5 Ways to Make Your MBA More Affordable

This article is sponsored by Columbia Business School.

As a financial aid professional, I often meet grad students with questions about how to best finance the MBA when it’s too late – AFTER they are already admitted.  If you are an undergrad student, however, it means you are already on the right path because you’re starting early.  Music to my ears!

The questions I get from students typically sound something like this: “What can I do to increase my chances of getting a scholarship or fellowship?” or “I am really afraid of taking on too much debt.  What can I do to reduce my student loan burden?”

Here are a few tips to get started:

Apply for Scholarships and Fellowships

Free money, free money, free money.  Everyone wants it, but not everyone gets it.  The sticker price of most MBA programs can be astounding, however, with the amount of scholarship assistance that exists at many schools, the discount to tuition could be significant making the degree much more affordable.

Regardless of how deserving you might be, many circumstances will affect getting a scholarship. Think of a school’s budget, economic forces impacting donations and school endowments, whether they offer aid on a merit or need basis, a donor’s criteria on how the school should spend their scholarship, and more factors, to name a few.

This doesn’t mean your actions can’t influence the outcome you want. The best way to increase your chances? It depends.  Find out if the school offers funding on a need or merit basis (or both like Columbia Business School) and pay attention to all deadlines.

Merit-based aid will depend largely on the content of your admissions application:  GMAT/GRE score, undergraduate GPA, work experience, intended industry, essays, interests, etc.  Standing out from your peers can help increase your chances here.

Need-based aid, on the other hand, usually has a separate process and will assess all funding sources – cash, savings, investments, home equity, family assistance, etc. – to calculate the student contribution.

All students are expected to contribute a portion of their income and assets to fund their MBA so keep that in mind for schools who offer need-based scholarships, however, there are a ton of programs that offer full tuition scholarships as well so make sure to do your research!

Don’t forget that there are tons of external scholarship opportunities out there.  There is tremendous value in adding up small scholarships. Combining multiple scholarships can occasionally result in just as much money as a full scholarship would.  Many are awarded based on gender, industry, etc. so you may find an award that was made just for you.

Understand the Cost of Attendance

Every school issues one but what does it really mean?  Essentially, the cost of attendance represents the maximum annual amount of financial aid you can receive across ALL aid types. For top schools, that could total ~$115K per year.  The cost of attendance includes things like tuition, fees, health insurance, books and moderate living expenses.

It does not include travel, a computer, student club dues, moving expenses, recruiting costs, social events, conferences, and any expenses you incur in the summer before, during or after business school.

Budget for the “extras”

So your total financial aid (including loans) cannot exceed ~$230K over two years.  But what is the real cost of the MBA?  Anecdotally, over a two year period, we hear that students spend $10 – 20K on travel alone so we estimate the true cost at about $250K.  Is this a requirement for you too?  Absolutely not.  The key here is to ensure that you are saving for the experiences you want to have outside of the stated cost of attendance.  How you decide to do that is up to you.

For the years leading up to business school, you can get a roommate to reduce your rent or live with your parents.  You can cancel cable and share someone’s Netflix and Amazon account, make your own coffee, etc.  Now is the time to begin assessing your budget and paring down expenses so that you can enter business school with the buffer you need.

Student Loans

If you received financial assistance from any federal or state sources for your undergraduate degree, I have something important to share.  Almost none of those options are available to graduate students.  You heard right.  No Pell, no SEOG, no state grants.  Only loans.  So the “good” news, is that you have access to federal and/or private loan options that allow you to borrow the full cost of attendance less other aid.

The bad news is that these loans can be expensive, they accrue interest while in school, and can take a long time to repay depending on the career you choose. Are student loans the worst option?  Not necessarily, but that will depend on your own philosophy on money, risk tolerance, other financial goals, your career trajectory and future earning potential.

Other ways to pay

Loans and scholarships are not the only ways to finance the MBA or to make the experience more affordable.  Here are some ideas:

• Ask your family whether or not they are willing to help you with some of the associated costs, if there is any funding left in a 529 plan that could be used for graduate school or if they are willing to tap their home equity for a loan.
• Corporate diversity fellowships are available for women in investment banking and consulting and these provide not only tuition discounts but also summer internships.
• Ask your company if they offer tuition assistance if you return post-MBA for a set number of years.
• Depending on the b-school city you choose, you might be able to land an in-school internship! This goes a long way in shaping your resume but also giving you income while in school thereby reducing your need for loans.  In addition, schools might offer you a way to either tutor fellow classmates or to be a teaching or research assistant – all paid positions.
• Schools offer ways to make the experience more affordable as well. At Columbia, we have several travel grants that subsidize international travel experiences, summer fellowships for those working at start-ups, real estate or social enterprises.  We also have a loan assistance program for those whose careers lead them to nonprofits.  There is funding to assist you in seed funding for your ventures, case competitions with prize money associated, free or subsidized events, etc.

If you have been admitted into an MBA program, you have already demonstrated significant leadership potential, intellectual strength, and personal qualities that will contribute in and out of the classroom. These admissions decisions do not consider how you will finance your MBA and are made prior to you submitting a financial aid application but that doesn’t mean you can’t afford to make it happen and make your MBA a reality!

Marilena Botoulas is the Assistant Dean of Financial Aid at Columbia Business School.