding loans.

Even if you are a credit risk, a school may or may not allow you to borrow the maximum a lender will approve. The school uses an estimated cost of education and living expenses to figure out what you should borrow, which may be less than the maximum you could borrow. If you decide to spend more than what the school estimates you should spend, you will be responsible for those extra expenses.

Take a Closer Look at Loans

Loans can be a good way to finance your business education, but avoid borrowing more than you actually need. Remember that loans are paid back over time, with interest accruing, so be careful to not borrow so much that it’s a struggle to make the monthly repayments after you graduate.

Review Your Financial Big Picture

Look at your total costs:

• Total cost of tuition and related academic expenses—compare the costs of each school you are considering in order to make the best choice.
• Total cost of living—factor in the location of each school
• Availability of financial aid
• Opportunity costs—estimate a modest starting salary and compare your projected earnings over the next several years with and without a graduate business degree.