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If you're planning a long career in business, getting a Master's of Business Administration (MBA) can open up a lot of opportunities for lucrative jobs. Obtaining an MBA degree can be expensive, though, especially if you want the name recognition of a top business school.
Understanding what to expect in terms of costs can help you determine whether an MBA is right for you—and also help you take steps to limit your expenses and student loan debt.
How Much Does an MBA Cost?
The average tuition cost of an MBA graduate degree is $66,300, according to the most recent data from Education Data Initiative. However, tuition rates can vary wildly depending on which school you attend.
For example, the online MBA program from the University of Texas Rio Grande Valley costs just $17,000, while total tuition costs at the Wharton School of the University of Pennsylvania will run you $161,810.
Among the top 30 or so MBA programs, MBA Today lists a range of $55,727 to $161,810 for a full-time two-year program.
In addition to tuition and fees, though, you'll also need to account for other expenses, such as:
- Room and board
- Other living expenses
If you're moving to a different state to attend school, you'll also need to consider the costs associated with moving and additional tuition costs for out-of-state students.
How Many Students Take Out Student Loans to Get an MBA?
According to the National Center for Education Statistics, over 50% of graduate students take out student loans to obtain an MBA degree. That's on the low end, even compared with those who obtain a master of education, master of arts or master of science degree.
Based on a report from fintech company SoFi, MBA graduates completed their program with an average of $74,707 in student loan debt.
How to Pay Off MBA School Loans
Once you've obtained an MBA, your chances of landing a high-paying career go up. According to MBA.com, the median starting salary for someone with an MBA degree is $115,000, and that's just the beginning.
That kind of salary can make it easier to keep up with your loan payments. But depending on your situation, there may be additional opportunities to accelerate your debt payoff.
Look Into Loan Repayment Assistance
The number of private employers offering student loan repayment assistance is increasing. In 2021, 17% of employers offered it, according to a survey by the Employee Benefit Research Institute, and 31% more said they plan to offer it in the future.
As you consider your offers for after graduation, consider companies that help their employees pay down their student loan debt.
Pay Extra Every Month
If your salary is comfortable enough that you can afford to put more toward your student loans every month, this strategy can help you save money on interest and eliminate your debt more quickly.
If you decide on this approach, try to be strategic about which loans you target for repayment. With the debt snowball method, for instance, you'll pay the minimum amount on all of your loans except for the one with the lowest balance.
You'll add an extra payment to that loan every month until it's paid down. Then, you'll take what you were paying toward that loan—both the required amount and your extra payment—and apply it to the loan with the next-lowest balance. You'll keep doing this until you've paid all your loans in full.
The debt avalanche method works similarly, but instead of focusing on the loans with the lowest balances first, you'll target the loans with the highest interest rates. This approach can help you maximize your interest savings, while the debt snowball method can help you get quick wins early on as you pay down lower balances.
Refinance Your Student Loans
The best student loan refinance interest rates are reserved for borrowers with high credit scores and high salaries. As an MBA graduate, you may already have a solid salary in the bag, and if you've built a good credit history over time, you could potentially score a lower interest rate than what you're paying right now.
The only thing to keep in mind is that if you're refinancing federal student loans, you'll lose access to income-driven repayment plans, forgiveness programs and other benefits only federal student loans offer. But if your financial situation is in good shape, you may not need those anyway.
Depending on what you can qualify for, refinancing could potentially save you thousands of dollars in interest. You may also be able to get more flexibility with your repayment plan to suit your needs and goals.
How to Borrow Less for Your MBA
Although it's a good idea to strategize about how to pay off your student loans, it's even more important to think about student loans before you start an MBA program and while you're a student.
Here are some steps you can take to limit your reliance on student loans or eliminate it altogether.
Work Full Time and Attend Part Time
It may be difficult to work on the side if you're pursuing a full-time MBA program. But it's not uncommon for professionals to continue to work their full-time jobs while taking MBA classes on a part-time basis.
This means it'll take you longer to complete the program, but it can also help solve the problems of tuition and other expenses without needing to use student loans.
Get Help From Your Employer
Many employers offer tuition assistance to help their employees obtain an MBA. This can come in the form of a fixed annual contribution, tuition reimbursement or a full sponsorship. Some employers may even have partnerships with select business schools, allowing you to get a discount on tuition.
Before you start your MBA program, check with your employer to see if it has a program to help you pay for your degree. If not, it may be worth considering switching to a different company if it can save you thousands of dollars.
Be Mindful About Your School Selection
As you've already seen, a degree from some of the top business schools comes with staggering tuition costs. Take your time to research a wide range of MBA programs, both in-person and online, to get an idea of which schools can provide you with the most value for your tuition dollars.
While a degree from Harvard, Yale, MIT or other top-tier schools can stand out on a resume, you'll need to work harder to make things work financially.
While you're comparing schools, look into job placement rates, career resources, networking opportunities, financial aid options and other factors that can impact your decision.
Wait to Apply
In general, experts don't recommend jumping into your MBA right after you've completed your bachelor's degree. It's best to get at least a few years of experience under your belt so you'll have an idea of the trajectory you want your career to take and which specialization can help you get there.
Taking some time to work can also help you set aside some money to help pay for the program.
Work to Build Your Credit Before and During Your MBA Program
Once you complete your MBA program, you'll likely want to hit the ground running. And with a higher salary, you may be thinking about getting more established by buying a house or a new car or taking other major financial steps.
To maximize your opportunities, it's a wise idea to establish a good credit history. Experian Go™ is a free program that can help you create an Experian credit report and track your progress with your FICO® Score☉ as it becomes available.
The sooner you start working on building your credit history, the better off you'll be when you're ready to use it to build your financial future.